OECD Economics Department Working Papers

ISSN :
1815-1973 (online)
DOI :
10.1787/18151973
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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

 

Regulation, Productivity and Growth

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Author(s):
Giuseppe Nicoletti1, Stefano Scarpetta1
Author Affiliations
  • 1: OECD, France

Publication Date
13 Jan 2003
Bibliographic information
No.:
347
Pages
66
DOI
10.1787/078677503357

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In this paper, we relate the scope and depth of regulatory reforms to growth outcomes in OECD countries. By means of a new set of quantitative indicators of regulation, we show that the cross-country variation of regulatory settings has increased in recent years, despite extensive liberalisation and privatisation in the OECD area. We then look at the regulation-growth linkage using data that cover a large set of manufacturing and service industries over the past two decades. We focus on multifactor productivity (MFP), which plays a crucial role in GDP growth and accounts for a significant share of its cross-country variance. We find evidence that reforms promoting private governance and competition (where these are viable) tend to boost productivity. Both privatisation and entry liberalisation are estimated to have a positive impact on productivity. In manufacturing the gains are greater the further a given country is from the technology leader, suggesting that regulation limiting ...

Keywords:
growth, models with panel data, productivity, regulation, privatisation
JEL Classification:
  • C23: Mathematical and Quantitative Methods / Single Equation Models; Single Variables / Models with Panel Data; Longitudinal Data; Spatial Time Series
  • K23: Law and Economics / Regulation and Business Law / Regulated Industries and Administrative Law
  • L16: Industrial Organization / Market Structure, Firm Strategy, and Market Performance / Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices
  • L33: Industrial Organization / Nonprofit Organizations and Public Enterprise / Comparison of Public and Private Enterprises and Nonprofit Institutions; Privatization; Contracting Out
  • L5: Industrial Organization / Regulation and Industrial Policy
  • O4: Economic Development, Technological Change, and Growth / Economic Growth and Aggregate Productivity