THE INFLUENCE OF SERVICES TRADE LIBERALIZATION ON SERVICE FLOWS AND INDUSTRY PRODUCTIVITY IN CIS COUNTRIES AND RUSSIA

This paper estimates the influence of the service sector’s liberalization on service flows in transition economies and on productivity of the Russian industry that uses these services as intermediate consumption. Empirical analysis of the international statistics shows that service trade between CIS countries and OECD countries is strongly underestimated and could grow 2.5–3 times larger due to liberalization. Modeling of the international service trade shows that services imports into Russia are strongly limited by existing trade barriers. For Russia, according to the estimates, the most liberalized service sector is communication services, and the least liberalized sector is information technology. This paper demonstrates that services are actively used by Russian industry as intermediate consumption. On the basis of the inter-industry empirical analysis, one can conclude that service sector liberalization may have a positive impact on the productivity of various sectors of the Russian manufacturing industry.