# **Table 8: Sensitivity to the Spillover Assumption: Comparison Across Market Structures** **<u>Results are percentage change unless otherwise indicated</u>**

|||<br>**FDI**<br>**Services**<br>**Barriers**|<br>**Cross-**<br>**border**<br>**Services**<br>**Barriers**|<br>**Import**<br>**Trade**<br>**Facilitation**|<br> <br>**Export**<br>**Trade**<br>**Facilitation**|**Import**<br>**Tariffs**|**RCEP**<br>**Partner**<br>**Tariffs**|**Import**|**RCEP**<br>**Partner**<br>**NTMs**|
|---|---|---|---|---|---|---|---|---|---|
||**RCEP**|**Only**|**Only**|**Only**|**Only**|**Only**|**Only**|**NTMs**|**only**|
|**Scenario definition**|**1**|**2**|**3**|**4**|**5**|**6**|**7**|**8**|**9**|
|RCEP FDI barriers (% reduction for RCEP countries)|50|50||||||||
|RCEP FDI barriers (% reduction for non-RCEP countries)|10|10||||||||
|Cross-border services barriers (% reduction for RCEP countries)|50||50|||||||
|Cross-border services barriers (% reduction for non-RCEP countries)|10||10|||||||
|Import Trade Facilitation (% reduction for RCEP countries)|20|||20||||||
|Import Trade Facilitation (% reduction for non-RCEP countries)|5|||5||||||
|<br>Export Trade Facilitation (% reduction)|20||||20|||||
|Export Trade Facilitation (% reduction for non-RCEP countries)|5||||5|||||
|Tariffs on Filipino Imports from RCEP (% reduction)|100|||||100||||
|<br>Tariffs on Filipino Exports to RCEP (% reduction)|100||||||100|||
|NTMs on Filipino Imports from RCEP (% reduction for RCEP countries)|20|||||||20||
|NTMs on Filipino Imports from RCEP (% reduction for non-RCEP countr|5|||||||5||
|NTMs on Filipino Exports to RCEP(% reduction)|20||||||||20|
|Pareto ShapeMultiplier--Melitz|0.98|0.98|0.98|0.98|0.98|0.98|0.98|0.98|0.98|
|Elasticity of Substitution Multiplier--Melitz|1.00|1.00|1.00|1.00|1.00|1.00|1.00|1.00|1.00|
|<br>FDI ElasticityMultiplier--Melitz|1.00|1.00|1.00|1.00|1.00|1.00|1.00|1.00|1.00|
|Elasticity of Substitution Multiplier--Armington|1.2|1.2|1.2|1.2|1.2|1.2|1.2|1.2|1.2|
|FDI ElasticityMultiplier--Armington|30.0|30.0|30.0|30.0|30.0|30.0|30.0|30.0|30.0|
|**Aggregate welfare**||||||||||
|<br>**EV as % of consumption--Krugman**|4.9|2.7|0.0|0.5|0.3|0.0|0.4|0.4|0.5|
|**EV as % of consumption--Melitz**|3.9|2.6|0.0|0.4|0.2|-0.1|0.2|0.3|0.3|
|**EV as % of consumption--Armington**|2.3|1.2|0.0|0.4|0.2|-0.1|0.2|0.3|0.2|
|**Aggregate Exports**||||||||||
|Krugman|13.7|3.4|0.1|1.5|1.0|2.4|1.3|**1.2**|1.9|
|Melit**z**|13.1|3.1|0.1|1.4|1.0|2.3|1.2|**1.2**|2.0|
|Armington|11.7|1.7|0.1|1.4|1.0|2.2|1.3|**1.2**|2.0|
|**FDI Output**||||||||||
|Krugman|29.2|**26.0**|0.0|0.7|0.3|0.4|0.3|0.5|0.3|
|Melitz|27.8|**26.0**|0.0|0.5|0.1|0.2|0.1|0.4|0.1|
|Armington*|23.3|**21.8**|0.0|0.5|0.1|0.1|0.1|0.3|0.0|
|**Diagnostics****||||||||||
|Feenstra Ratio Summary--Krugman|101.53%|100.93%|100.00%|100.09%|100.08%|100.10%|100.09%|100.05%|100.14%|
|<br>Feenstra Ratio Summary--Melitz|101.12%|100.96%|100.00%|100.03%|100.01%|100.04%|100.01%|100.01%|100.04%|
|<br>Terms of trade--Krugman|99.93%|99.90%|100.00%|99.61%|100.31%|99.52%|100.38%|99.67%|100.47%|
|Terms of trade--Melitz|100.14%|100.00%|100.00%|99.63%|100.33%|99.56%|100.40%|99.69%|100.49%|
|Terms of trade--Armington|100.34%|99.98%|100.00%|99.66%|100.37%|99.60%|100.42%|99.71%|100.56%|

***** We impose an upper bound of 90 on the elasticity of substitution between FDI and domestic business services (30 times the Krugman value of σ=3); in this case, we fall short of fully matching the FDI response in the Krugman model.

****** The percentage change is the value indicated minus 100.

Source: Authors’ estimates 55