Services are increasingly traded across borders, including by selling through digital means, setting up local affiliates abroad, or travelling to the country of the customer to provide tailor-made services. As such, regulatory bottlenecks and fragmentation in markets can affect the ability, quality and pricing of the services provided.
The OECD STRI reveals that regulations on services trade have become more restrictive and more fragmented over the past decade. Sectors with the highest average restrictions are those that provide essential inputs to other industries, such as transport, professional and communications services.
This trend is worrisome as tighter restrictions increase the cost of services trade. Regulatory barriers that are high or unnecessarily burdensome can hinder services supplies or make them substantially more expensive. In addition, complying with regulations in target markets that differ significantly from those in the home country can be an additional costly challenge for exporters.