Title: Services liberalisation in the regions of Russia under WTO accession: regional household and poverty effects
Authors: Thomas F. Rutherford; David G. Tarr
University of Wisconsin, Madison, 330 Taylor Hall, Madison, WI 53706, USA.
The World Bank, 1818 H Sts., NW, Washington DC 20433, USA
Abstract: We develop a seven region comparative static computable general equilibrium model of Russia to assess the impact of accession to the World Trade Organization (WTO) on households and poverty in its seven federal regions. Crucially, our model allows for foreign direct investment in business services and endogenous productivity effects from additional varieties of business services and goods. National welfare gains are substantial at about 4.5% of GDP; but we show that the gains in a traditional constant returns to scale model without FDI in business services are only 0.1%. Variance in the gains across the regions is explained by their capacity to attract FDI in services. Distributional impacts within regions are rather flat for the first nine deciles; but the richest decile of the population in the three regions that attract the most FDI in business services gains significantly more than the other nine representative households in those regions.
Keywords: services liberalisation; foreign direct investment; FDI; Avinash Dixit; Joseph Stiglitz; monopolies; monopolistic competition; endogenous productivity effects; poverty effects; household effects; trade liberalisation; CGE; computable general equilibrium; economic models; imperfect competition: product varieties; Russia; Russian Federation; World Trade Organization; WTO accession; federal regions; business services; welfare gains; returns to scale; gains variance; distributional impacts; representative households; Central Federal District; Moscow; Southern Federal District; Rostov-on-Don; Northwestern Federal District; Saint Petersburg; Far Eastern Federal District; Khabarovsk; Siberian Federal District; Novosibirsk; Urals Federal District; Yekaterinburg; Volga Federal District; Nizhny Novgorod; North Caucasian Federal District; service sector; global economy; services technology; services management.
Int. J. of Services Technology and Management, 2012 Vol.17, No.2/3/4, pp.181 - 204
Available online: 15 Aug 2012