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Deregulation of Business

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  • Evgeny Yakovlev

    ()
    (UC Berkeley)

  • Ekaterina Zhuravskaya

    ()
    (NES, CEFIR. CERP)

Abstract

What determines the enforcement of deregulation reform of business activities? What are the outcomes of deregulation? We address these questions using an episode of a drastic reform in Russia between 2001 and 2004 which liberalized registration, licensing, and inspections. Based on the analysis of micro-level panel data on regulatory burden, we find that: 1) On average, the reform reduced the administrative costs of firms; but, the progress of reform had a substantial geographical variation. 2) The enforcement of deregulation reform was better in regions with a transparent government, low corruption, better access of the public to independent media sources, a powerful industrial lobby, and stronger fiscal autonomy. 3) Using the exogenous variation in regulation generated by the interaction of reform and its institutional determinants, we find a substantial positive effect of deregulation on net entry and small business employment and no effect on pollution and public health. The results support public choice theory of the nature of regulation and are inconsistent with the predictions of public interest theory.

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Bibliographic Info

Paper provided by Center for Economic and Financial Research (CEFIR) in its series Working Papers with number w0097.

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Length: 48 pages
Date of creation: Dec 2007
Date of revision:
Handle: RePEc:cfr:cefirw:w0097

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Citations

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Cited by:
  1. Clarisse Nguedam Ntouko, 2013. "Regulatory Framework and Private Investment: Empirical Evidence for Developing Countries," Economics Bulletin, AccessEcon, vol. 33(1), pages 494-510.
  2. Xu, Lixin Colin, 2010. "The effects of business environments on development : surveying new firm-level evidence," Policy Research Working Paper Series 5402, The World Bank.
  3. Lopez-de-Silanes, Florencio & La Porta, Rafael & Shleifer, Andrei, 2008. "The Economic Consequences of Legal Origins," Scholarly Articles 2962610, Harvard University Department of Economics.
  4. World Bank, 2013. "Russian Federation : National and Regional Trends in Regulatory Burden and Corruption," World Bank Other Operational Studies 16566, The World Bank.
  5. International Finance Corporation & World Bank, 2008. "Doing Business 2009 : Comparing Regulation in 181 Economies," World Bank Publications, The World Bank, number 6313, August.
  6. Antonio Ciccone & Elias Papaioannou, 2008. "Entry regulation and intersectoral reallocation," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 1353, Department of Economics and Business, Universitat Pompeu Fabra.
  7. Lee G. Branstetter & Francisco Lima & Lowell J. Taylor & Ana Venâncio, 2010. "Do Entry Regulations Deter Entrepreneurship and Job Creation? Evidence from Recent Reforms in Portugal," NBER Working Papers 16473, National Bureau of Economic Research, Inc.

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