## Trade Reform in Services: Structural Change and Production Networks

_IMF Working Papers, March 28, 2025_

## Source details

**Canonical URL:** [Trade Reform in Services: Structural Change and Production Networks](https://www.imf.org/en/publications/wp/issues/2025/03/28/trade-reform-in-services-structural-change-and-production-networks-565386)

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## Bibliographic details
- Authors: Adam Jakubik, Wentao Zhou
- Published: March 28, 2025
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229004763.001

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### Methodology
- Multi-country multi-sector quantitative trade model with input-output linkages.
- Focus on services trade reforms and their economy-wide effects through production networks and consumption patterns.

### Key findings
- Welfare gains from substantial services trade liberalization are large, around 3 percent on average.
- Welfare gains are larger by 0.7 percentage points in a hypothetical scenario where EMDEs’ consumption patterns have converged to AEs.
- Welfare gains are larger by 5.7 percentage points when EMDEs’ production networks have converged to AEs.
- Both EMDEs and AEs gain from EMDEs reducing services barriers to the level of AEs.
- Services-intensive AEs with strong supply linkages to EMDEs benefit the most.

### Scenarios and comparative outcomes
- Baseline substantial services trade liberalization: welfare gain ~3 percent on average.
- Consumption-convergence scenario: additional gain of 0.7 percentage points relative to baseline.
- Production-network-convergence scenario: additional gain of 5.7 percentage points relative to baseline.
- EMDE liberalization to AE barrier levels yields cross-region gains for both EMDEs and AEs.

### Policy implications and recommendations
- Increasing gains from services trade are associated with EMDEs’ continued development and convergence toward AE consumption patterns and production networks.
- Findings call for injecting further ambition into multilateral negotiations on services trade reforms to capture rising benefits as EMDEs develop.
- Prioritize reforms that reduce services barriers in EMDEs, given mutual gains and amplified benefits when production networks converge.

*Source: Trade Reform in Services: Structural Change and Production Networks, IMF Working Papers 2025, 061.*

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## Content in this bundle

- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2025/03/28/trade-reform-in-services-structural-change-and-production-networks-565386_