Dynamic Benefits Of Multilateral Service Trade Liberalization

The position of service sector in the national economy has kept rising in the last30years, along with the development of the world economy and the continuous adjustment of the industrial structure in each country. And the uneven developments of service sectors between countries, together with the different needs, promote the rapid development of service trade, resulting in an increase of the proportion of service trade in international trade. On one hand, the rapid development of service industry and service trade is due to the rapid development of information technology, which makes service sectors more closely linked with economic development, so the exchange of services between countries become faster. On the other hand, the process of worldwide service trade liberalization is an important promotion. In September1986, GATT put service trade into the framework of multilateral negotiation, then countries signed the "General Agreement on Trade in Services"(GATS) after8years’negotiation, and gave reduction commitments for service trade liberaliztion, and GATS began to come into effect in1995. Nonetheless the sign of GATS indicates that countries have reached a consensus on multilateral service trade liberalization, the twists and turns of the negotiation process could tell the diffirent attitude between developed and developing countries. Developed countries headed by the United States are the leaders and important drivers of multilateral service trade liberalization, while the developing countries are reluctant to negotiation. Developing countries tend to think that due to the weak competitiveness of their service sectors, service trade liberalization will endanger the development of domestic service industry and the economy as a whole, resulting in a welfare loss. Therefore, the economic impact of service trade liberalization on a country is a significant issue.Taking the dynamic gains brought by multilateral service trade liberalization as the theme, this thesis discusses the economic impacts of multilateral service trade liberalization on a country from the perspective of productivity improvement. This paper is divided into the following seven sections. The first chapter is an introduction, which explained the background, significance, methods and shortcomings of this reaserch. The second chapter is a literature review, which aims to sort out the service trade liberalization related theoretical and empirical researches, and to clarify the literature background of this research. Drawing on the liberalization of trade in goods and foreign direct investment theory, the third chapter summed up the mechanism of service trade liberalization in promoting productivity improvement. Chapter4made a description of the process and status quo of global service trade liberalization using statistical analysis methods. Chapter5is a cross-country empirical analysis. Using data of69countries around the world during2006-2010, this chapter made an empirical test of the effects of service department openess on a country’s productivity and discussed the differences between different countries and different service departments. Chapter6is an empirical test of Chinese data, which examined the impact of China’s service trade liberalization process on the productivity of the industrial sector. Chapter7summd up the main conclusion of this thesis and gave some suggestions of maximizing the dynamic gains of service trade liberalization as well as pointed out the direction of further study.Some conclusions are drawed from cross-country empirical analysis. The global service trade liberalization process has promoted the total factor productivity, and is mainly achieved by promoting the advancement of the technology frontier; such positive impact is more significant in the high-income group countries and less signicicant in low-income group countries. The positive impact on the high-income group countries is mainly through the advancement of technology frontier, while on the low-income group countries is mainly through enhancing the technical efficiency. The study shows an inverted "U"-shaped relationship between the openness degree of service sectors and productivity, that is, with the increase of openness degree, its role in promoting productivity fading away, and a further liberalization of the services sector will inhibit the promotion of productivity. Sub-sector studies have shown that, generally speaking, the positive impact is significant in the finance and business services sectors, mainly through the advancement of technology frontier, but there is no significant effect in the other service sectors. For high-income countries, the positive impact in the financial, telecommunications and business services sectors have promoted their TFP, mainly through the advancement of the technology frontier; while in low-income countries, the effects of financial, transportation and retail service sectors is significant and mainly achieved through enhancing technical efficiency.The empirical analysis of Chinese data gets conclusions as follow. The openess of China’s service sectors has not yet reached the break point of promoting productivity of the secondary industry, which may be due to the less contaction between service and industrial sector, as well as the fact that the large-opened service sectors does not match the close-connection sectors. Therefore, strengthening the contact between China’s service sectors and industrial sectors, and paying more attention to the coherence between the opened service sectors and the national economy, is conducive to maximize the dynamic gains brought about by service trade liberalization.