Abstract

http://ssrn.com/abstract=383301
 
 

References (84)



 
 

Citations (137)



 


 



Regulation, Productivity and Growth: OECD Evidence


Stefano Scarpetta


OECD, Directorate for Employment, Labour and Social Affairs; World Bank - Social Protection Unit (HDNSP); Institute for the Study of Labor (IZA)

Giuseppe Nicoletti


Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO)

January 3, 2003

World Bank Policy Research Working Paper No. 2944

Abstract:     
Nicoletti and Scarpetta 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.

This paper - a product of the Social Protection Team, Human Development Network - is part of a larger effort in the network to understand what drives productivity growth.

Number of Pages in PDF File: 60

JEL Classification: O4, L5, K23, L33, L16, C23

working papers series


Download This Paper

Date posted: April 16, 2003  

Suggested Citation

Scarpetta, Stefano and Nicoletti, Giuseppe, Regulation, Productivity and Growth: OECD Evidence (January 3, 2003). World Bank Policy Research Working Paper No. 2944. Available at SSRN: http://ssrn.com/abstract=383301

Contact Information

Stefano Scarpetta (Contact Author)
OECD, Directorate for Employment, Labour and Social Affairs ( email )
2 rue Andre Pascal
Paris Cedex 16, 75016
France
+33 1 45 24 19 88 (Phone)
+33 1 45 24 18 59 (Fax)
World Bank - Social Protection Unit (HDNSP) ( email )
Human Development Network
1818, H Street, N.W.
Washington, DC 20433
United States
202-458-1119 (Phone)
202-522-7247 (Fax)
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Giuseppe Nicoletti
Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) ( email )
2 rue Andre Pascal
Paris Cedex 16, MO 63108
France
+33 1 4524 8730 (Phone)
+33 1 4524 1347 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 2,730
Downloads: 537
Download Rank: 27,315
References:  84
Citations:  137

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.422 seconds