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competitiveness and export of agricultural, manufacturing, or mineral products. Well-regulated and competitive service sectors may lead to a significant boost in the overall competitiveness of economies. In this way, services act as an input that facilitates the trade in goods in general.
Designing a Reform Strategy in Service Liberalization The reform of restrictive service regulations remains a highly complex issue for which developing countries require significant support. Indeed, in addressing reforms in the service sector, a policy maker requires a set of policy definitions at the domestic level, as follows: • The desired participation of the state in the service sector and the modality of this participation, that is, as an exclusive service provider; as a service provider in competition with the private sector; by limiting the role of the state to policy designer and regulator, including ensuring competition and enforcement; or a combination of all the above • The extent of private sector involvement • The extent of the participation of foreign providers of services • The regulatory framework that will best serve the objectives of the reforms, including the sequence of reforms In some sectors, such as financial, telecommunication, and transportation services, the way reforms are adopted and the sequence of the reforms are critical determinants of the final result. In addition, certain regulatory measures that have been in place for a long time must be carefully assessed and possibly replaced by other, more appropriate measures, where these are available. Countries must ensure that a sound sequence of reforms is followed. In other sectors, sequencing may be less relevant, but a sound regulatory framework will nonetheless be required to ensure competition and guarantee public goods such as safety and health. International experience shows that countries may follow different approaches according to policy goals, level of development, and institutional capacity. However, independently of the direction countries decide to take, certain policies must be implemented to ensure that the sector functions properly, as follows: • If the state decides to participate directly as a provider, the corporate governance of state-owned enterprises becomes an important issue. • In addition, a level playing field for all providers must be ensured if competition with the private sector is allowed. In particular, the devel-