Services Barriers and their Economic Impact

Abstract

This paper applies the most advanced methodologies for measuring services barriers to calculate the restrictiveness and the impact of services barriers in selected transition economies, i.e. the Baltic States, and eight South Eastern European (SEE) countries (for telecommunications and banking) and Russia (for telecommunications). Among the selected countries, the Baltic countries record the highest liberalisation scores for both telecommunications and banking services making their situation comparable to that of most developed countries. By contrast, the SEE countries have more room to improve their performance and the price level of their telecommunication services, both in fixed and cellular services by eliminating general restrictions on competition and removing barriers to foreign equity participation. With respect to banking services, the results suggest that the SEE markets are fairly contestable; policy priorities would thus appear to be broad issues of macroeconomic stability and structural reform. The telecommunications estimates put Russia in an intermediate position between the results for the Baltic States and the SEE countries. The WTO accession should encourage Russia to stabilise and consolidate its legal and regulatory framework generating significant economic gains to the whole economy.Quantitative estimates of services barriers, even if still imperfect, represent useful complements to extensive qualitative descriptions of services restrictions, as they facilitate the comparisons in time, across countries and potentially among different services sectors. In order to improve the reliability of these estimates, further work would need to address the limitations related to the data collection, the construction of indexes and the methods used for measuring the impact of services barriers restrictiveness on the performance and price levels.