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GTAP Resource #1483

"The Impact of Liberalizing Barriers to Foreign Direct Investment in Services: The Case of Russian Accession to the World Trade Organization "
by Tarr, David G., Thomas Rutherford and Jesper Jensen

In this paper we employ a computable general equilibrium model of the Russian economy to assess the impact of accession to the World Trade Organization (WTO). We assess the impact of improved market access for Russia in the markets of its partners and the impact of Russia’s market access commitments to foreigners in both goods and services. The model incorporates productivity effects in both goods and services markets endogenously, through a Dixit-Stiglitz framework. It recognizes that foreign direct investment or the availability of foreign expertise is necessary to have foreign firms compete in key business services, and innovatively applies this is a Small Open Economy numerical model. The ad valorem equivalent of barriers to foreign direct investment have been estimated based on detailed questionnaires completed by specialized research institutes in Russia and by applying the Findlay and Warren econometric methodology. We estimate that Russia will gain about 7.41% of the value of Russian consumption in the medium run from WTO accession and up to 24% in the long run, when the impact on the capital stock in a comparative steady state is taken into account. We decompose the effects and estimate that the largest gains to Russia will derive from increased foreign direct investment in the services sectors in Russia as a result of Russia’s market access commitments under the GATS. Export intensive sectors, such as ferrous metals, non-ferrous metals, chemicals and timber, wood, pulp and paper products are the sectors that expand the most as a result of WTO accession.

Resource Details (Export Citation) GTAP Keywords
Category: 2004 Conference Paper
Status: Published
By/In: Presented at the 7th Annual Conference on Global Economic Analysis, Washington DC, USA
Date: 2004
Created: Tarr, D. (4/30/2004)
Updated: Tarr, D. (4/30/2004)
Visits: 2,714
No keywords have been specified.

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