Template-type: ReDIF-Paper 1.0
Author-Name: Dan Andrews
Author-Name: Balázs Égert
Author-Name: Cassie Castle
Author-Name: Christine de la Maisonneuve
Title: Regulation and Growth: Lessons from nearly 50 years of product market reforms
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.
Classification-JEL: C23; L16; L5; O43; O57
Keywords: capital stock, downstream sectors, employment, labour productivity, network sectors, OECD, product market regulation, structural reforms
Creation-Date: 2025-06-25
Number: 1835
Handle: RePEc:oec:ecoaaa:1835-EN