Opening Services Markets within Europe: Modelling Foreign Establishments in a CGE Framework

(Arjan Marcel) Lejour, (Hugo) Rojas-Romagosa, (Gerard C.G.) Verweij

Research output: Working paperDiscussion paperOther research output

Abstract

This paper presents the treatment of FDI in our CGE model WorldScan based on the ideas of Petri (1997) and Markusen (2002). They assume that firms establishing affiliates abroad also transfer firm-specific knowledge. Consequently, capital and products differ from existing capital and products in the host country. As an illustration, we apply this model to assess the proposals of the European Commission to open up services markets. FDI in services could increase by 20% to 35%. However, the overall economic impact is limited. Our assessment suggests that GDP in the EU25 could increase up to 0.4%. These effects could be up to 0.8% higher if foreign capital also increases the overall productivity of the services sector.
Original languageEnglish
Place of PublicationThe Hague
PublisherCPB Netherlands Bureau for Economic Policy Analysis
Number of pages45
ISBN (Print)9058333162
Publication statusPublished - Mar 2007
Externally publishedYes

Publication series

NameCPB discussion paper
Volumeno. 80

Keywords

  • Europa
  • Investment management
  • International economic relations
  • Investeringen
  • Dienstensector

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