Services trade regulatory restrictiveness and downstream productivity in the common market for Eastern and Southern Africa Region

Abstract

The study employed the productivity growth model to investigate the effect of services trade regulatory restrictions in the Common Market for Eastern and Southern Africa (COMESA) region. The study found that services trade regulatory restrictions have a negative and statistically significant effect on downstream productivity which increases with institutional quality. In addition, the findings show a negative and statistically significant inverse relationship between commercial presence and downstream productivity. Sectoral analyses show a positive and statistically significant coefficient for financial services restrictions across all sectors. While a significant negative coefficient is estimated for transportation services across all downstream sectors, the coefficient for telecommunications services is significantly negative for manufacturing and services sectors only. The findings of this study underscore the importance of institutional quality in services trade liberalisation.