Economic reform and service liberalization in developing countries

This chapter offers a survey of the literature exploring the effect of preferential trade agreements (PTAs) on economic reform. The main findings are two-fold. First, there is evidence that north-south PTAs are associated with microeconomic reform in southern countries. The main mechanism proposed here is that trade agreements help leaders to tie their hands in relation to reform. Second, services are important actors in promoting preferential liberalization in the USA, since changes in policies and regulations in developing countries help competitive US services firms to enter into these liberalizing markets.