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Services policy reform and manufacturing employment: Evidence from transition economies
Author(s) -
Fiorini Matteo,
Hoekman Bernard,
Malgouyres Clément
Publication year - 2018
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12710
Subject(s) - downstream (manufacturing) , upstream (networking) , productivity , economics , upstream and downstream (dna) , tertiary sector of the economy , corporate governance , manufacturing sector , human capital , extant taxon , business , labour economics , market economy , economy , macroeconomics , finance , computer network , operations management , computer science , evolutionary biology , biology
Policy reforms targeting the services sectors are a neglected dimension of the process of structural transformation and economic development. The effects of such reforms on employment across industries as a function of their use of services as intermediate inputs are theoretically ambiguous and remain largely understudied. This paper uses sector‐level data for 24 transition economies for the 1990–2012 period to assess the impacts of services policy reforms on downstream manufacturing employment. We find a negative effect of services reforms on manufacturing sector employment. This is mostly associated with the process of transition to a market‐based economy. Controlling for transition‐specific dynamics, the data suggest a neutral effect of progress towards adopting “best practice” policies for upstream services on employment in downstream manufacturing. Furthermore, in line with the extant literature, we confirm that services policy reforms enhance productivity of downstream manufacturing industries. Finally, we find that the negative effects on downstream employment are mitigated in countries with better economic governance and human capital.