Services are a major part of the global economy, generating more than two-thirds of global gross domestic product (GDP), attracting over three-quarters of foreign direct investment in advanced economies, employing the most workers, and creating most new jobs globally. Services have always been traded. International transportation is as old as trade itself, and financial and insurance services followed shortly after.
Over time, advances in communication technology has brought new services into the global economy. Some examples include legal, engineering, and other professional services, computer services and telecommunications, just to name a few. The World Trade Organization’s General Agreement on Trade in Services (GATS) brings the certainty of a global rules-based system to the services markets. It defines services as a transaction between a resident and a non-resident. Depending on the territorial presence of the supplier and the consumer at the time of the transaction, the agreement categorizes services trade by the way in which they are delivered, known as “modes of supply”.
There is not one service industry, but many services with different business models, competition challenges and regulatory frameworks. To maximise the benefits that technology has brought, targeted policy reform needs to identify the main bottlenecks and benchmark to best practice regulation.
Modern manufacturing is a heavy user of services inputs, and its competitiveness relies on access to state-of-the-art suppliers at the best price. The OECD Trade in Value Added (TiVA) database shows that services represent more than 50% of the value added in gross exports, and over 30% of the value added in exports of manufacturing goods – services are deeply imbedded in manufactured goods being traded all over the world today.
Measuring services trade barriers with the OECD Services Trade Restrictiveness Index
Obstacles to global services trade, however, remain pervasive as national trade and regulatory policies in individual services sectors are often made with limited regard for economy-wide impacts.
Launched in 2014, and updated annually, the OECD Services Trade Restrictiveness Index (STRI) is a unique, evidence-based tool that provides information on regulations affecting trade in services in 22 sectors across all OECD member countries and Brazil, the People’s Republic of China, India, Indonesia, Kazakhstan, Malaysia, Peru, Singapore, South Africa, Thailand, and Vietnam. These countries and sectors represent over 80% of global trade in services.
The STRI toolkit can support policymakers to scope out reform options, benchmark them relative to global best practice, and assess their likely effects; for trade negotiators to clarify restrictions that most impede trade, and for businesses to shed light on the requirements that traders must comply with when entering foreign markets.
Composite STRI indices for each country and sector in the STRI that quantify restrictions on foreign entry and the movement of people, barriers to competition, regulatory transparency and other discriminatory measures that impact the ease of doing business (see country and sector notes below).
Composite STRI indices to measure the regulatory environment for digitally enabled services (Digital STRI) and the European Economic Area (intra-EEA STRI).
Indices of regulatory heterogeneity that measures regulatory differences by country pair, sector and year.
Empirical analysis assessing the impact of services trade policies on economic performance and trade costs.
What can policymakers do to support open and well-regulated services markets?
Open and well-regulated services markets ensure access to information, skills, technology, funding and markets in a modern, increasingly digital economy. Intermediate services reduce costs, improve quality, and match suppliers and customers around the world. Moving up the value chain, therefore, depends on a local business services sector open to ideas, skills and investment from cutting edge firms wherever they may be found.
The main findings from our analytical work on trade and services suggest that policymakers consider adopting whole-of-government strategies to capitalise on the demonstrated potential of co-ordinated services trade policy and regulatory reforms to help make globalisation work for all, and are highlighted in our trends brochure and our book on Services Trade Policies and the Global Economy.
OECD Services Trade Restrictiveness Index: Policy Trends up to 2024
Substantial services trade liberalisation occurred during 2023, but imposition of new barriers in many key sectors demonstrate the need for renewed efforts to open markets.
The cost of trading services is 2x as high as trading goods. OECD data indicates that the WTO's Joint Initiative on Domestic Services Regulation agreement could generate an annual trade cost savings of USD 150 billion for participants and WTO members.
The sector notes are two-page summaries of the STRI results for each sector. A chart presents the STRI score for each of the countries together with the average score. The STRI scores are broken down on five policy areas: Restrictions on market entry conditions; Restrictions on the movement of people; Other discriminatory measures; Barriers to competition; Regulatory transparency. The sector notes also explain what drives the results and provide a brief description of the sector and the most common restrictions.
The countries included in each sector note are the OECD members and Brazil, the People’s Republic of China, India, Indonesia, Kazakhstan, Malaysia, Peru, Singapore, South Africa, Thailand, and Vietnam. The sector notes were most recently updated in February 2024.
Eight policy papers covering 22 sectors in the STRI were published in November 2014, with a ninth on logistics in August 2015. These papers provide an in-depth exploration and explain in detail the indices and scores for the participating countries.
The country notes are two-page summaries of the STRI results for each country. Each note features a chart that depicts the STRI indices for 22 services sectors together with the average and the lowest score of the 50 countries for each sector. The country notes also provide a brief description of the importance of services in trade, production and employment and the main characteristics of the services trade policy environment.
The 22 sectors included are: computer services, construction, legal services, accounting services, architecture, engineering, telecoms, 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) services. The country notes were last updated in February 2024.
The STRI Explorer is an interactive web tool that allows users to investigate the STRI database and indices in a flexible manner. It enables users to compare the services trade restrictiveness of different countries, sectors, years, or policy areas, or to examine a specific case in more detail. The resulting downloadable graphs and tables can be used to analyse trends and patterns in services trade policy.
The online STRI regulatory database displays the detailed information that built the index, along with sources and comments for all countries and sectors. This is approximately 2070 measures for each country, 150000 web links in total and 16 000 laws and regulations.
Using the database
The STRI regulatory database lists all the regulations which may constitute barriers to trade in services or which could facilitate this trade. This very detailed qualitative database also provides the source of the regulation, along with the title of the law, relevant articles, a web link to the law, and a comment if additional explanations are required. This information is presented by default, without the source and comment variables.
This dynamic online regulatory database is structured around 4 dimensions: countries, sectors, measures and variables. Due to its flexibility, the tool offers a wide range of selections to the user who can, for instance, select:
one country in one particular sector, or,
one measure for all countries in all sectors, or,
all countries in one sector etc.
The first page displays the selection. The user can come back to the selection page or modify its current selection directly in the results table. The user can also decide to display the source and the comment variables in addition to the value. In this way the user will have a full view of the regulatory regime of the country in question for this measure. The focus view option provides a quicker and simpler way to view this specific information by double-clicking on a specific cell.
At the end, the user will be given the possibility of sharing the information obtained or referencing the specific selection by clicking on the “share this” button. The selected data can also be downloaded.
The rapid acceleration of digital transformation has had profound implications for services trade but the benefits of digitalisation risk being derailed by existing and emerging trade barriers. The OECD Digital Services Trade Restrictiveness Index (Digital STRI) is a new tool that identifies, catalogues, and quantifies cross-cutting barriers that affect services traded digitally. It consists of two components, the regulatory database and indices, which bring together comparable information from 74 countries. Read the paper on the Digital STRI and then use our tools to access the raw data, simulate policy changes, or review our comprehensive online regulatory database.
The STRI scoring methodology uses binary scores. Most measures in the STRI regulatory database have binary answers (yes/no) and binary scores are applied directly. Measures that have numerical answers are broken down on thresholds to which binary scores are applied.
Some measures constitute hierarchies where one or a combination of a few measures would close a market segment or a mode of supply to foreign suppliers. In other cases a restriction on one measure would render others irrelevant. The scoring methodology captures such hierarchies by conditioning the scoring on measures on the answers to questions higher up in the hierarchy of measures.
Some measures are complementary. These are bundled together in the scoring methodology such that if one measure in the bundle is scored as a restriction, all of them are.
The methodology note explains the thresholds, hierarchies and bundling of measures. It starts with the horizontal measures that are included in all sectors, followed by sector-specific scoring methodologies.
The OECD Services Trade Restrictiveness Index is owned by the OECD. It represents significant time and resource investment and shall not be reproduced in whole or significant part without express permission from the OECD. For use, reproduction and translation of the STRI and related multimedia tools, please consult the terms and conditions.