Regional Impacts of Liberalization of Barriers against Foreign Direct Investment in Services: The Case of Russia's Accession to the WTO

In this paper, the authors develop a 10‐region comparative static computable general‐equilibrium model of Russia to assess the impact of accession to the World Trade Organization on the regions of Russia. The model allows for foreign direct investment in business services and endogenous productivity...

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Bibliographic Details
Published in:Review of international economics 2010-02, Vol.18 (1), p.30-46
Main Authors: Rutherford, Thomas F., Tarr, David G.
Format: Article
Language:English
Subjects:
Business services
Economic theory
Foreign direct investment
Foreign investment
International Business F230
International investment
International Trade Organizations F130
Liberalization
Mathematical models
Multinational Firms
Regional Economic Activity: Growth, Development, and Changes R110
Regional economics
Russian Federation
Scale models
Socialist Institutions and Their Transitions: International Trade, Finance, Investment, and Aid P330
Socialist Systems and Transitional Economies: Urban, Rural, and Regional Economics P250
Studies
Trade liberalization
Trade Policy
World Trade Organization
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Summary:In this paper, the authors develop a 10‐region comparative static computable general‐equilibrium model of Russia to assess the impact of accession to the World Trade Organization on the regions of Russia. The model allows for foreign direct investment in business services and endogenous productivity effects from additional varieties of business services and goods produced under imperfect competition. The authors then show that these features are crucial to the results, as the welfare gains are about 20 times greater than in a constant‐returns‐to‐scale model. The results for the estimated gains vary considerably across the regions; this is principally explained by the ability of the different regions to benefit from a reduction in barriers against foreign direct investment.
ISSN:0965-7576
1467-9396
DOI:10.1111/j.1467-9396.2009.00879.x