Service Trade Liberalization in Oman: International Commitments and Trade Performance
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and
Abstract
The service sector constitutes an important and a growing sector of the global economy as well as in the Arab region. In Oman, the service sector accounts for the highest share in the sectoral composition of the GDP and constitutes a crucial component of the overall policy of economic diversification. The objective of this paper is to investigate the extent of service trade liberalization in Oman as reflected in its international trade commitments, and analyze its trade performance using an adapted version of the gravity model within the context of the wider Arab region. The analysis shows that Oman has the third most extensive GATS commitments in the Arab region, which have been consolidated and improved upon under USA–Oman FTA. Results from the gravity analysis indicate that WTO membership has a significant effect in enhancing service exports, while the variable US-FTA has a correct sign but a non-significant effect. Trade potential calculation shows that comparatively Oman has a quite significant export potential among the Arab countries indicating that it could potentially increase its exports more than what is actually traded. A trade liberalization scenario, in which countries reduce their trade restrictiveness index to the most liberal country in the region indicates that the GCC countries like Kuwait, Qatar and Oman would benefit the most from service liberalization with an increase in export values of, respectively, 89 %, 87 % and 75 % compared d to the base year.
A Annex
Estimates from pooled regression model, fixed effect model and random effect model.
| Random effect model (RE) | Fixed effect model (FE) | Pooled model (OLS) | ||||
|---|---|---|---|---|---|---|
| Variable | Coefficient | z-stat | Coefficient | t-stat | Coefficient | t-stat |
| Constant | −4544.48 | −0.79 | 3464.60 | 0.35 | −2615.04 | −0.64 |
| logGDP | 1.22*** | 4.8 | 1.50*** | 4.00 | 0.59** | 2.37 |
| logRWGDP | 143.18 | 0.79 | −109.70 | −0.32 | 82.64 | 0.64 |
| WTO | 1.29** | 2.06 | 0.86* | 1.60 | ||
| US_FTA | 0.50 | 0.98 | 0.33 | 0.57 | 0.79 | 1.20 |
| LogSTRI_F | −2.54 | −1.34 | −2.01* | −1.8 | −0.11 | −007 |
| LogSTRI_C | −1.25*** | −2.69 | −1.70*** | −3.22 | −0.67 | −1.06 |
| logER | 0.28* | 1.81 | 0.52 | 1.27 | 0.23** | 2.3 |
| logIntuse | 0.176* | 1.61 | 0.15 | 1.28 | 0.73 | 2.74 |
| R2 | 0.33 | 0.34 | 0.69 | |||
| No. of obs | 198 | 198 | 198 | |||
| Time effect | yes | yes | yes | |||
| Country effect | yes | yes | yes | |||
| Husman test | H0: the difference between FE and RE coefficients is not systematic | |||||
| Chi2(6) = 7.58 | ||||||
| P > Chi2 = 0.2708 | ||||||
Notes: ***Significant at 1 % probability level; **significant at 5 % probability level; significant at 10 % probability level. Formally the null hypothesis under the Hausman test is
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Articles in the same Issue
- Research Article
- The Nexus between Government Expenditure and Economic Growth: Evidence of the Wagner’s Law in Kuwait
- Housing Prices and Money Demand: Empirical Evidence in Selected MENA Countries
- Service Trade Liberalization in Oman: International Commitments and Trade Performance
Articles in the same Issue
- Research Article
- The Nexus between Government Expenditure and Economic Growth: Evidence of the Wagner’s Law in Kuwait
- Housing Prices and Money Demand: Empirical Evidence in Selected MENA Countries
- Service Trade Liberalization in Oman: International Commitments and Trade Performance
