Regulation, Productivity, and Growth : OECD Evidence

The authors look at differences in the scope and depth of pro-competitive regulatory reforms and privatization policies as a possible source of cross-country dispersion in growth outcomes. They suggest that, despite extensive liberalization and pri...

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Main Authors:	Nicoletti, Giuseppe, Scarpetta, Stefano
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	AGENCY PROBLEMS BANKRUPTCY BARRIERS TO ENTRY BUSINESS ENTERPRISES BUSINESS ENVIRONMENT BUSINESS SECTOR COMMUNICATION TECHNOLOGY COMPETITIVE MARKETS CONCENTRATION INDEXES CONSTANT RETURNS TO SCALE CONSUMERS CORPORATE GOVERNANCE DATA AVAILABILITY DEFLATORS DUOPOLY ECONOMIC GROWTH ECONOMIC INTEGRATION ECONOMIC OUTCOMES ECONOMIC RESEARCH ECONOMICS ELASTICITIES EMPIRICAL EVIDENCE EMPIRICAL RESEARCH EMPIRICAL STUDIES EMPLOYMENT EQUILIBRIUM FIXED COSTS GDP GDP PER CAPITA GOOD GOVERNANCE GROWTH PERFORMANCE GROWTH RATES HUMAN DEVELOPMENT INCOME INEFFICIENCY INNOVATION INSTITUTIONAL ENVIRONMENT INSULATION INTERNATIONAL TRADE LAWS LIVING STANDARDS MACROECONOMIC POLICY MANAGERS MARGINAL COSTS MARGINAL PRODUCTIVITY MARKET COMPETITION MARKET FAILURES MARKET INSTITUTIONS MARKET POWER MEASUREMENT ERRORS MINIMUM WAGES MONOPOLY RENTS NATURAL MONOPOLY PERFECT COMPETITION POLICY DETERMINANTS POLICY RESEARCH POLITICAL ECONOMY POLITICAL INTERFERENCE POSITIVE EFFECTS PRICE CONTROLS PRICE ELASTICITY PRICE ELASTICITY OF DEMAND PRICE SETTING PRODUCERS PRODUCT MARKETS PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PUBLIC POLICY RESOURCE ALLOCATION RULE OF LAW SCREENING SERVICE INDUSTRIES SOCIAL SERVICES SOCIAL WELFARE SPILLOVERS STOCK PRICES TARIFF BARRIERS TECHNOLOGICAL PROGRESS TECHNOLOGY ADOPTION TELECOMMUNICATIONS WELFARE FUNCTION
Online Access:	http://documents.worldbank.org/curated/en/2003/01/2117755/regulation-productivity-growth-oecd-evidence http://hdl.handle.net/10986/19175

id	okr-10986-19175
recordtype	oai_dc
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	AGENCY PROBLEMS BANKRUPTCY BARRIERS TO ENTRY BUSINESS ENTERPRISES BUSINESS ENVIRONMENT BUSINESS SECTOR COMMUNICATION TECHNOLOGY COMPETITIVE MARKETS CONCENTRATION INDEXES CONSTANT RETURNS TO SCALE CONSUMERS CORPORATE GOVERNANCE DATA AVAILABILITY DEFLATORS DUOPOLY ECONOMIC GROWTH ECONOMIC INTEGRATION ECONOMIC OUTCOMES ECONOMIC RESEARCH ECONOMICS ELASTICITIES EMPIRICAL EVIDENCE EMPIRICAL RESEARCH EMPIRICAL STUDIES EMPLOYMENT EQUILIBRIUM FIXED COSTS GDP GDP PER CAPITA GOOD GOVERNANCE GROWTH PERFORMANCE GROWTH RATES HUMAN DEVELOPMENT INCOME INEFFICIENCY INNOVATION INSTITUTIONAL ENVIRONMENT INSULATION INTERNATIONAL TRADE LAWS LIVING STANDARDS MACROECONOMIC POLICY MANAGERS MARGINAL COSTS MARGINAL PRODUCTIVITY MARKET COMPETITION MARKET FAILURES MARKET INSTITUTIONS MARKET POWER MEASUREMENT ERRORS MINIMUM WAGES MONOPOLY RENTS NATURAL MONOPOLY PERFECT COMPETITION POLICY DETERMINANTS POLICY RESEARCH POLITICAL ECONOMY POLITICAL INTERFERENCE POSITIVE EFFECTS PRICE CONTROLS PRICE ELASTICITY PRICE ELASTICITY OF DEMAND PRICE SETTING PRODUCERS PRODUCT MARKETS PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PUBLIC POLICY RESOURCE ALLOCATION RULE OF LAW SCREENING SERVICE INDUSTRIES SOCIAL SERVICES SOCIAL WELFARE SPILLOVERS STOCK PRICES TARIFF BARRIERS TECHNOLOGICAL PROGRESS TECHNOLOGY ADOPTION TELECOMMUNICATIONS WELFARE FUNCTION
spellingShingle	AGENCY PROBLEMS BANKRUPTCY BARRIERS TO ENTRY BUSINESS ENTERPRISES BUSINESS ENVIRONMENT BUSINESS SECTOR COMMUNICATION TECHNOLOGY COMPETITIVE MARKETS CONCENTRATION INDEXES CONSTANT RETURNS TO SCALE CONSUMERS CORPORATE GOVERNANCE DATA AVAILABILITY DEFLATORS DUOPOLY ECONOMIC GROWTH ECONOMIC INTEGRATION ECONOMIC OUTCOMES ECONOMIC RESEARCH ECONOMICS ELASTICITIES EMPIRICAL EVIDENCE EMPIRICAL RESEARCH EMPIRICAL STUDIES EMPLOYMENT EQUILIBRIUM FIXED COSTS GDP GDP PER CAPITA GOOD GOVERNANCE GROWTH PERFORMANCE GROWTH RATES HUMAN DEVELOPMENT INCOME INEFFICIENCY INNOVATION INSTITUTIONAL ENVIRONMENT INSULATION INTERNATIONAL TRADE LAWS LIVING STANDARDS MACROECONOMIC POLICY MANAGERS MARGINAL COSTS MARGINAL PRODUCTIVITY MARKET COMPETITION MARKET FAILURES MARKET INSTITUTIONS MARKET POWER MEASUREMENT ERRORS MINIMUM WAGES MONOPOLY RENTS NATURAL MONOPOLY PERFECT COMPETITION POLICY DETERMINANTS POLICY RESEARCH POLITICAL ECONOMY POLITICAL INTERFERENCE POSITIVE EFFECTS PRICE CONTROLS PRICE ELASTICITY PRICE ELASTICITY OF DEMAND PRICE SETTING PRODUCERS PRODUCT MARKETS PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PUBLIC POLICY RESOURCE ALLOCATION RULE OF LAW SCREENING SERVICE INDUSTRIES SOCIAL SERVICES SOCIAL WELFARE SPILLOVERS STOCK PRICES TARIFF BARRIERS TECHNOLOGICAL PROGRESS TECHNOLOGY ADOPTION TELECOMMUNICATIONS WELFARE FUNCTION Nicoletti, Giuseppe Scarpetta, Stefano Regulation, Productivity, and Growth : OECD Evidence
relation	Policy Research Working Paper;No. 2944
description	The authors look at differences in the scope and depth of pro-competitive regulatory reforms and privatization policies as a possible source of cross-country dispersion in growth outcomes. They suggest that, despite extensive liberalization and privatization in the OECD area, the cross-country variation of regulatory settings has increased in recent years, lining up with the increasing dispersion in growth. The authors then investigate empirically the regulation-growth link using data that cover a large set of manufacturing and service industries in OECD countries over the past two decades and focusing on multifactor productivity (MFP), which plays a crucial role in GDP growth and accounts for a significant share of its cross-country variance. Regressing MFP on both economywide indicators of regulation and privatization and industry-level indicators of entry liberalization, the authors find evidence that reforms promoting private governance and competition (where these are viable) tend to boost productivity. In manufacturing the gains to be expected from lower entry barriers are greater the further a given country is from the technology leader. So, regulation limiting entry may hinder the adoption of existing technologies, possibly by reducing competitive pressures, technology spillovers, or the entry of new high technology firms. At the same time, both privatization and entry liberalization are estimated to have a positive impact on productivity in all sectors. These results offer an interpretation to the observed recent differences in growth patterns across OECD countries, in particular between large continental European economies and the United States. Strict product market regulations-and lack of regulatory reforms-are likely to underlie the relatively poorer productivity performance of some European countries, especially in those industries where Europe has accumulated a technology gap (such as information and communication technology-related industries). These results also offer useful insights for non-OECD countries. In particular, they point to the potential benefits of regulatory reforms and privatization, especially in those countries with large technology gaps and strict regulatory settings that curb incentives to adopt new technologies.
format	Publications & Research :: Policy Research Working Paper
author	Nicoletti, Giuseppe Scarpetta, Stefano
author_facet	Nicoletti, Giuseppe Scarpetta, Stefano
author_sort	Nicoletti, Giuseppe
title	Regulation, Productivity, and Growth : OECD Evidence
title_short	Regulation, Productivity, and Growth : OECD Evidence
title_full	Regulation, Productivity, and Growth : OECD Evidence
title_fullStr	Regulation, Productivity, and Growth : OECD Evidence
title_full_unstemmed	Regulation, Productivity, and Growth : OECD Evidence
title_sort	regulation, productivity, and growth : oecd evidence
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2003/01/2117755/regulation-productivity-growth-oecd-evidence http://hdl.handle.net/10986/19175
_version_	1764439257278054400
spelling	okr-10986-191752021-04-23T14:03:41Z Regulation, Productivity, and Growth : OECD Evidence Nicoletti, Giuseppe Scarpetta, Stefano AGENCY PROBLEMS BANKRUPTCY BARRIERS TO ENTRY BUSINESS ENTERPRISES BUSINESS ENVIRONMENT BUSINESS SECTOR COMMUNICATION TECHNOLOGY COMPETITIVE MARKETS CONCENTRATION INDEXES CONSTANT RETURNS TO SCALE CONSUMERS CORPORATE GOVERNANCE DATA AVAILABILITY DEFLATORS DUOPOLY ECONOMIC GROWTH ECONOMIC INTEGRATION ECONOMIC OUTCOMES ECONOMIC RESEARCH ECONOMICS ELASTICITIES EMPIRICAL EVIDENCE EMPIRICAL RESEARCH EMPIRICAL STUDIES EMPLOYMENT EQUILIBRIUM FIXED COSTS GDP GDP PER CAPITA GOOD GOVERNANCE GROWTH PERFORMANCE GROWTH RATES HUMAN DEVELOPMENT INCOME INEFFICIENCY INNOVATION INSTITUTIONAL ENVIRONMENT INSULATION INTERNATIONAL TRADE LAWS LIVING STANDARDS MACROECONOMIC POLICY MANAGERS MARGINAL COSTS MARGINAL PRODUCTIVITY MARKET COMPETITION MARKET FAILURES MARKET INSTITUTIONS MARKET POWER MEASUREMENT ERRORS MINIMUM WAGES MONOPOLY RENTS NATURAL MONOPOLY PERFECT COMPETITION POLICY DETERMINANTS POLICY RESEARCH POLITICAL ECONOMY POLITICAL INTERFERENCE POSITIVE EFFECTS PRICE CONTROLS PRICE ELASTICITY PRICE ELASTICITY OF DEMAND PRICE SETTING PRODUCERS PRODUCT MARKETS PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PUBLIC POLICY RESOURCE ALLOCATION RULE OF LAW SCREENING SERVICE INDUSTRIES SOCIAL SERVICES SOCIAL WELFARE SPILLOVERS STOCK PRICES TARIFF BARRIERS TECHNOLOGICAL PROGRESS TECHNOLOGY ADOPTION TELECOMMUNICATIONS WELFARE FUNCTION The authors look at differences in the scope and depth of pro-competitive regulatory reforms and privatization policies as a possible source of cross-country dispersion in growth outcomes. They suggest that, despite extensive liberalization and privatization in the OECD area, the cross-country variation of regulatory settings has increased in recent years, lining up with the increasing dispersion in growth. The authors then investigate empirically the regulation-growth link using data that cover a large set of manufacturing and service industries in OECD countries over the past two decades and focusing on multifactor productivity (MFP), which plays a crucial role in GDP growth and accounts for a significant share of its cross-country variance. Regressing MFP on both economywide indicators of regulation and privatization and industry-level indicators of entry liberalization, the authors find evidence that reforms promoting private governance and competition (where these are viable) tend to boost productivity. In manufacturing the gains to be expected from lower entry barriers are greater the further a given country is from the technology leader. So, regulation limiting entry may hinder the adoption of existing technologies, possibly by reducing competitive pressures, technology spillovers, or the entry of new high technology firms. At the same time, both privatization and entry liberalization are estimated to have a positive impact on productivity in all sectors. These results offer an interpretation to the observed recent differences in growth patterns across OECD countries, in particular between large continental European economies and the United States. Strict product market regulations-and lack of regulatory reforms-are likely to underlie the relatively poorer productivity performance of some European countries, especially in those industries where Europe has accumulated a technology gap (such as information and communication technology-related industries). These results also offer useful insights for non-OECD countries. In particular, they point to the potential benefits of regulatory reforms and privatization, especially in those countries with large technology gaps and strict regulatory settings that curb incentives to adopt new technologies. 2014-08-01T15:40:37Z 2014-08-01T15:40:37Z 2003-01 http://documents.worldbank.org/curated/en/2003/01/2117755/regulation-productivity-growth-oecd-evidence http://hdl.handle.net/10986/19175 English en_US Policy Research Working Paper;No. 2944 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research

Regulation, Productivity, and Growth : OECD Evidence

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