Services Liberalization in Preferential Trade Arrangements : The Case of Kenya

Given the growing importance of commitments to foreign investors in services in regional trade agreements, it is important to develop applied general equilibrium models to assess the impacts of liberalization of barriers to multinational service providers. This paper develops a 55 sector applied general equilibrium model of Kenya with foreign direct investment and Dixit-Stiglitz productivity effects from additional varieties of imperfectly competitive goods or services, and uses the model to assess its regional and multilateral trade options, focusing on commitments to foreign investors in services. To assess the sensitivity of the results to parameter values, the model is executed 30,000 times, and results are reported as confidence intervals of the sample distributions. The analysis reveals that a 50 percent preferential reduction in the ad valorem equivalents of barriers in all business services by Kenya with its African partners would be somewhat beneficial for Kenya. If a preferential agreement with African partners is combined with an agreement with the European Union, the gains would more than triple the gains of an Africa only agreement. Multilateral reduction of services barriers, however, would yield gains about 12 times the gains of an agreement with the Africa region alone. These results suggest that preferential liberalization in the region is a valuable first step, but wider liberalization, with larger partners and liberal rules of origin or multilaterally, will yield much larger gains due to providing access to a much wider set of services providers. The largest gains would come from domestic regulatory reform in services, as this would almost triple the gains of multilateral liberalization.

Bibliographic Details

Main Authors:	Balistreri, Edward J., Tarr, David G.
Language:	English
Published:	2011-01-01
Subjects:	ACCOUNTING, ADVANCED COUNTRIES, AGGREGATE EXPORTS, AGRICULTURAL PRODUCTS, AGRICULTURE, AIR, AVERAGE TARIFF, BANK OFFICE, BANKING SERVICES, BASE YEAR, BILATERAL FREE TRADE AGREEMENT, CAPITAL STOCK, CENTRAL ELASTICITIES, CENTRAL ELASTICITY, COLLATERAL, COLLATERAL REQUIREMENTS, COMMON MARKET, COMPETITIVENESS, CONFIDENCE, CONSTANT ELASTICITY OF TRANSFORMATION, CONSTANT RETURNS TO SCALE, COST STRUCTURE, COST STRUCTURES, COUNTRY OF ORIGIN, CREDIT RATING, CUSTOMS UNION, DEBT, DEMAND CURVE, DEMAND CURVES, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPMENT ECONOMICS, DEVELOPMENT INTENSITY, DEVELOPMENT POLICY, DOMESTIC MARKET, DOMESTIC PRODUCTION, DUOPOLY, ECONOMIC GEOGRAPHY, ECONOMIC INTEGRATION, ECONOMIC REFORM, ECONOMIC RESEARCH, ECONOMIC THEORY, ECONOMICS LITERATURE, ECONOMIES OF SCALE, ELASTICITIES, ELASTICITY, ELASTICITY OF DEMAND, ELASTICITY OF SUBSTITUTION, ELASTICITY OF SUPPLY, ELASTICITY VALUES, EQUILIBRIUM, EXCHANGE RATE, EXPORT MARKET, EXPORT MARKETS, EXPORTS, EXTERNALITIES, EXTERNALITY, FACTORS OF PRODUCTION, FEDERAL RESERVE, FEDERAL RESERVE BANK, FINANCIAL SECTOR, FINANCIAL SERVICES, FINANCIAL SUPPORT, FIRM PERFORMANCE, FOREIGN BANKS, FOREIGN DIRECT INVESTMENT, FOREIGN FIRMS, FOREIGN GOODS, FOREIGN INVESTMENT, FOREIGN INVESTORS, FREE ACCESS, FREE TRADE, FREE TRADE AGREEMENT, FREE TRADE AGREEMENTS, FREIGHT, GDP, GENERAL EQUILIBRIUM ANALYSIS, GENERAL EQUILIBRIUM MODEL, GLOBALIZATION, GOVERNMENT REGULATION, HOME COUNTRY, IMPERFECT COMPETITION, INCOME, INCREASING RETURNS, INCREASING RETURNS TO SCALE, INITIATIVE, INSURANCE, INSURANCE MARKET, INTERMEDIATE GOODS, INTERMEDIATE INPUTS, INTERNATIONAL COMPETITIVENESS, INTERNATIONAL ECONOMY, INTERNATIONAL NEGOTIATIONS, INTERNATIONAL TRADE, INVESTMENT BARRIERS, LAWS, LAWYERS, LEGAL SYSTEM, LESS DEVELOPED COUNTRIES, MARGINAL COST, MARGINAL COSTS, MARGINAL REVENUE, MARKET ACCESS, MARKET SHARE, MARKET SHARES, MOBILE BANKING, MONOPOLISTIC COMPETITION, MONOPOLY, MONOPOLY RENTS, MULTILATERAL LIBERALIZATION, MULTILATERAL TRADE, MULTINATIONAL, MULTINATIONAL FIRMS, MULTINATIONALS, MUTUAL RECOGNITION, NATIONAL DEVELOPMENT, NONDISCRIMINATORY BARRIERS, OPEN ECONOMIES, OPEN ECONOMY, OPENNESS, OPTIMAL TARIFFS, PREFERENTIAL, PREFERENTIAL AGREEMENT, PREFERENTIAL AGREEMENTS, PREFERENTIAL REDUCTION, PREFERENTIAL TRADE, PREFERENTIAL TRADE AGREEMENTS, PREFERENTIAL TRADE ARRANGEMENTS, PREFERENTIAL TRADE LIBERALIZATION, PRICE INDEX, PRIMARY FACTORS, PRIVATE SECTOR DEVELOPMENT, PRODUCT DIFFERENTIATION, PRODUCTION FUNCTION, PRODUCTIVITY, PRODUCTIVITY GROWTH, PRODUCTIVITY INCREASES, PUBLIC POLICY, RAIL, RAILWAY, RAILWAYS, REAL ESTATE, REAL EXCHANGE RATE, REDUCTION OF BARRIERS, REFORM PROGRAM, REGIONAL INTEGRATION, REGIONAL TRADE, REGIONAL TRADE AGREEMENTS, REGULATOR, REGULATORY BARRIERS, REGULATORY ENVIRONMENT, REGULATORY REGIME, REGULATORY REGIMES, REINSURANCE, ROAD, RULES OF ORIGIN, SINGLE MARKET, SMALL COUNTRIES, SMALL ENTERPRISES, SUPPLY CURVE, SUPPLY CURVES, TARIFF DATA, TARIFF EQUIVALENCE, TARIFF EQUIVALENTS, TARIFF PREFERENCES, TARIFF RATE, TARIFF RATES, TARIFF REDUCTION, TARIFF REVENUE, TAX, TECHNOLOGY TRANSFER, TELECOMMUNICATIONS, TERMS OF TRADE, TERMS OF TRADE EFFECTS, THIRD WORLD, TOTAL FACTOR PRODUCTIVITY, TRADE DATA, TRADE DIVERSION, TRADE FLOWS, TRADE LIBERALIZATION, TRADE LOSSES, TRADE PARTNERS, TRADE POLICIES, TRADE POLICY, TRANSITION ECONOMIES, TRANSMISSION OF KNOWLEDGE, TRANSPORT, TRANSPORT SERVICES, TRANSPORTATION, TRANSPORTATION COSTS, TRANSPORTATION FACILITIES, TRANSPORTATION NETWORK, TRANSPORTATION SERVICES, TRUE, UNILATERAL LIBERALIZATION, UNILATERAL REFORM, UNSKILLED LABOR, URUGUAY ROUND, VALUE OF IMPORTS, VALUE OF OUTPUT, VARIABLE COSTS, VEHICLE, WEALTH, WEALTH CREATION, WELFARE ECONOMICS, WORLD TRADE, WORLD TRADE ORGANIZATION, WTO, ZERO PROFITS, ZERO TARIFFS,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110131090808 https://hdl.handle.net/10986/3322
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