Regulation Policy of Service Industry and International Trade in Service

This paper argues that the regulatory policy of service industries affects the international trade in service. Indicators of Product Market Regulation are introduced in a gravity model to quantify these effects. It is found that outward and inward oriented regulation policies of service import country constitute an entry cost for foreign service providers; Further, inward oriented regulation policies of service export country have no effects for export country, but outward oriented regulation policies distinctly decrease the local services sector's export performance.