Putting Services and Foreign Direct Investment with Endogenous Productivity Effects in Computable General Equilibrium Models

With the growing importance of services and foreign direct investment in services, it is important to have a framework to analyze the impact of the liberalization of barriers to foreign direct investment in services. This paper summarizes several r...

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Bibliographic Details
Main Author:	Tarr, David G.
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ACCESS TO SERVICES ACCOUNTANT ACCOUNTING ADVANCED COUNTRIES AGGREGATE SUPPLY AGRICULTURE AVERAGE COSTS BALANCE OF TRADE BARRIER BARRIERS TO INVESTMENT BASE YEAR BASKET OF GOODS BENCHMARK BIDS BINDING CONSTRAINT BUSINESS SERVICE BUSINESS SERVICES BUYERS CAPITAL FLOWS CAPITAL STOCK CAPITAL STOCKS CLOSED ECONOMIES COMPARATIVE ADVANTAGE COMPETITIVE MODELS COMPETITIVENESS COMPOSITE SERVICES CONSTANT RETURNS TO SCALE CONSUMERS COST FUNCTIONS COST REDUCTION COST STRUCTURE COST STRUCTURES COUNTRY OF ORIGIN CUSTOMS DELIVERY OF SERVICES DELIVERY SERVICES DEMAND CURVE DEMAND FUNCTION DEMAND FUNCTIONS DERIVATIVE DERIVATIVES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT FINANCE DEVELOPMENT POLICY DOMESTIC ECONOMY DOMESTIC MARKET DOMESTIC PRICE DOMESTIC PRICES DUMPING ECONOMIC ACTIVITY ECONOMIC GEOGRAPHY ECONOMIC PERFORMANCE ECONOMICS LITERATURE ELASTICITY ELASTICITY OF SUBSTITUTION ELASTICITY OF SUPPLY ELECTRICITY EQUILIBRIUM EQUILIBRIUM VALUES EQUIPMENT EXCHANGE RATE EXPENDITURES EXPORT COMPETITIVENESS EXPORT MARKET EXPORT MARKETS EXPORTERS EXTERNALITIES EXTERNALITY FACTORS OF PRODUCTION FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL SUPPORT FIRM PERFORMANCE FIXED COST FIXED COSTS FIXED PRICES FIXED RATE FOREIGN BANKS FOREIGN COMPETITION FOREIGN DIRECT INVESTMENT FOREIGN DIRECT INVESTORS FOREIGN FIRM FOREIGN FIRMS FOREIGN INPUT FOREIGN INPUTS FOREIGN INVESTORS FOREIGN TRADE GDP GEOGRAPHIC SCOPE GLOBAL DEVELOPMENT FINANCE GOOD GOVERNANCE GROWTH RATE GROWTH RATES GROWTH THEORY HOME COUNTRY HOMOGENEOUS GOOD HORIZONTAL RESTRICTIONS IMPERFECT COMPETITION INCREASING RETURNS INCREASING RETURNS TO SCALE INDIVIDUAL FIRM INDIVIDUAL FIRMS INDUSTRIAL COUNTRIES INSURANCE INSURANCE COMPANIES INSURANCE MARKETS INTERMEDIATE GOODS INTERMEDIATE PRODUCTS INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERNATIONAL ECONOMICS INTERNATIONAL TRADE INVESTMENT FLOWS JOINT VENTURE MANUFACTURING MARGINAL COST MARGINAL COSTS MARGINAL PRODUCT MARGINAL PRODUCTIVITY MARGINAL REVENUE MARKET ACCESS MARKET POWER MARKET PRICES MARKET REFORMS MARKET SHARE MARKET SIZE MARKETING MOBILE TELEPHONE MONETARY FUND MONOPOLISTIC COMPETITION MONOPOLY NATIONAL INCOME NET EXPORTS OPEN ACCESS OPEN ECONOMIES OPEN ECONOMY OUTPUT POST OFFICE PRICE INDEX PRODUCT DIFFERENTIATION PRODUCTION FUNCTION PRODUCTION PROCESS PRODUCTION STRUCTURE PRODUCTION STRUCTURES PRODUCTIVITY PRODUCTIVITY GROWTH PRODUCTIVITY INCREASES PURCHASING QUOTA RENTS R&AMP;D RATE OF RETURN RATE OF RETURN ON CAPITAL REAL EXCHANGE RATE RED TAPE REDUCTION OF COST REGIONAL TRADE REGULATORY BARRIERS REGULATORY ENVIRONMENT RESULT RESULTS RETAIL RETAIL TRADE SALES SECURITIES SENSITIVITY ANALYSIS SERVICE PROVIDERS SHARE OF CAPITAL SKILLED WORKERS SMALL COUNTRIES SMALL COUNTRY SPREAD SUBSTITUTE SUBSTITUTES SUBSTITUTION EFFECT SUPPLIERS SUPPLY CURVES TARIFF BARRIERS TARIFF REVENUE TAX TAX RATE TAX REVENUES TECHNICAL EXPERTISE TECHNOLOGICAL CHANGE TELECOMMUNICATION TELECOMMUNICATIONS TELECOMMUNICATIONS PROVIDERS TELEPHONE TELEPHONE SERVICE TELEPHONE SERVICES TIME FRAME TOTAL COSTS TOTAL FACTOR PRODUCTIVITY TRADE BALANCE TRADE LIBERALIZATION TRADE NEGOTIATIONS TRADE POLICY TRADE REGIME TRADING TRANSITION COUNTRIES USERS USES UTILITY FUNCTION VALUE ADDED VARIABLE COST VARIABLE COSTS WORLD MARKET WORLD TRADE WORLD TRADE ORGANIZATION WTO
Online Access:	http://documents.worldbank.org/curated/en/2012/03/15974846/putting-services-foreign-direct-investment-endogenous-productivity-effects-computable-general-equilibrium-models http://hdl.handle.net/10986/19869

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Summary:	With the growing importance of services and foreign direct investment in services, it is important to have a framework to analyze the impact of the liberalization of barriers to foreign direct investment in services. This paper summarizes several recent papers and builds policy-based computable general equilibrium models showing the dynamics of services, foreign direct investment and the endogenous productivity effect from services. The modeling framework shows that the liberalization of barriers against foreign direct investment in services yields welfare gains several times larger than the usual estimates from traditional computable general equilibrium models, which focus on goods trade, not foreign direct investment in services. The larger estimates are consistent with econometric evidence on the gains from services liberalization. The paper begins with a small stylized model to help understand the fundamental economics. Then it describes models developed at the request of the Russian government to assess the potential impact of Russia's accession to the WTO. Reviews of the work indicated that the modeling helped the Russian government gain public support for the WTO entry. The paper also describes a new technique that allows modelers to include tens of thousands of households in the model.

Putting Services and Foreign Direct Investment with Endogenous Productivity Effects in Computable General Equilibrium Models

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