The paper identifies France’s structural reforms that would yield the largest competitiveness gains based on macro-empirical evidence, and reviews signs of potential gains from a deregulation of the services sector. It is expected that completing deregulation in the services sector would benefit the entire French economy, by boosting productivity and exports. Econometric results have estimated the impact of reducing the labor taxation and labor market rigidities and of increasing innovation to the average level of other advanced countries.
as an input for their production. Therefore there is a need to have a broader view of the impact of the deregulation.
C. Regulation and Productivity Growth: Spillover and Macroeconomic Impact
Services as Inputs
18. This section turns to the impact of servicesderegulation not on the deregulated sector but on the whole economy . In order to understand how services sector deregulation can affect the rest of the economy, it is important to describe the role services play as an input for production.
19. Table 3 shows that services are, by far the
Main reform measure(s) or assumption:
→ Reversion of TFP growth to 1980’s rate
→ Regulatory reform mainly in public services
→ Deregulation and rapid diffusion of IT
Sources: METI, Sanwa Research Institute (2000) ; Japan Center for Economic Research (2003) ; Shimpo and Nishizaki (1997) ; Bradford (2003) ; OECD (2004) ; and Hayashi and Prescott (2002) .
Bradford , Scott , 2003 , “ Paying the Price: Final Goods Protection in OECD Countries, ” The Review of Economics and Statistics
-risk projects ( Box 3.2 ). 3 In addition to the availability of long-term financing, traditional explanations for Europe’s lagging productivity growth also emphasize policy and institutional factors such as strict regulations in product and labor markets. 4 But these seem less relevant in the case of Germany, which is one of the most deregulated advanced countries in retail trade, according to OECD indicators, and where some reforms (e.g., transport servicesderegulation) constitute an example of best practice in Europe. It is true, however, that despite a recent
gain in potential GDP of more than 10 percent of GDP for most euro area countries over a 10-year period.
Ostry et al, 2009
91 developed and emerging countries,
Structural reforms boost income growth, but growth effects depend on reform sequencing.
Pérez and Yao, 2012
20 OECD countries, 1985–2008
A policy package combining servicesderegulation, a reduction in tax wedges and replacement rates could reduce unemployment rates by ¾ –5½ percentage points, depending on country initial conditions.
Angana Banerji, Mr. Valerio Crispolti, Ms. Era Dabla-Norris, Mr. Romain A Duval, Mr. Christian H Ebeke, Davide Furceri, Mr. Takuji Komatsuzaki, and Mr. Tigran Poghosyan
-owned enterprises (SOEs), and included the following key elements:
Harmonization of competition policies . Restrictions on foreign ownership were abolished at the beginning of 1993. Finnish laws on price setting, entry conditions, acquisition were harmonized with the European Union (EU) laws, including for professional services.
Deregulation of selected network markets . Key reforms in this area were the liberalization of telecom and electricity markets. The telecom market was fully liberalized in 1994 by opening domestic long distance services and international
. It also establishes conditions for liberalization of trade in services, deregulation of direct investment, and the creation of a settlement mechanism for trade disputes.
2 Regional integration in Latin America and the Caribbean had been attempted before with the creation of arrangements such as the Andean Pact (including Bolivia. Colombia. Ecuador. Peru, and Venezuela). ALADI (the Latin American Association for Integration, including Argentina, Brazil. Chile. Mexico. Paraguay, Uruguay, and the Andean Pact countries). ALALC (the Latin American Association for
percent of disposable income in 2007 compared to 20 percent in the United States). To stimulate private consumption, wages and property income could be supported by:
Servicederegulation . Raising productivity in services, particularly in health care, would boost wages and corporate profits, which in turn could further boost income through higher stock returns and dividend payouts.
Labor reform . Creating a new regular contract with weaker employment protection could encourage firms to hire more regular workers. This would not only lead to more human capital