Modelling the Policy Issues in Services Trade

This paper considers what special features of services need to be taken into account in modelling services trade, and summarises methods to quantify barriers to services trade. One feature of services trade policy is the formal recognition within the WTO of commercial presence as a method by which services are traded. To capture services delivered via FDI, modellers need to distinguish the ownership as well as the location of economic activity. To capture the policy-relevant features of barriers to services trade, modellers need to recognise that restrictions on market access are not just discriminatory, but can also affect domestic new entrants. There is a range of theoretical and empirical challenges to fleshing out this research agenda. JEL Classification : F1 ; F2.