OECD Service Trade Restrictiveness Index Shows Trade Obstacles in Emerging Economies Remain High

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According to the latest Service trade Restrictiveness Index (STRIs) released by the Organization for Economic Cooperation and Development (OECD), service trade barriers in many emerging economies remain much higher than their developed trading partners.

Specifically for the distribution service sector, which covers general wholesale and retail sales of consumer goods, the STRIs suggests the highest trade barriers are in place in Indonesia, China and India whereas Spain, Germany and Czech Republic are among the most open to foreign companies (see the figure above).  Because trade in distribution services has mainly taken place through commercial presence, and the STRI results highlight the importance of impediments on foreign ownership.

The STRIs indices take the value from 0 to 1, where 0 is completely open and 1 is completely closed. The indices are calculated based on the following five factors:

  • Restrictions on foreign ownership and other market entry conditions (30%)
  • Restrictions on the movement of people (10%)
  • Other discriminatory measures and international standards (17%)
  • Barriers to competition and public ownership (22%)
  • Regulatory transparency and administrative requirements (21%)¬†

Currently, the STRIs include 40 countries (34 OECD members as well as Brazil, China, India, Indonesia, Russia and South Africa) across 18 service sectors.