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.
"To the benefit of interest groups, most of the large costs
associated with excessive business regulation remain hidden in the
complexities of the ongoing process of restructuring. Business
Regulation and Economic Performance does a great service to all of
us by unearthing some of these costs with a convincing array of
cross-sectional evidence. A must-read for policy makers, especially in
heavily regulated regions such as Latin America."
- Ricardo Caballero, Chairman and Ford
International Professor,
Department of Economics, Massachusetts Institute of Technology
"Despite greater macroeconomic stability and increased
openness to trade and investment, many developing countries have failed
to thrive. This original study links microeconomic regulation to
aggregate measures of growth, productivity, and volatility to explain
the poor performance of emerging economies around the world, and
especially in Latin America. The authors convincingly show that
excessive regulation of business and labor has led to adverse macro
performance. Stringent regulations perform a double punch. First, they
prevent resources from moving to their most productive uses and
economies from adjusting to external shocks. Second, they provide
insidious incentives for rent seeking to the relevant authorities,
especially when governance is weak. Business Regulation and Economic
Performance is essential reading for policy makers seeking to
improve growth and stability in developing countries."
- Simeon Djankov, Deputy Prime Minister and
Minister of Finance of Bulgaria, and
former lead author of Doing Business, The World Bank
- Shipping Weight: 0.86 lbs (0.39 kgs)
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