Business Regulation and Economic Performance

Norman V. Loayza And Luis Servén

Description

The Schumpeterian process of 'creative destruction' is an essential ingredient of a dynamic economy. In many countries around the world, however, this process is weakened by pervasive regulation of product and factor markets. This book documents the regulatory obstacles faced by firms, particularly in developing countries, and assesses their implications for firm renewal and macroeconomic performance.
Combining a variety of methodological approaches--analytical and empirical, micro and macroeconomic, single- and cross-country-- the book provides evidence that streamlining the regulatory framework would have a significant social pay-off, particularly in developing countries that are also burdened by weak governance. The book's chapters trace out analytically and empirically the links between microeconomic policies and distortions, on the one hand, and aggregate performance in terms of productivity, growth and volatility, on the other.
The volume adds to a novel but increasingly influential literature that seeks to understand macroeconomic phenomena from a microeconomic perspective, and derive the relevant lessons for development policy. Such literature is still fairly scarce in the case of industrial countries, and virtually in its infancy for developing countries.

Sujets

• Economic growth
• Regulatory reform
• Governance
• Creative destruction
• Developing country
• Innovation
• Private sector development

Informations

• Publié par: world-bank-publications
• Publié le: 11 janvier 2010
• Nombre de lectures: 33
• EAN13: 9780821381458
• Langue: English
• Poids de l'ouvrage: 4 Mo

Extrait

Business Regulation and
Economic Performance
Norman V. Loayza and Luis ServénBUSINESS REGULATION AND
ECONOMIC PERFORMANCEBUSINESS REGULATION AND
ECONOMIC PERFORMANCE
Norman V. Loayza
Luis Servén
Editors
THE WORLD BANK
WASHINGTON, DC© 2010 The International Bank for Reconstruction and Development / The World Bank
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Washington DC 20433
Telephone: [phone]
Internet: www.worldbank.org
All rights reserved
2 3 4 5 14 13 12 11
This volume is a product of the staff of the International Bank for Reconstruction and
Development / The World Bank. The fi ndings, interpretations, and conclusions expressed
in this volume do not necessarily refl ect the views of the Executive Directors of The
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ISBN: 978-0-8213-7407-8
eISBN: 978-0-8213-8145-8
DOI: 10.1596/978-0-8213-7407-8
Library of Congress Cataloging-in-Publication Data
Business regulation and economic performance / editors, Norman V. Loayza and Luis
Servén.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-8213-7407-8 — ISBN 978-0-8213-8145-8 (electronic)
1. Business enterprises—Case studies. 2. Industrial laws and legislation—Case studies.
3. Trade regulation—Case studies. 4. Economic development—Case studies. I. Loayza,
Norman. II. Servén, Luis.
HF1008.B88 2009
338.7--dc22
2009041883
Cover design by Bill Pragluski of Critical Stages.
Cover image: "Spiral Path," © images.com/Corbis.Contents
About the Editors ix
About the Contributors xi
Abbreviations and Acronyms xiii
1 Overview 1
Norman V. Loayza and Luis Servén
2 Product Market Regulation and Macroeconomic
Performance: A Review of Cross-Country Evidence 23
Fabio Schiantarelli
3 Regulation and Macroeconomic Performance 65
Norman V. Loayza, Ana María Oviedo, and Luis Servén
4 Regulation and Microeconomic Dynamics 119
Norman V. Loayza, Ana María Oviedo, and Luis Servén
5 Informality in Latin America and the Caribbean 157
Norman V. Loayza, Luis Servén, and Naotaka Sugawara
6 Slow Recoveries 197
Raphael Bergoeing, Norman V. Loayza,
and Andrea Repetto
7 Market Reforms, Factor Reallocation, and Productivity
Growth in Latin America 225
Marcela Eslava, John Haltiwanger, Adriana Kugler,
and Maurice Kugler
Index 265
vvi contents
Figures
1.1 Regulation around the World 6
1.2 Regulation in Latin America 7
1.3 GDP per Capita vs. Regulation Indices 8
1.4 Overall Regulation and Growth 9
1.5 Overall Regulation and Volatility 9
1.6 Labor Productivity Growth and Firm Turnover 11
1.7 Latin America: Size of Informality 14
1.8 Informality and Its Basic Determinants: Informality
Measured by the Schneider Shadow Economy Index 16
1.9 Severity of Recessions and Regulatory Burden:
Cross-Country Relationships 17
3.1 Regulation around the World 78
3.2 GDP per Capita vs. Regulation Indices 79
3.3 Growth of GDP per Capita vs. Regulation Indices 83
3.4 Volatility of Output Gap vs. Regulation Indices 84
4.1 Regulation Indices, Average per Region 124
4.2 Firm Turnover in Latin America and OECD Countries 126
4.3 Labor Productivity Growth Rate Decomposition
in Manufacturing 128
4.4 Labor Productivity Growth and Firm Turnover 131
5.1 Size of Informality in Latin America, Various Measures 160
5.2 Informality and Basic Determinants 171
5.3 Predicted and Actual Levels of Informality 177
5.4 Differences in Informality between Latin American
Countries and Chile 180
5.5 Explanation of Differences in Informality between
Latin American Countries and Chile 181
6.1 Regulation Index by Region 203
6.2 Severity of Recessions and Regulatory Burden 204
6.3 Impulse Response for Macro Variables 216
6.4 Impulse Response for Cut-Off Level 216
6.5 Impulse Response for Job Creation and
Destruction Rates 217
6.6 Slow Recovery—Exercise 1 (normalized output level) 218
6.7 Slow Recovery—Exercise 2 (normalized output level) 218
7.1 Hypothetical Adjustment Functions, Different Types
of Adjustment Costs 232
7.2 Institutions Index—Latin American Countries, 1985–99 235
7.3 Colombia: Estimated White Collar Employment
Adjustment Function at Different Levels of Institutions
Index 238contents vii
7.4 Colombia: Estimated Blue-Collar Employment
Adjustment Function at Different Levels of Institutions
Index 238
7.5 Colombia: Estimated Capital Adjustment Function at
Different Levels of Institutions Index 239
7.6a Estimated White-Collar Employment Adjustment
Function at 1985 Levels of Institutions for Brazil, Chile,
Colombia, and Uruguay 243
7.6b
Function at 1998 Levels of Institutions for Brazil, Chile,
243
7.7a Estimated Blue-Collar Employment Adjustment

Colombia, and Uruguay 244
7.7b

244
7.8a Estimated Capital Adjustment Function at 1985
Levels of Institutions for Brazil, Chile, Colombia, and
Uruguay 245
7.8b Estimated Capital Adjustment Function at 1998
245
Tables
3.1 Summary Statistics of Regulation Indices by Region 74
3.2 Correlation Coeffi cients between Regulation Indices 76
3.3 Economic Growth and Burden of Regulation:
Basic Specifi cation, 1990–2003 85
3.4 Macroeconomic Volatility and Burden of Regulation: Specifi 86
3.5
Governance Interactions, 1990–2003 88
3.6
90
3.7
Accounting for Endogeneity and Governance
Interactions, 1990–2003 92
3.8 Macroeconomic Volatility and Burden of Regulation:

Interactions, 1990–2003 94viii contents
4.1 Labor Productivity and Firm Dynamics 130
4.2 Firm Turnover and Regulation 132
4.3 Labor Productivity and Regulation 136
4.4 Within Component of Labor Productivity and
Regulation 138
4.5 Between Component of Labor Productivity and 140
4.6 Net Entry Component of Labor Productivity and
Regulation 142
5.1a The Effect of Informality on Economic Growth,
Controlling for GDP per Capita 164
5.1b
Controlling for Government Expenditure/GDP 165
5.2a The Effect of Informality on Poverty, Controlling
for GDP per Capita 167
5.2b
for Government Expenditure/GDP 168
5.3 Determinants of Informality 176
6.1 Severity of Recessions and the Burden of Regulations 205
6.2 Parameterization 215
6.3 Simulated Slow Recovery Indicators 220
7.1 White-Collar Labor, Blue-Collar Labor, and Capital
Adjustment Functions 236
7.2 Models of Fundamentals 249
7.3 Summary Statistics of Simulated Fundamentals for
Latin American Countries 250
7.4 Standard Deviations of White-Collar Labor,
Blue-Collar Labor, and Capital Shortages,
before and after 1990 252
7.5 Decomposition of Aggregate Productivity under
Counterfactual Factor Demands 255