The Impact of the EU Services Directive on Trade and Investment : A Difference-in-Differences Analysis

The 2006 Services Directive was designed to stimulate the free circulation of services within the European internal market. Owing to their relatively poor tradability and considerable political sensitivity, the services that had not been liberalized by ad hoc EU legislation were still mostly national. The Directive had to be transposed into national law by 2009. This paper provides an ex-post evaluation of the Directive's impact on trade and investment in services in a sample of EU countries. The effects are estimated by difference-in-differences analysis, comparing the most heavily affected service sectors with a set of services outside the scope of the Directive. The results show no significant impact of the Directive in the short run, i.e. in the first five years after its implementation