The Impact of Economic Regulation on Growth: Survey and Synthesis

Abstract

This study provides a survey of research that uses cross-country comparisons to examine how economic regulation affects growth. Studies in the peer-reviewed literature tend to rely on either World Bank or Organisation for Economic Co-operation and Development measures of regulation. Those studies seem to reflect a consensus that entry regulation and anticompetitive product and labor market regulations are generally harmful to growth. The results from this cross-country research, taken in conjunction with economic theory as well as other country specific studies of economic regulation, support the hypothesis that economic regulation tends to reduce welfare in competitive markets. Given the continued use of certain types of economic regulation, the findings may offer important lessons for policymakers.