Liberalization of Trade in Producer Services - the Impact on Developing Countries

This paper analyzes the impact of liberalization of trade in producer services, focusing on financial services, telecommunications and transport. The likely effects on developing countries is that they will become net importers of the liberalized services, but they will also become more industrialized and increase their exports of labor-intensive goods and services, if given market access under the most appropriate modes of trade. Potential gains from this pattern of trade are large, since imports of efficient producer services will improve productivity in all sectors of the economy and depends on the developing countries' capacity to en sure sufficient competition in the liberalized sectors, and the quality of infrastructure in the country in question. The paper continues with a discussion of the experience from liberalization in the financial and telecommunication sectors of South Africa, Namibia and Tanzania. South Africa has apparently gained the most from liberalization, as its markets are sufficiently large and reasonably well regulated to attract foreign investors. Namibia has seen very little foreign investment after liberalization, while Tanzania has attracted investors that have established themselves in the most profitable niches of the markets. James Hodge, DPRU, University of Cape Town Hildegunn Kyvik Nordås, Chr. Michelsen Institut