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Creating the Conditions for International Business Expansion: The Impact of Regulation on Economic Growth in Developing Countries - A Cross-Country Analysis

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Author Info
Jililian, Hossein
Kirkpatrick, Colin
Parker, David

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Abstract

The role of an effective regulatory regime in promoting economic growth and development and therefore international business has generated considerable interest among researchers and practitioners in recent years. In particular, building effective regulatory structures in developing countries is not simply an issue of the technical design of the most appropriate regulatory instruments, it is also concerned with the quality of supporting regulatory institutions and capacity. Many of the institutions that support markets are publicly provided and the effectiveness of these regulatory institutions can be expected to be an important determinant of how well markets function. This paper explores the role of regulation in affecting economic outcomes using an econometric model of the impact of regulatory governance. More precisely, it assesses through econometric modelling the impact of variations in the quality of regulatory governance on economic growth. Proxies for regulatory quality are included as determinants of economic growth. The results based on two different techniques of estimation suggest a strong causal link between regulatory quality and economic performance. The results confirm that "good" regulation is associated with higher economic growth, which in turn is conducive to the expansion of international business.

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Paper provided by University of Manchester, Institute for Development Policy and Management (IDPM) in its series Development Economics and Public Policy Working Papers with number 30554.

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Date of creation: 2003
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Handle: RePEc:ags:idpmde:30554

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Keywords: economic growth; regulation; governance; institutions; economic performance; International Development; C23; I18; L33; L51; L98; O38; O50;

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Zhang, Yingang & Parker, David & Kirkpatrick, Colin, 2004. "Competition, Regulation and Privatisation of Electricity Generation in Developing Countries: Does the Sequencing of the Reforms Matter?," Centre on Regulation and Competition (CRC) Working papers 30599, University of Manchester, Institute for Development Policy and Management (IDPM). [Downloadable!]
    Other versions:
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