Modeling Services Liberalization : The Case of Kenya

This paper employs a 55 sector small open economy computable general equilibrium model of the Kenyan economy to assess the impact of the liberalization of regulatory barriers against foreign and domestic business service providers in Kenya. The model incorporates productivity effects in both goods and services markets endogenously, through a Dixit-Stiglitz framework. It estimates the ad valorem equivalent of barriers to foreign direct investment based on detailed questionnaires completed by specialists in Kenya. The authors estimate that Kenya will gain about 11 percent of the value of Kenyan consumption in the medium run (or about 10 percent of gross domestic product) from a full reform package that also includes uniform tariffs. The estimated gains increase to 77 percent of consumption in the long-run steady-state model, where the impact on the accumulation of capital from an improvement in the productivity of capital is taken into account. Decomposition exercises reveal that the largest gains to Kenya will derive from liberalization of costly regulatory barriers that are non-discriminatory in their impacts between Kenyan and multinational service providers.

Bibliographic Details

Main Authors:	Balistreri, Edward J., Rutherford, Thomas F., Tarr, David G.
Language:	English
Published:	World Bank, Washington, DC 2008-03
Subjects:	ACCESS TO INSURANCE, ACCOUNTING, AFFILIATE, AFFILIATES, AGRICULTURAL OUTPUT, AGRICULTURE, AIR, BANK PAPERWORK, BANK POLICY, BANKING SERVICES, BANKS, BASE YEAR, BENCHMARK, BOARDS OF DIRECTORS, BRANCH BANKING, BUSINESS LICENSES, CAPITAL OWNERS, CAPITAL STOCK, CAPITALS, COLLATERAL, COLLATERAL REQUIREMENTS, COMMON MARKET, COMPETITIVENESS, CONSTANT RETURNS TO SCALE, CONSUMER INTERESTS, COST STRUCTURE, CREDIT RATING, CREDIT RATING AGENCIES, CUSTOMS UNION, DEBT, DEBT CONTRACTS, DEVELOPING COUNTRIES, DEVELOPMENT ECONOMICS, DOMESTIC INVESTORS, DOMESTIC MARKET, ECONOMIC DEVELOPMENT, ECONOMIC GEOGRAPHY, ECONOMIC THEORY, ECONOMICS LITERATURE, ELASTICITIES, ELASTICITY, ELASTICITY OF SUBSTITUTION, EMPLOYMENT, EQUILIBRIUM, EQUILIBRIUM VALUE, EXCHANGE RATE, EXPENDITURES, EXPORTS, EXTERNALITIES, EXTERNALITY, FACTORS OF PRODUCTION, FEDERAL RESERVE, FEDERAL RESERVE BANK, FINANCIAL SECTOR, FINANCIAL SERVICES, FINANCIAL SUPPORT, FIRM PERFORMANCE, FIXED RATE, FOREIGN BANKS, FOREIGN DIRECT INVESTMENT, FOREIGN ENTRY, FOREIGN FIRM, FOREIGN FIRMS, FOREIGN INVESTMENT, FOREIGN INVESTORS, FREIGHT, GDP, GOVERNMENT BUDGET, GOVERNMENT REGULATION, GROSS DOMESTIC PRODUCT, IMPERFECT COMPETITION, IMPORT TARIFFS, INCOME, INCREASING RETURNS, INCREASING RETURNS TO SCALE, INSURANCE, INSURANCE COMPANY, INSURANCE MARKET, INTERNATIONAL BANK, INTERNATIONAL ECONOMICS, INTERNATIONAL ECONOMY, INTERNATIONAL STANDARDS, INTERNATIONAL TRADE, INVESTMENT BARRIERS, JOINT VENTURE, JOINT VENTURE PARTNERS, JOINT VENTURES, LAWS, LEGAL SYSTEM, LOCAL INVESTOR, MARGINAL COST, MARGINAL COSTS, MARGINAL PRODUCT, MARGINAL PRODUCTIVITY, MARGINAL REVENUE, MARITIME TRANSPORT, MARKET ACCESS, MARKET ECONOMY, MARKET PRICES, MARKET SHARES, MICRO ENTERPRISES, MONOPOLISTIC COMPETITION, MONOPOLY, MULTINATIONAL BANK, MULTINATIONAL BANKS, NATIONAL DEVELOPMENT, OPEN ECONOMY, OPTIMIZATION, PACIFIC REGION, POLITICAL ECONOMY, POSITIVE EFFECTS, PRIVATE INVESTMENT, PRIVATE SECTOR DEVELOPMENT, PRODUCT DIFFERENTIATION, PRODUCTION FUNCTION, PRODUCTIVITY, PRODUCTIVITY INCREASES, PROFITABILITY, PUBLIC POLICY, RAIL, RAILROADS, RAILWAY, RAILWAYS, RATE OF RETURN, RATE OF RETURN ON CAPITAL, RATING AGENCIES, REAL ESTATE, REAL EXCHANGE RATE, REFORM PROGRAM, REGULATOR, REGULATORY BARRIERS, REGULATORY ENVIRONMENT, REGULATORY REGIME, REGULATORY REGIMES, REINSURANCE, RETURN ON INVESTMENT, RIDER, ROAD, ROAD SERVICES, SKILLED WORKERS, SMALL ENTERPRISES, SUPPLY CURVE, SUPPLY CURVES, TARIFF REVENUE, TAX, TELECOMMUNICATIONS, THIRD WORLD, TOTAL FACTOR PRODUCTIVITY, TOTAL OUTPUT, TRADE FLOWS, TRADE LIBERALIZATION, TRADE POLICY, TRADE SECTOR, TRADING, TRANSPORT, TRANSPORT SERVICES, TRANSPORTATION, TRANSPORTATION COSTS, TRANSPORTATION FACILITIES, TRANSPORTATION NETWORK, TRANSPORTATION SERVICES, UNIFORM TARIFFS, UNIVERSAL ACCESS, URUGUAY ROUND, VALUE ADDED, VALUE OF OUTPUT, WAGES, WEALTH, WEALTH CREATION, WORLD INVESTMENT REPORT, WORLD TRADE, WORLD TRADE ORGANIZATION, WTO,
Online Access:	http://documents.worldbank.org/curated/en/2008/03/9082578/modeling-services-liberalization-case-kenya-vol-1-o1 https://hdl.handle.net/10986/6496
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