India finds problems OECD Services Trade Restrictiveness Index

India has found problems with the current method under which the OECD index –Services Trade Restrictiveness Index (STRI) – ranks countries based on their services trade policies. As per study commissioned by Indian Ministry of Commerce, the outcomes of index are biased and counter-intuitive. For example, the index seems to show the Indian services sector as one of the most restrictive, particularly in policy areas like foreign entry. This seems surprising as since 1991, the one area that has seen maximum liberalization in India is Foreign Direct Investment (FDI). The initial work suggests that there are both theoretical and practical inconsistencies in the Organisation for Economic Cooperation and Development (OECD) methodology. Additionally, the data seems to have been generated by rather arbitrary procedures and reflects a developed country bias. In order to rectify this, the Indian team of econometricians designed a new way of measuring restrictiveness in the services trade that would be more robust and would not have a bias either for developed or developing countries.

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