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Do Regulatory Reforms Stimulate Investment and Growth? Evidence from the Doing Business Data, 2003-07

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  • Benjamin P. Eifert

    (University of California, Berkeley)

Abstract

The role of regulatory barriers in inhibiting entrepreneurship, investment and employment creation is an old topic in economics. This study utilizes a five¬-year panel of data on regulations and procedures from the World Bank’s Doing Business project, along with Arellano-¬Bond dynamic panel estimators, looking for evidence that regulatory reforms lead to higher aggregate investment rates (roughly, factor demand) or GDP growth conditional on investment rates (roughly, factor productivity). It looks both at individual regulatory indicators and more aggregate measures of the incidence of reforms, finding some evidence of positive impacts of regulatory reforms in countries which are relatively poor (conditional on governance) and relatively well¬-governed (conditional on income). Relatively poor and relatively well¬governed countries grow about 0.4 and 0.2 percentage points faster in the year immediately following one or more reforms, respectively. In both subsets of countries, investment rates accelerate by about 0.6 percentage points in the subsequent year.

Suggested Citation

  • Benjamin P. Eifert, 2009. "Do Regulatory Reforms Stimulate Investment and Growth? Evidence from the Doing Business Data, 2003-07," Working Papers 159, Center for Global Development.
    • Handle: RePEc:cgd:wpaper:159
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    Citations

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    Cited by:

    1. Alhammadi, Abdulnaser & Shahadan, Faridah, 2014. "The Determinants of Growth Performance of Small Services Enterprises in Yemen," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 48(1), pages 35-48.
    2. Nikitin, Andrey S. (Никитин, Андрей), 2016. "Investment Rating as an Instrument of Effective Govern Management Stimulation in Russian Regions [Инвестиционный Рейтинг Как Инструмент Стимулирования Эффективности Управления Развитием Регионов Ро," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 6, pages 192-221, December.
    3. Silberberger, Magdalene & Königer, Jens, 2016. "Regulation, trade and economic growth," Economic Systems, Elsevier, vol. 40(2), pages 308-322.
    4. Colin Kirkpatrick, 2012. "Economic Governance: Improving the Economic and Regulatory Environment for Supporting Private Sector Activity," WIDER Working Paper Series wp-2012-108, World Institute for Development Economic Research (UNU-WIDER).
    5. Mary Hallward-Driemeier & Lant Pritchett, 2015. "How Business Is Done in the Developing World: Deals versus Rules," Journal of Economic Perspectives, American Economic Association, vol. 29(3), pages 121-140, Summer.
    6. Kirkpatrick, Colin, 2012. "Economic Governance: Improving the Economic and Regulatory Environment for Supporting Private Sector Activity," WIDER Working Paper Series 108, World Institute for Development Economic Research (UNU-WIDER).
    7. Jayasuriya, Dinuk, 2011. "Improvements in the World Bank's ease of doing business rankings : do they translate into greater foreign direct investment inflows ?," Policy Research Working Paper Series 5787, The World Bank.
    8. Frank Iyekoretin Ogbeide & Oluwafemi Mathew Adeboje, 2020. "Effects of financial reform on business entry in sub‐Saharan African countries: Do resource dependence and institutional quality matter?," African Development Review, African Development Bank, vol. 32(2), pages 188-199, June.
    9. Qingjie Zhou & Dongyao Yu & Feng Xu & Jiamin Sun, 2022. "The Impact of Institutional Friction Cost on Economic Growth: Evidence from OECD Countries," Sustainability, MDPI, vol. 15(1), pages 1-15, December.
    10. Rafiou Raphaël Bétila, 2021. "The impact of Ease of Doing Business on economic growth: a dynamic panel analysis for African countries," SN Business & Economics, Springer, vol. 1(10), pages 1-34, October.
    11. Angelica E. Njuguna & Emmanuel Nnadozie, 2022. "Investment Climate and Foreign Direct Investment in Africa: The Role of Ease of Doing Business," Journal of African Trade, Springer, vol. 9(1), pages 23-46, December.
    12. Lucas Figal Garone & Paula A. López Villalba & Alessandro Maffioli & Christian A. Ruzzier, 2020. "Productivity differences among firms in Latin American and the Caribbean," Working Papers 136, Universidad de San Andres, Departamento de Economia, revised Jan 2020.
    13. Tilman Altenburg & Aimée Hampel-Milagrosa & Markus Loewe, 2017. "A Decade On: How Relevant is the Regulatory Environment for Micro and Small Enterprise Upgrading After All?," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 29(2), pages 457-475, April.

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