Privatization and the unusual case of Belarusian accession to the WTO

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Title: Privatization and the unusual case of Belarusian accession to the WTO
Author: Balistreri, Edward J. ; Olekseyuk, Zoryana ; Tarr, David G.
Organization: Bank of Finland
Department / Unit: Institute for Economies in Transition (BOFIT)
Series: BOFIT Discussion Papers
Series number: 2/2017
Year of publication: 2017
Publication date: 14.2.2017
Pages: 43
Subject (yso): yksityistäminen; suorat investoinnit
Keywords: Bofit-kokoelma; Valko-Venäjä; WTO
JEL: D02; D58; F13; F14; L16; C68
Other keywords: privatization; services liberalization; endogenous productivity; foreign direct investment; WTO accession
Abstract: The accession negotiations of Belarus to the WTO are unusual since, due to its obligations in the Eurasian Economic Union, WTO accession is not expected to impact its tariffs or formerly substantial trade distorting agricultural subsidies. Nonetheless, we estimate that WTO accession will increase welfare by 8.8 percent per year in Belarus in the medium term. We show that inclusion of (i) foreign direct investment; (ii) reduction on non-discriminatory barriers against services providers; and (iii) our model with imperfect competition and endogenous productivity effects together produce esti-mated gains eleven times larger than a model of perfect competition with only cross-border trade in services. Our analysis is enabled by our production of a dataset on both discriminatory and non-discriminatory barriers in services and their ad valorem equivalents. Based on a new dataset on labor productivity by sector and type of ownership, in our central model we estimate that privatization will increase welfare by 35.4 percent. We find substantial variance in the estimated gains from privatiza-tion depending on model assumptions; but all the estimates of the impacts of privatization indicate substantial welfare gains.

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