This chapter provides insights into trade policies and domestic regulations that impact services sectors, which are the industries where women work most. Barriers to trade in services affect not only foreign service providers, but also domestic service providers who as a result experience increased hurdles to procure services at competitive rates. This analysis focuses on horizontal services trade barriers that apply across the economy as well as the regulatory environment for different services sectors, including digitally-enabled services. Also examined are the economic benefits of narrowing the gap between the regulatory framework for services trade in each country and the least restrictive country in the dataset.
Trade and Gender Review of Latin America
Abstract
Services sectors play a fundamental role in the ability of women to engage in labour markets and to contribute to economic growth and well-being. In their majority, women work in services sectors and are engaged in those sectors at a higher proportion than men (Section 5.2). This sector, which is increasingly digitized, is also where women most frequently lead businesses (Section 5.3).
Women-led businesses engage with clients online at least as much as men do (Section 5.3), and women-owned small and medium-sized enterprises (SMEs) that leverage digital trade tools such as websites have a higher export rate (Poole and Volpe, 2023[1]). This implies that digital trade is not just a tool for business growth, but can also represent a platform for women entrepreneurs to expand their reach and influence on a global scale.
Furthermore, SMEs that employ digital tools, such as webpages, have been observed to employ more female workers (Andrenelli and Lopez Gonzalez, 2023[2]). This suggests that the digitization of trade not only empowers women entrepreneurs, but also creates more job opportunities for women in the workforce. The digitization of trade, therefore, can be seen as a catalyst for gender equality in the workplace, breaking down traditional barriers and providing women with more opportunities to excel.
This chapter provides insights into trade policies and domestic regulations that impact service sectors in the selected countries ̶ Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, and Peru ̶ which may affect not only foreign service providers, but also domestic service providers who experience as a result increased hurdles to procure services at competitive rates. This analysis will focus first on horizontal services trade barriers that apply across the economy. It will then examine the regulatory environment for digitally-enabled services in the selected countries.
This chapter leverages regulatory data collected through the OECD's Digital Services Trade Restrictiveness Index (DGSTRI) for the seven Latin American countries referred to above and the Services Trade Restrictiveness Index (STRI) for six of them (excluding Argentina). These tools serve to identify and examine cross-cutting barriers that affect, respectively, services trade and digitally traded services. It then examines how certain policies may impact women-led businesses.
Services sectors play a critical role in the selected Latin American economies (Figure 5.1). The value added in services in these countries (understood as the value generated in production including the contribution of labour and capital) represented an average of 57% of their GDP in 2023, indicating its resilience and importance to their economies. Since services sectors contribute significantly to GDP, any developments in this sector could have a major impact on countries’ overall economic performance, including employment. Industries such as retail, hospitality, healthcare, education, finance, and information technology are particularly labour-intensive and provide a wide range of job opportunities. Moreover, digital jobs and digital services are particularly relevant for women who tend to favour more flexible working arrangements.
The selected countries experienced constant growth in services as a share of GDP year-on-year from 2014 to 2019; from 2019 to 2022, they experienced a slight but constant decline which was stopped or reversed in 2023.
Services represent more than 50% of GDP in all the selected countries. Within the selected countries, at 68% of GDP Costa Rica is the highest producer of services; followed by Brazil and Mexico at 59%, Chile and Colombia at 57%, Argentina at 53% and lastly, Peru at 51%
In terms of the selected countries’ competitiveness in the global digital market and their ability to leverage technology for international trade, the seven countries show a consistent increase of digitally-enabled service exports (Figure 5.2). Between 2014 and 2023, their exports jumped from USD 33.98 billion to USD 61.86 billion, an increase of 82%. Among these countries, Brazil is the leader with its digitally-enabled services exports growing by 54% from 2014 to 2023
Source: Elaboration by the authors based on World Bank World Development Indicators data, https://databank.worldbank.org/source/world-development-indicators (accessed 7February 2025).
Source: Elaboration by the authors based on WTO data. World Trade Organization, https://www.wto.org/english/res_e/statis_e/gstdh_digital_services_e.htm (accessed 13 February 2025).
Digitally-enabled services have in some ways been found to be more egalitarian than traditional sectors.1 They tend to reduce discrimination since the gender of the entrepreneur or service provider is not always evident. They allow for greater flexibility in terms of working hours and location, which is particularly beneficial for women who often juggle paid work and multiple family responsibilities including domestic and caregiving responsibilities. The lower costs to access markets that digital platforms provide can particularly benefit smaller businesses, where women-led businesses are overrepresented. Finally, digital trade tools can help women entrepreneurs overcome traditional barriers to market access, such as shallower professional networks or mobility constraints. Through digital platforms, women can reach a global customer base, collaborate with business partners from around the world, and access resources and information that may not be readily available in their local environment.
Digitalization has unlocked significant potential across services sectors, particularly since the COVID-19 pandemic. Entrepreneurs, including women, increased their use of digital technologies to survive during the COVID-19 pandemic by creating new distribution and procurement channels via e-commerce.2 With proper infrastructure, capacity building and support, many services can now be delivered electronically. Brazil for example, has tripled its internet penetration in 15 years, with digitally delivered services accounting for 65% of the country's service exports in 2020.3
Nonetheless, existing gender disparities have meant that costly internet access, limited training opportunities in digital technologies, constrained access to financing, and significant family responsibilities have resulted in lower online participation by women and unequal distribution of benefits from the digital economy when compared to their male counterparts.4
The following section delves into trade regulations, specifically horizontal measures across 22 service sectors in the selected countries with a focus on identifying barriers that may particularly hinder women's ability to capitalise on trade opportunities.
Latin America presents a mixed picture regarding trade restrictiveness across services sectors.5 The average score of the 38 OECD countries is 0.19 out of 1; of the six selected countries, three are below this average (i.e. less restrictive): Chile (0.16), Costa Rica (0.16), and Peru (0.18), and two are above (i.e. more restrictive): Brazil (0.22) and Mexico (0.24). The score for Colombia (0.19) is the same as the OECD average.
Further analysis into specific sectors reveals that the challenges faced by woman-led businesses can be exacerbated in specific policy areas. For example, restrictions on foreign entry can increase the cost of services inputs which may hinder their productivity and their ability to scale internationally. Moreover, a lack of regulatory transparency can create an uneven playing field, particularly for women-owned businesses as they may have less experience or access to support networks as compared to their male counterparts. Conversely, some countries have given preferential access to government procurement tenders to SMEs or to women-owned and women-led firms. Some evidence exists that these measures have increased the share of women-led firms in public procurement markets. However, their impact may be incumbent on the full implementation of such programs and whether non-traditional public sector suppliers are able to avail themselves of these opportunities.6
In the following sub-sections, specific examples of these horizontal measures within different policy sectors are provided, further illustrating their possible impact on women-led businesses.
Services that traditionally necessitated a local presence can now be offered across borders, thereby reducing the expenses and difficulties businesses face in establishing foreign subsidiaries. However, certain countries can inhibit this potential by mandating businesses to set up a commercial or local presence for the provision of such services.
In the selected countries, requirements for a commercial or local presence tend to be the exception rather than the rule across the various sectors. There are, however, specific sectors in some of the countries where such a presence is mandated, including the professional and distribution services. It is worth noting that some of these sectors also coincide with sectors where female entrepreneurship is largely present.
For example, a local presence is required in Brazil for the cross-border supply of professional services such as accounting, engineering, legal, and architecture. Foreign lawyers must register and establish a law firm in Brazil. To practice engineering, professionals must first obtain registration with the appropriate Regional Council, the regional engineering council with jurisdiction over their area of practice.
In Colombia, accounting firms and accountants must set up a commercial presence before providing services. Anyone who intends to provide such services must register with the Colombian Central Accountants Board, have uninterrupted domicile in Colombia for at least three years prior to registry, and provide proof of accounting experience in Colombia of at least one year.
In Chile, foreign companies in the distribution sector must also appoint a local representative agent.
In Costa Rica, foreign accounting firms can only advertise and practice public accounting in the country through local professionals or offices.
1. Indices take values between zero and one, one being the most restrictive information for Argentina was not available at the time of the preparation of this chapter.
2. STRI Restrictions on foreign entry.
Source: OECD STRI (2024).
5.2.1. Preferential public procurement measures
Government agencies often require a vast array of goods, services, and construction projects. Winning public procurement contracts can provide significant revenue and growth opportunities for businesses. Public procurement in many countries is a substantial share of GDP: on average it constitutes 10-15% of developed countries’ GDP and up to 40% for some developing countries.7 Public procurement policies can address some of the challenges that prevent firms from fully engaging in public procurement markets.
Women-owned businesses, which are often smaller in size, face unique challenges in addition to those faced by all SMEs. These include a lack of information regarding tender opportunities, cumbersome administrative procedures, and intense price competition.8
As a general rule, the seven countries provide explicit preferences for local or national suppliers in their public procurement regulations, which could prove favourable to women led firms if those firms are informed of public procurement opportunities and able to participate and compete in bids for tender. In Brazil for example9, it is possible for the federal government to establish margins of preference of the price for goods and services produced in Brazil and follow Brazilian technical standards.
In Colombia, national firms are preferred over foreign firms, and foreign firms that use local content and staff are preferred over those that do not. There are also special preferences for local SMEs. Article 21 of Law 80 of 1993, Colombia's General Statute on Public Procurement,10 prioritises the participation of domestic goods and service providers in government contracts. To achieve this, the law mandates state entities to: (a) ensure fair competition: national providers compete on the basis of quality, opportunity, and price, alongside international competitors, (b) maintain objective selection: the selection process for awarding contracts remains unbiased, regardless of a provider's origin; and, (c) prioritise national offers (when equal): if two competing offers are equal in all other aspects, the contract is awarded to the domestic provider.
Furthermore, in 2020 Colombia enacted Law 2069 of 2020 aimed at fostering entrepreneurship, and economic growth.11 Article 32 of the law allows public entities to establish differential criteria for women-led SMEs in public tenders, as well as certain processes under the public tender threshold, depending on the analysis of the sector. Contracting authorities are mandated to carry out a sectorial analysis to identify potential SMEs that could be direct or indirect contractors.
Costa Rica encourages the participation of SMEs by favouring procurement through local SMEs that predominantly employ people from the region for a set of products and in certain regions. The Ministry of Economy, Industry and Commerce may also provide compliance and collateral guarantees through the Special Fund for the Development of Micro, Small and Medium Enterprises (FODEMIPYME) or through financial instruments created under the Law 8634, Banking System for Development.12
In Mexico,13 there is a clear preference for suppliers who use local labour and resources. National suppliers are given priority over foreign suppliers, even where the latter's prices are up to 15% lower. Public tenders are only available to international bidders under two conditions: a) if no valid national tenders are available and the national tender has been declared null and void; and b) if the procurement is financed by external credit granted to Mexico. Under the Public Work Law, foreign entities can only participate in tenders if there is a reciprocal arrangement in place.
Furthermore, Mexico’s national programne for equality and non-discrimination (PRONAIND) 2014-2018 mandates the incorporation of gender perspective in the design of all public policies in Mexico. In line with this obligation and the aim to promote women's economic empowerment by removing barriers to their full participation in paid economic activities, a 2014 reform to the Public Procurement law was made to offer an advantage (i.e. a higher score) during the bidding process for companies that demonstrate their commitment to inclusion and support the development of women.
Chile introduced a focus on gender in public procurement matters to promote the participation of women-led businesses: public procurement directive 2014 enacted in 2015 and updated in 2022 incorporated a gender perspective in public procurement processes by allowing the inclusion of evaluation criteria related to high social impact such as the promotion of the participation of women in the public procurement system. For these purposes, only companies owned or controlled by women (i.e. more than 50% female ownership, having a female general manager or having more than 50% female legal representatives) benefits from these provisions. In 2023, Chile amended its public procurement law to allow public entities to incorporate complementary criteria in tender evaluations, aiming to promote gender equality and advance women’s leadership within corporate organizational structures. Since December 2024, public entities are allowed to prioritize high social impact initiatives, such as those led by women-owned SMEs, in direct tenders for acquisitions valued at less than 30 UTM (USD 68 317).
According to the 46th Newsletter of Comunidad Mujer,15 a civil society organisation that promotes social, cultural, normative and organisational transformation for gender equality in Chile, following the introduction of a gender focus in public procurement policies, there has been an increase in women suppliers to the state (during 2017, from 34 000 to 36 051 suppliers as natural persons; and from 350 to 529 supplier companies led by women as legal persons). Their participation in the amounts traded in the public market increased by 25% between 2013 and 2017, and the average amount traded by each supplier grew by almost USD 1 500. However, Chilean women-owned supplier companies continue to be fewer compared to their male counterparts, representing three out of ten state suppliers.
5.2.2. Regulatory transparency
Regulatory transparency is crucial for businesses seeking to enter foreign markets because it provides them with a clear understanding of the rules, regulations, and procedures in the new market. It allows businesses to accurately assess the potential risks, costs, and benefits of expanding their operations into a new country. Transparency can also reduce the likelihood of encountering unforeseen legal or regulatory obstacles, which can lead to costly delays or penalties. Additionally, regulatory transparency fosters a fair and competitive business environment, as it ensures that all businesses, regardless of their size, gender of their leadership or country of origin, are subject to the same rules and standards. This level playing field encourages innovation and growth, and discourages discrimination and cronyism, benefiting businesses, particularly women-led businesses which often face the challenge of lack of information that comes from shallower networks that those of men.
All the selected countries are legally required to communicate regulations to the public. However, allowing for insufficient time between publication and entry into force of laws and regulations can lead to uncertainties and added costs. Moreover, an appropriate stakeholder consultation on new legislative initiatives is not always in place. The use of electronic means for undertaking consultations is not yet uniformly applied across all sectors in the selected countries.
For instance, in Brazil16 laws typically become effective 45 days after they are officially published, unless specified otherwise. Also, the legislative process is accessible to the public as a general rule. In contrast, in Chile, laws are made public through the Official Journal (Diario Oficial) and relevant electronic platforms. They take effect immediately upon publication unless a different date is specified. The relevant administrative body has the discretion to determine the methods for citizen participation. It is this body that identifies issues of public interest where citizen input is necessary.
In some countries in the region, regulations do not match international best practices, i.e. a minimum of 14 days between publication and entry into force of laws and regulations. In Colombia and Peru, the law enters into force immediately after publication in the official gazette. However, both have established a comprehensive public comment procedure.17 State agencies are obligated to encourage civic engagement via both physical and digital platforms, enabling citizens and interest groups to provide input on specific regulatory initiatives. Various communication channels are used to disseminate information about the objectives of the proposed regulations, the deadline for submitting comments, and the procedures and mechanisms for receiving them.
In December 2021, 67 WTO Members adopted a Declaration announcing the successful conclusion of negotiations on services domestic regulation aimed at increasing transparency, predictability and efficiency of procedures for authorisation of service providers (Box 5.1). Agreeing to its principles signals a nation's commitment to establishing transparent, efficient, and effective domestic regulations on services. It also signifies a country's recognition of the need for international co-operation in this area.
Finally, it is crucial to consider that barriers at home can affect the ability to export, and the cost of exporting, digitally enabled services. These barriers could potentially hinder the growth and development of these services, and thus need to be addressed effectively.
WTO Joint Initiative on Services Domestic Regulation
The WTO Joint Initiative on Services Domestic Regulation agreed in 2021 covers a comprehensive set of disciplines aimed at lowering administrative hurdles and licensing conditions for services providers.
Through this action, the selected countries have agreed to make sure, among other commitments, that any measures relating to the authorisation for the supply of a service do not discriminate between men and women. The Joint Initiative contains an historic provision: it includes, for the first time in WTO rules, a provision on non-discrimination between women and men, relating to the authorisation for the supply of a service. Furthermore, differential treatment that aims at accelerating de facto equality between women and men is not considered discriminatory.1
All seven Latin American countries have committed to implement the disciplines on services domestic regulation. These disciplines entered into force in February 2024 for 46 signatories during the 13th WTO Ministerial Conference.
1. Differential treatment that is reasonable and objective, and aims to achieve a legitimate purpose, and adoption by Members of temporary special measures aimed at accelerating de facto equality between men and women, shall not be considered discrimination for the purposes of this provision” (WTO Reference Paper on Services Domestic Regulation, Section II – Disciplines on Services Domestic Regulation, footnote 18, https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/INF/SDR/2.pdf&Open=True).
The regulatory environment affecting digitally enabled services is diverse as shown by the broad distribution of Digital Services Trade Restrictiveness Indices (DGSTRI) range from 0, the least restrictive score (for Canada) to 0.2996, the most restrictive one (for Argentina) (Figure 5.4).
The average DGSTRI score of the selected countries (0.18728) is higher than the OECD average (0.1824). Costa Rica and Mexico stand out as the least restrictive regulatory environments; they are also less restrictive than the OECD on average. Conversely, Argentina, Chile and Colombia exhibit the highest level of restrictions within the group that are members of the OECD and of the DGSTRI in Figure 5.5. The primary constraints identified in the selected countries are related to communications infrastructure and connectivity, followed by electronic transactions, whereas barriers associated with intellectual property rights are the least prevalent form of limitation.
Barriers to trade in services related to infrastructure and connectivity, electronic transactions and online payment systems, among others, may make it more difficult for companies to engage in commercial transactions from a distance. They can also increase the cost of doing business, which can imply lower productivity of businesses that use those services. The removal of unnecessary obstacles could have the opposite effect, however.
In the following sub-sections, specific examples illustrate their impact on women-led businesses within different policy sectors.
Note: Indices take values between zero and one, one being the most restrictive.
Source: Digital STRI (2024).
Note: Indices take values between zero and one, one being the most restrictive.
Source: Digital STRI (2024).
5.3.1. Infrastructure and connectivity
Costa Rica is the least restrictive of the selected countries in infrastructure and connectivity; Argentina and Colombia display a score of 0.2380 each, which matches the highest score of the OECD countries (Figure 5.6). The average of the selected countries is 0.1360, which is considerably higher than the average of the OECD countries of 0.0532.
Infrastructure and connectivity measures include pro-competitive interconnection rules among network operators, restrictions, or prohibitions on communication service usage, as well as policies influencing cross-border data movement and data localisation. Non-regulated interconnection prices and conditions for major providers of telecommunications services, along with the lack of publicly available interconnection reference offers undermine competition and thus contribute to a higher level of restriction.
Note Indices take values between zero and one, one being the most restrictive.
Source: Digital STRI (2024)
Another factor taken into account is the non-discriminatory internet traffic management and whether it is mandated or not by law. The selected countries abide by this principle and set forth the obligation that Internet access providers do not arbitrarily block, interfere, discriminate, or restrict the right of users to access content, applications or services. This means that SMEs' online services or content cannot be unfairly slowed down or blocked, thus providing them with equal opportunities to reach their customers and compete in the digital marketplace.
Restrictions on the use of communication services can also significantly impact SMEs by hindering their ability to effectively connect with clients, partners, and suppliers. It may also affect their marketing strategies and overall business operations, potentially leading to reduced competitiveness and growth.
5.3.2. Measures affecting electronic transactions
The selected countries are more restrictive than OECD Member countries in measures that affect electronic transactions, with an average of 0.0303 compared to the average for OECD Member countries of 0.0268. Mexico, Peru, Colombia, and Argentina are less restrictive (and below the OECD average) than are Costa Rica, Brazil and Chile (which are above the OECD average). This higher restrictiveness is partly due to the fact that, Brazil, and Chile do not offer online tax registration and declaration for non-resident foreign providers. Since 2023, Costa Rica allows non-resident foreign providers to register and declare taxes although some restrictions remain.
The DGSTRI also considers factors such as the presence of discriminatory licensing conditions for conducting e-commerce activities and the existence of dispute resolution mechanisms for international transactions, among others. It is worth noting that none of the countries have laws or regulations that require e-commerce service providers to secure a license or authorisation, apart from the regular business licenses.
All the selected countries have implemented laws or regulations that equate electronic signatures with traditional handwritten ones, bolstering e-commerce by guaranteeing secure communication. Each of these countries also possess mechanisms for dispute resolution that are accessible to consumers for e-commerce transaction disputes.
Examples of these online dispute resolution systems include Mexico's government-established Concilianet, which provides online mediation, the International Consumer Protection and Enforcement Network (ICPEN), utilised by consumer protection agencies of the selected countries, and the Latin American eCommerce Institute and eConfianza Trustmark programme. However, several challenges persist, such as agreement on applicable law and jurisdiction, digitization of judicial and administrative proceedings, and enforcement of decisions.
Note: Indices take values between zero and one, one being the most restrictive.
Source: Digital STRI (2024).
5.3.3. Payment systems
In terms of measures that affect payment systems, the selected countries show a heterogeneous picture. Costa Rica, Brazil, Chile, Colombia, and Peru do not have major restrictions in this area. Argentina and Mexico on the contrary have a score of 0.0184; this makes the latter one of the most restrictive of the OECD countries (only Türkiye is more restrictive with a score of 0.0368).
This higher level of restrictiveness in Mexico and Argentina can be attributed to several factors. In Mexico, no explicit rules exist to mandate international payment security standards and in Argentina, as of 2019, financial entities and other local card issuers must have the prior approval of the Central Bank of Argentina to access the exchange market so as to make payments abroad for specific operations. As part of Argentina’s exchange control, new measures were introduced in 2022 imposing limits on the number of cross-border transactions that can be made from local accounts although tit was lifted on 28 December 2023. This type of regulatory instability creates uncertainty for cross-border transactions.
The DGSTRI shows that most of the seven selected countries refrain from imposing major obstacles to electronic payment methods, such as restrictions on using a local bank account or on the use of different currencies for international payments.
Note:Indices take values between zero and one, one being the most restrictive.
Source: Digital STRI (2024).
As highlighted above, the Latin American countries under review have different regulatory profiles. This section highlights the economic benefits of narrowing the gap between the regulatory framework for services trade in each of these countries and global best practice. The illustrative services trade liberalisation scenario considered here assumes that in a given sector there is a 50% reduction in the gap between the STRI score of the respective Latin American country and the score of the least restrictive country, amongst all countries covered by the OECD STRI database. The benefits outlined in the scenario apply in principle to all firms but smaller, less well financed firms like many of those owned and led by women may stand to benefit the most.
Depending on a country’s current level of restrictions to services trade in a specific sector, this scenario may imply comprehensive and ambitious reforms. For example, the simulation requires a 0.15 reduction in the STRI score in the case of commercial banking services in Mexico. Such a lowering of the STRI score could be achieved through a bundle of liberalising reforms encompassing the lifting of nationality and residence requirements for managers, the abolishment of commercial presence requirements, and the removal of several of barriers to competition, e.g. by improving the independence of the regulatory authority.18
Overall, such a hypothetical liberalisation could lead to a substantial decrease in policy-induced trade costs for all six countries. The impact of efforts to remove regulatory barriers to services trade would be particularly pronounced regarding financial services. In the case of commercial banking, the estimated trade cost reduction amounts to 34% on average across the six countries, ranging from 19% (Costa Rica) to 49% (Mexico). Similarly, an average reduction of trade costs by 19% is expected for insurance services, with Brazil (32%) displaying the greatest potential to benefit from regulatory reforms.
Given that Latin American firms that are at least partly owned by women are likely to perceive limited access to credit as an obstacle (Presbitero and Rabellotti, 2016[3]), steps towards greater alignment of regulation in the banking sector with global best practice may deliver significant gains for women entrepreneurs. Importantly, these positive effects would not be limited to services sectors: industries downstream the supply chain can benefit from policy reforms targeting upstream services sectors, such as commercial banking. A large body of literature underscores the relevance of well-functioning financial services to economic performance, including of manufacturing industries (Amiti and Weinstein, 2011[4]; Manova, Wei and Zhang, 2015[5]; Liu et al., 2020[6]).
A further promising area for future reforms concerns logistics and related services. Regarding courier services, the simulation suggests that firms’ trade costs could be lowered significantly if Brazil (30%), Chile (27%), and Peru (14%) closed the gap with the most liberal country by half. In the hypothetical reform scenario for cargo handling, trade costs would fall by 11% on average across the six countries. While Chile would be expected to see a trade cost reduction of nearly 5%, estimated reductions for the other five countries range from 12% (Costa Rica) to 14% (Peru). There is also potential for a sizable reduction of services trade costs in transport services. Thus, in the simulated reform scenario trade costs for road freight transport would fall by 24% in Mexico and 14% Costa Rica. In light of the pivotal role of logistics and transport services in global value chains (Blyde and Molina, 2015[7]), and the high costs of logistics and transport services that were signalled by women entrepreneurs during round tables held in Colombia and Costa Rica, lowering restrictions in these sectors would lower costs and enable trade in a wide range of goods and services.
The analysis also reveals opportunities to reap benefits from the removal of barriers to trade in telecommunications services. Across the six countries, trade costs for this sector are expected to fall by 9%. The estimated gains are particularly large in Chile (12%), Brazil (10%), Colombia (10%), and Mexico (10%), but continue to be substantial in Peru (6%) and Costa Rica (7%). The telecommunications sector is of critical importance to the exchange of information and the co-ordination of geographically dispersed production activities (Fink, Mattoo and Neagu, 2005[8]; Robert-Nicoud, 2008[9]; Nordås and Kim, 2013[10]; Fort, 2016[11]). Examples of starting points for potential reforms include efforts to improve the independence of the regulatory authority (e.g. Chile), changes to public procurement procedures (e.g. Brazil), and improvements to the procedure by which firms can provide comments on regulations (e.g. Mexico).
While a discussion of the political feasibility of such reforms is beyond the scope of this Review, it is important to adopt a holistic perspective of services trade policy. The effects of reforms that lower regulatory barriers to services trade do not necessarily manifest themselves only in the services sector experiencing the policy change. When assessing the economic benefits of services trade liberalisation as well as the costs of restrictions on services trade, significant spillover effects on downstream sectors arising from the essential role of business services as inputs must be taken into account (Benz et al., 2023[12]).
By facilitating the fine slicing of production processes across functions and locations, services inputs – e.g. transport services, logistics, and telecommunication services – enable firms to reap the returns to specialisation in global value chains (Deardorff, 2001[13]; Francois and Hoekman, 2010[14]). Trade costs which are due to strict regulations on services impact firms in all sectors, with smaller firms likely to be more heavily affected than larger firms (Rouzet, Benz and Spinelli, 2017[15]). As women-owned and women-led businesses are frequently smaller than those owned and led by men, higher costs of services inputs can be expected to disproportionately hamper the growth of women-led businesses.
References
[4] Amiti, M. and D. Weinstein (2011), “Exports and Financial Shocks”, The Quarterly Journal of Economics, Vol. 126/4, pp. 1841-1877, https://doi.org/10.1093/qje/qjr033.
[2] Andrenelli, A. and J. Lopez Gonzalez (2023), “Understanding the potential scope, definition and impact of the WTO e-commerce Moratorium”, OECD Trade Policy Papers, No. 275, OECD Publishing, Paris, https://doi.org/10.1787/59ceace9-en.
[12] Benz, S. et al. (2023), “Right here, right now? New evidence on the economic effects of services trade reform”, OECD Trade Policy Papers, No. 271, OECD Publishing, Paris, https://doi.org/10.1787/1159657f-en.
[7] Blyde, J. and D. Molina (2015), “Logistic infrastructure and the international location of fragmented production”, Journal of International Economics, Vol. 95/2, pp. 319-332, https://doi.org/10.1016/j.jinteco.2014.11.010.
[13] Deardorff, A. (2001), “International Provision of Trade Services, Trade, and Fragmentation”, Review of International Economics, Vol. 9/2, pp. 233-248, https://doi.org/10.1111/1467-9396.00276.
[8] Fink, C., A. Mattoo and I. Neagu (2005), “Assessing the impact of communication costs on international trade”, Journal of International Economics, Vol. 67/2, pp. 428-445, https://doi.org/10.1016/j.jinteco.2004.09.006.
[11] Fort, T. (2016), “Technology and Production Fragmentation: Domestic versus Foreign Sourcing”, The Review of Economic Studies, p. rdw057, https://doi.org/10.1093/restud/rdw057.
[14] Francois, J. and B. Hoekman (2010), “Services Trade and Policy”, Journal of Economic Literature, Vol. 48/3, pp. 642-692, https://doi.org/10.1257/jel.48.3.642.
[6] Liu, X. et al. (2020), “Services development and comparative advantage in manufacturing”, Journal of Development Economics, Vol. 144, p. 102438, https://doi.org/10.1016/j.jdeveco.2019.102438.
[5] Manova, K., S. Wei and Z. Zhang (2015), “Firm Exports and Multinational Activity Under Credit Constraints”, Review of Economics and Statistics, Vol. 97/3, pp. 574-588, https://doi.org/10.1162/rest_a_00480.
[10] Nordås, H. and Y. Kim (2013), “The Role of Services for Competitiveness in Manufacturing”, OECD Trade Policy Papers, No. 148, OECD Publishing, Paris, https://doi.org/10.1787/5k484xb7cx6b-en.
[1] Poole, J. and M. Volpe (2023), Can Online Platforms Promote Women-Led Exporting Firms?, Interamerican Development Bank, https://publications.iadb.org/en/can-online-platforms-promote-women-led-exporting-firms.
[3] Presbitero, A. and R. Rabellotti (2016), “Credit Access in Latin American Enterprises”, in Firm Innovation and Productivity in Latin America and the Caribbean, Palgrave Macmillan US, New York, https://doi.org/10.1057/978-1-349-58151-1_8.
[16] Rimmer, S. (2017), Gender-smart Procurement: Policies for Driving Change, Chatham House Research Paper.
[9] Robert-Nicoud, F. (2008), “Offshoring of routine tasks and (de)industrialisation: Threat or opportunity—And for whom?”, Journal of Urban Economics, Vol. 63/2, pp. 517-535, https://doi.org/10.1016/j.jue.2007.03.002.
[15] Rouzet, D., S. Benz and F. Spinelli (2017), “Trading firms and trading costs in services: Firm-level analysis”, OECD Trade Policy Papers, No. 210, OECD Publishing, Paris, https://doi.org/10.1787/b1c1a0e9-en.
← 3. See https://www.oecd.org/publications/digital-trade-review-of-brazil-0b046dfe-en.htm#:~:text=This%20Digital%20Trade%20Review%20of,the%20benefits%20shared%20more%20inclusively.
← 4. Although different across Latin American countries, gender gaps in access to the internet can be substantial, especially in Peru (15 percentage points) and Mexico (6 p.p). Moreover, women in Latin America are less likely to say they have the requisite digital skills in their workplace. See https://socialdigital.iadb.org/en/sph/resources/research-publications/19435.
← 5. The OECD Services Trade Restrictiveness Index (STRI) provides information on the regulatory environment that affects trade in the following 22 sectors: computer services, construction, legal services, accounting services, architecture, engineering, telecommunication, distribution, broadcasting, motion pictures, sound recording, commercial banking, insurance, air transport, maritime transport, road transport, rail transport, courier and logistics (cargo-handling, storage and warehouse, freight forwarding, customs brokerage).
← 6. Rimmer (2017[16]) outlines policies and programmes that have been put into place in four economic areas (Australia, Chile, European Union and United States) to support women in public procurement markets.
← 8. See https://lac.unwomen.org/en/digital-library/publications/2022/05/compras-publicas-con-perspectiva-de-genero-avances-y-desafios-en-america-latina-para-dinamizar-a-las-empresas-lideradas-por-mujeres.
← 12. See http://www.pgrweb.go.cr/scij/Busqueda/Normativa/Normas/nrm_texto_completo.aspx?param1=NRTC&nValor1=1&nValor2=94469&nValor3=0&strTipM=TC.
← 14. See https://www.chilecompra.cl/wp-content/uploads/2022/11/Directiva20-Perspectiva-de-Genero.pdf.
← 15. See https://comunidadmujer.cl/wp-content/uploads/2022/04/CM_Boletin_46_Compras-publicas-con-enfoque-de-genero.pdf.
← 17. See Decree 270 in 2017in Colombia http://www.suin-juriscol.gov.co/viewDocument.asp?ruta=Decretos/30030343.See Decreto Supremo no. 009-2024-JUS in Peru https://spij.minjus.gob.pe/spij-ext-web/#/detallenorma/H1383890.
← 18. In a small number of cases, the scenario simulated here does not involve any liberalisation because the corresponding Latin American country is fully aligned with global best practice. This applies to accounting services and air transport services in Chile, and legal services in Costa Rica. Since no other country covered by the STRI database is more open to services trade, the simulated scenario does not involve any reform effort for Chile and Costa Rica in those specific sectors.