The OECD STRI database and indices Presentation at Kiel Institute-World Bank Workshop on Services, May 23, Hildegunn Kyvik Nordås, OECD/TAD/TSD
The STRI outputs A regulatory database An inventory of trade policy measures and domestic regulation relevant for services trade negotiations and unilateral reforms. A core of measures common for all sectors + sector-specific measures Composite indices A snapshot of trade restrictiveness OECD Trade & Agriculture 2
STRI sector coverage Pilot sectors Computer services Construction Professional services Accounting, architecture, engineering, legal services Telecommunications New sectors Transport Air, maritime, rail, road courier Distribution Audiovisual services Motion picture, broadcasting, sound recording OECD Trade & Agriculture 3
The STRI Regulatory Database: Five policy areas 1. Restrictions on foreign ownership and other market entry conditions includes limitations on foreign ownership and screening requirements in the foreign country, nationality and residency requirements for the board of directors, quotas regarding the number of firms permitted to practice and conditions regarding subsequent transfer of capital. 2. Restrictions on the movement of people includes measures affecting the movement of, including in the form of quotas, labour market tests and duration of stay for different categories of providers (intra-corporate transferees, contractual and independent services suppliers). 3. Other discriminatory measures and international standards includes measures related to national treatment, discrimination in taxes, subsidies and government procurement, and the lack of adoption of international standards. 4. Barriers to competition and public ownership contains first, discriminatory measures where foreign suppliers rights under the competition law are inferior to that of local companies, and state-owned enterprise privileges that may put foreign entrants at a competitive disadvantage. The second category of measures relates to regulation of dominant firms with the objective to ensure market access on reasonable terms for new entrants, including foreign firms. 5. Regulatory transparency and administrative requirements includes measures relating to regulatory efficiency, such as the timely publication of regulations, and a period for comments on draft regulations, the time necessary to obtain a visa and the costs related to registering a company. OECD Trade & Agriculture 4
Constructing the regulatory database 1. The OECD Secretariat fills in the database for each sector and country using national laws and regulations, and for a few measures World Bank surveys 2. The Member country comments and verifies 3. Peer review: A light version where countries have the opportunity, but not the obligation to review each other 4. Continuously updated Documenting the presence of regulation is relatively straight forward. Documenting the absence of regulation less so. OECD Trade & Agriculture 5
OECD Trade & Agriculture 6
STRI indices Qualitative information is scored and aggregated to indices taking values between 0 and 1; Scoring and weighting take into account complementarities between policy measures as well as hierarchies of measures (e.g. identifying binding constraints) In due course the raw data, the indices and the methodology for calculating the indices will be available on the OECD web. OECD Trade & Agriculture 7
The STRI indices 1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 CS CO PS.acc PS.arc PS.eng PS.leg TC OECD Trade & Agriculture 8
Some observations/results Services sectors are linked: Telecoms/broadcasting network/content (e.g. two-sided markets) Construction/engineering/architecture Cost of obtaining a building permit is systematically lower in countries that regulate architecture and engineering Transport/distribution Services regulation deeply embedded in the fabric of society: Regulation/litigation Trust and attitude to safety and security OECD Trade & Agriculture 9
Further work A trade cost function for services necessary to make the indices fully comparable across sectors Barriers to competition and barriers to trade: how are they related? Are some regulatory systems more conducive to open markets than others? Extension to countries where rule of law is weak Services regulation and productivity in down-stream sectors How does services regulation shape the location of activities within international production networks? OECD Trade & Agriculture 10