series which allows us to precisely analyze the liberalizing trends over time as opposed to investigating cross‐country difference only in case we use alternative services policy reform measures. Note, however, that these reform proxies capture (anti‐competitive) restrictiveness of regulations, but they do not capture enforcement of existing regulations at the EU level. We also use a second set of regulatory measures that vary over time and which is country‐sector specific, namely the Foreign Direct Investment (FDI) restrictiveness indicators, and also comes from the OECD. Assessing the effect of these measures is important as many foreign service suppliers enter markets through a foreign affiliate. Again, the FDI restrictiveness indicator does not pick up the enforcement of existing EU regulations.

The NMR indexes vary on a scale between 0 to 6 with lower values indicating lower levels of restrictions and higher values reflecting the most restrictive conditions in services sectors. In all, they measure the restrictiveness of competition in services in domestic economies. Moreover, each overall index is made up of several sub‐indexes analyzing different aspects of reforms. With these distinctions, one is able to make a difference between the different _types_ of regulations in services as provided in Table 1. Some reform measures are purely related to the entry of domestic as well as foreign firms in the market, whereas others are comprised of barriers connected to anti‐competitive rules and practices specifically targeted to the conduct of the firm, or firm operations. We regroup these sub‐indicators together so as to create this difference of regulatory type and use them separately in our regressions next to an overall index measure of reform that summarizes both entry and conduct. Table A1 in the annex shows in detail which sub‐barriers are taken up for each of the two types of indexes. We follow the OECD in constructing these indexes in the sense that we use equal weights across indicators, which the OECD does for its overall index as well.

As said, next to the NMR this paper also exploits the OECD’s FDI restrictiveness indicator as put forward in Kalinova _et al_ . (2010). This index ranges from 0 to 1 with also lower values indicating lower levels of restrictions and higher values reflecting greater levels of FDI barriers. This index is made up of several sub‐indicators that measure separately various barriers such as equity restrictions, screening requirements, economic needs test, or movements of key‐personnel. In total, there are 20 different service sectors covered. In the regressions we do not separate them out as they do not make an analytical separation according to a functional type of restriction as in the NMR between entry and conduct and as such the overall index of FDI restrictiveness is employed. Table A2 in the annex also shows in detail which barriers are included for the services sectors taken up in our sample. Note that each barrier, as explained in column 3 in this table, is common across all services sectors presented in column 1 of Table A2.

All reform indexes are rescaled from 0‐1 so as to have consistent interpretation of the coefficient indexes after regressions. In terms of time series, years covered for each index varies. The NMR indexes for telecommunications and post, transport and electricity and gas start in 1975 and are provides on a yearly basis. Retail services have been collected for the years 1998, 2003, 2008 and 2013, while professional services are beginning in 1996 with 2003, 2008 and 2013 with subsequent years. The FDI reform index starts in 1997 up to 2014 with missing years in between but yearly as of 2010. Missing years are interpolated so as to optimize good time series. There are two ways of taking care of this, namely on a linear basis assuming reform is a gradual process that takes place each year, or on a constant basis supposing that reform is a “lumpy” process that is not always implemented each year. Both choices come along with their weaknesses. It is hard to imagine that reform, particularly in services, is really taking place each year. On the other hand, the constant approach may actually create a mismatch 7