An Empirical Study of the Effects of Services Infrastructure on Trade Efficiency and Growth in Myanmar

Abstract

This research attempts to investigate the existing levels of implementation of the General Agreement on Trade in Services (GATS) in Myanmar by examining the performance of three services sectors: transport, banking and telecommunications. The research questions include (i) what factors affect substantially the export and economic growth in response to service sectors liberalization? (ii) and investigating to what extent these factors contribute to the export and economic growth of Myanmar during the period 1990-2005 based on data availability. To achieve this, two types of model are used: the export supply equation and the growth model. The results from the export supply equation and growth model advocate that the efficiency in cargo-handling, transportation networks, capital formation/GDP ratio have significant impacts on Myanmar’s exports among other service-openness factors. The amount of loans offered by private banks, and numbers of fixed and mobile telephone subscribers have minimal effects on both manufactured and aggregate exports, suggesting the need for substantial service trade liberalization to attract FDI inflows in service trade sectors through far-reaching policy initiatives which would intentionally create a more stable economic and political environment. In addition, the determinants of capita income growth in Myanmar are examined extensively applying the Barro and Sachs-Warner type growth model which incorporates financial and telecommunication performance variables in the model in support of dynamic efficiency gains obtained under the service-trade liberalization.