Private Sector Development and Governance

Abstract

In the past few years economic research has empirically established the link between “good” regulation and development and there is a broad consensus over the fact that regulatory quality matters for economic growth. Up to now, however, there has not been much research on the determinants of regulation, since this link is difficult to establish empirically to data restrictions and methodological issues. In our panel data analysis with over 100 countries for the period from 1970 to 2005 we find some evidence that the private sector, especially foreign direct investment, plays a significant role in regulatory making.

Keywords: Institutions, Regulations, Private Sector, Trade, FDI

JEL Classification: L51, O55, F19, F20