Does cross-border regulation really influence cross-border trade? Evidence from the Services Trade Restrictions Index

Overview & Synopsis

This paper uses the recent Services Trade Restrictions Database and the Services Trade Restrictons Index provided by the World Bank to assess the specific impact of Mode 1 regulation on crossborder services trade. The article follows an augmented gravitational model to evaluate the determinents of imports and exports between country pairs, and to assess their correlation with Mode 1 regulation of both the home country and the partner country. At the aggregated level, there is evidence of a negative correlation between services trade values and the level of restrictions of both the home country and the partner country. The partner country regulation doesn't keep its impact at the sectoral level.