The Internal Market for Services of the European Union - Evidence from the OECD-Panel Data

The European Union service sector hampers many regulations by the Member States. For this reason, the European Commission issued a directive to reduce regulations and raise competition. We update the study from Kox, Lejourr and Montizaan (2005) with the latest changes of the directive on services o the internal market. Based on OECD-Panel data, we are able to develop a linear service trade model to investigate the economic benefit of such a directive. Our results show that the volume of service trade would decline with a between 2.6%-5.4%. This surprising outcome is contrary to previous results from Kox, Lejour and Montizaan (2005) or Breuss and Badinger (2005). We show that this is due to the latest modification in the service directive.