Political economy of service trade liberalization and the Doha Round

In this paper we examine political economic issues of service trade liberalization of a developing country in the context of the Doha Round negotiations. We first discuss the various unique characteristics of the service industries. Then we incorporate these features in a Grossman-Helpman style political economy model and solve for the politically-determined service sector protection. We then examine how various factors such as increased cross-cutting lobbying, the reduction of state-owned service providers and linking negotiation on agricultural protection with negotiation on service sector liberalization can help reduce the political constraints on liberalizing the service sectors.