Shepherd and Pasadilla (2011) find that less restrictive services trade policies are associated with better human development outcomes across a range of sectors. They argue: “Appropriate services trade liberalization can therefore promote human development directly through improved outcomes, in addition to indirectly effects through the income channel.”
Usually, the impact of services liberalization impacts income, which in turn is assumed to promote human development. But, the authors isolate the direct connection between service sector restrictiveness and development and find: (i) the tension between service sector openness and human development outcomes are overstated; (ii) there is no systematic association between greater policy restrictiveness and better outcomes; and (iii) open and efficient services sectors can help promote human development.
