The Impact of Business Regulatory Reforms on Economic Growth

Abstract

I investigate the link between business regulatory reforms and economic growth in 172 countries. I create a five year dataset on business regulatory reforms from the World Bank’s Doing Business reports. Then, I test the hypothesis that business regulatory reforms increase economic growth, using data on micro-economic reforms. These data do not suffer the endogeneity issues associated with other datasets on changes in economic institutions. The results provide a robust support for the claim that business regulatory reforms are good for economic growth. The paper establishes that, on average, each business regulatory reform is associated with a 0.15 percent increase in growth rate of GDP.

Keywords: growth, reform, development, regulations, doing business, and institutions

JEL Classification: O12, O17, O50, P48