Service Regulation and Growth: Evidence from OECD Countries

Abstract

We study the effects of anti-competitive service regulation by examining whether OECD countries with less anti-competitive regulation see a better economic performance of manufacturing industries using less-regulated services more intensively. Our results indicate that lower service regulation translates into faster value added, productivity, and export growth of downstream service-intensive industries. The negative growth-effect of anti-competitive regulation is particularly relevant in the case of professional services and energy provision. Our estimates prove robust to accounting for alternative forms of regulation (such as product and labor market regulation), for the degree of financial development and also to a number of other specification checks.

Keywords: Regulation, financial development, sector analysis, growth

JEL Classification: O40, L51, L80