Abstract: This article makes use of the panel data of 38 countries with different economic development levels to study the impact of service trade restrictions on the productivity of manufacturing industries of these countries. It also analyzes the regulating effects of government regulation on this kind of impact. The results show that the impact of the service trade restrictions depends to a large extent on the level of governance of the governments of each country; the fewer the service trade restrictions, the more significant the improvement of the productivity of the manufacturing industry of the countries with higher level of government governance will be. The lower productivity of the manufacturing industry is correlated with the higher degree of service trade restrictions, its effect will be weakened along with the improvement of the level of government governance. The regulating effect of government governance in the countries with middle and lower level of income is greater and more significant than that in the countries with higher level of income. Under the different ways of provision of service trade, the government governance has different channels to play its positive roles.

Key words: service trade policy; productivity of manufacturing industry; government governance