A New Dawn for MENA Firms: Service Trade Liberalization for More Competitive Exports

With the ongoing debates on the Doha Agenda, micro-level empirical evidence has emerged to highlight the positive effect of services deregulation on the productivity and exports of manufacturing firms in developing countries. While the MENA region has been neglected in this literature so far, the current paper fills the gap by exploring the effect of service liberalization on the extensive and intensive trade margins of manufacturing and services firms in selected MENA countries for 2013. The results show that service trade restrictiveness weighted by the input-output technical coefficient of service sectors, has a significantly negative effect on both the intensive andthe extensive margins of trade. The results are robust to different measures of service trade restrictiveness, namely the tariff equivalent of services and the service trade restrictiveness index.