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GTAP Resource #4340

"A Global Model with Imperfect Competition of Liberalization of Barriers Against Foreign Direct Investors in Services, Trade Facilitation and Reduction of Non-Tariff Barriers: Application to Kenya, Tanzania and the Tripartite Free Trade Area."
by Balistreri, Edward J., David G. Tarr and Hidemichi Yonezawa

Recent empirical work has documented the high trade costs in sub-Saharan Africa. We decompose trade costs into three categories: costs that can be lowered by trade facilitation; non-tariff barriers; and the quality and costs of business services. In this paper, we develop an innovative multi-region trade model that is capable of addressing all these issues, and, in particular, is capable of assessing the impacts on Kenya and Tanzania. This paper is innovative since it is the first paper to numerically assess liberalization of barriers against both domestic and multinational service providers in a multi-sector, multi-region applied general equilibrium model where the Dixit-Stiglitz variety-productivity effects are important to the results; and it is the first multi-region model to assess services liberalization in sub-Saharan Africa. Since both economic theory and a growing body of empirical literature have shown that wide availability of business services results in productivity gains to the manufacturing sector and contributes to its international competitiveness, we believe it is crucial to construct a multi-region model that contains these features.

The model contains both competitive and imperfectly competitive sectors. It includes foreign direct investment in business services sectors and Dixit-Stiglitz endogenous productivity effects from additional varieties in imperfectly competitive business services and manufacturing sectors. Imperfectly competitive sectors have the usual Krugman cost structure, with constant marginal costs and a fixed cost, while pricing is according to Chamberlinian monopolistic competition.

The paper employs the GTAP database and aggregates the GTAP data to ten regions: United States, European Union, China, Kenya, Tanzania, Uganda, Rwanda, Common Market of East and Southern Africa (COMESA), South African Development Community (SADC) and Rest of the World.

The paper builds on four databases, three of which are very rec...

Resource Details (Export Citation) GTAP Keywords
Category: 2014 Conference Paper
Status: Published
By/In: Presented at the 17th Annual Conference on Global Economic Analysis, Dakar, Senegal
Date: 2014
Version: 1
Created: Tarr, D. (3/27/2014)
Updated: Tarr, D. (3/27/2014)
Visits: 2,427
- Non-Tariff barriers
- Non-Tariff measures in services
- Preferential trading arrangements
- Trade in services
- Other data bases and data issues
- Africa (East)

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