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Deregulation of Business

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  • Zhuravskaya, Ekaterina
  • Yakovlev, Evgeny

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.

Suggested Citation

  • Zhuravskaya, Ekaterina & Yakovlev, Evgeny, 2007. "Deregulation of Business," CEPR Discussion Papers 6610, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:6610
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    Cited by:

    1. Leora Klapper & Raphael Amit & Mauro F. Guillén, 2010. "Entrepreneurship and Firm Formation across Countries," NBER Chapters, in: International Differences in Entrepreneurship, pages 129-158, National Bureau of Economic Research, Inc.
    2. Peter J. Stauvermann & Jin Hu & Ronald R. Kumar, 2025. "The effects of imperfect competition and antitrust measures in a three-sector OLG model," Journal of Economics, Springer, vol. 146(2), pages 145-186, October.
    3. Victoria Golikova & Boris Kuznetsov, 2017. "Suboptimal Size: Factors Preventing the Growth of Russian Small and Medium-Sized Enterprises," Foresight and STI Governance, National Research University Higher School of Economics, vol. 11(3), pages 83-93.
    4. Hoon Jang, 2018. "Association of SME and Government Policy Factors with the Creation of New Employment: Manufacturing Industry in Korea," Social Sciences, MDPI, vol. 7(6), pages 1-16, June.
    5. Peter J. Stauvermann & Ronald R. Kumar, 2022. "Does more market competition lead to higher income and utility in the long run?," Bulletin of Economic Research, Wiley Blackwell, vol. 74(3), pages 761-782, July.
    6. Andrei Shleifer & Florencio Lopez-de-Silanes & Rafael La Porta, 2008. "The Economic Consequences of Legal Origins," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 285-332, June.
    7. Antonio Ciccone & Elias Papaioannou, 2008. "Entry regulation and intersectoral reallocation," Economics Working Papers 1353, Department of Economics and Business, Universitat Pompeu Fabra.
    8. Clarisse Nguedam Ntouko, 2013. "Regulatory Framework and Private Investment: Empirical Evidence for Developing Countries," Economics Bulletin, AccessEcon, vol. 33(1), pages 494-510.
    9. Francesco Bripi, 2016. "The Role of Regulation on Entry: Evidence from the Italian Provinces," The World Bank Economic Review, World Bank, vol. 30(2), pages 383-411.
    10. World Bank, 2013. "Russian Federation : National and Regional Trends in Regulatory Burden and Corruption," World Bank Publications - Reports 16566, The World Bank Group.
    11. Lee Branstetter & Francisco Lima & Lowell J. Taylor & Ana Venâncio, 2014. "Do Entry Regulations Deter Entrepreneurship and Job Creation? Evidence from Recent Reforms in Portugal," Economic Journal, Royal Economic Society, vol. 124(577), pages 805-832, June.
    12. Lixin Colin Xu, 2011. "The Effects of Business Environments on Development: Surveying New Firm-level Evidence," The World Bank Research Observer, World Bank, vol. 26(2), pages 310-340, August.
    13. International Finance Corporation & World Bank, 2008. "Doing Business 2009 : Comparing Regulation in 181 Economies," World Bank Publications - Books, The World Bank Group, number 6313, April.
    14. Barinova, Vera (Баринова, Вера) & Zemtsov, Stepan (Земцов, Степан) & Tsareva, Yulia (Царева, Юлия), 2018. "Review of Empirical Studies of Factors of Entrepreneurial Activity [Обзор Эмпирических Исследований Факторов Предпринимательской Активности]," Working Papers 031830, Russian Presidential Academy of National Economy and Public Administration.
    15. Jonathan Munemo, 2012. "Entrepreneurship In Developing Countries: Is Africa Different?," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 17(01), pages 1-12.

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    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • K2 - Law and Economics - - Regulation and Business Law
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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