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Regulation and Growth: Lessons from nearly 50 years of product market reforms

Author

Listed:
  • Dan Andrews
  • Balázs Égert
  • Cassie Castle
  • Christine de la Maisonneuve

Abstract

Against a backdrop of renewed interest in regulatory costs, we provide fresh evidence on the impacts of product market regulation on economic growth using cross-country industry-level data. Leveraging the 2025 update of the OECD Energy, Transport and Communications Regulation (ETCR) indicator, we find that anticompetitive regulations in upstream sectors – particularly barriers to entry – curbs long-run economic performance in downstream sectors. On average across the OECD, network sector deregulation between 1980 and 2023 boosted economy-wide labour productivity by an around 5 percent in cumulative terms, underpinned by material gains to value added (~6 percent), employment (~2 percent) and capital stock (~4 percent). The estimated gains from upstream product market reforms are more than double for the manufacturing sector, which relies heavily on inputs from regulated upstream sectors. While rapid network sector deregulation contributed around 0.25 percentage points to annual labour productivity growth during the 1995-2005 boom, its subsequent slowdown could account for up to one-sixth of the post2005 productivity slowdown. Looking forward, reloading network sector deregulation could yield smaller, yet still material, productivity gains.

Suggested Citation

  • Dan Andrews & Balázs Égert & Cassie Castle & Christine de la Maisonneuve, 2025. "Regulation and Growth: Lessons from nearly 50 years of product market reforms," OECD Economics Department Working Papers 1835, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:1835-en
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    More about this item

    Keywords

    capital stock; downstream sectors; employment; labour productivity; network sectors; OECD; product market regulation; structural reforms;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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