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

Dan Andrews, Balázs Égert, Cassie Castle and Christine de la Maisonneuve

No 1835, OECD Economics Department Working Papers from OECD Publishing

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.

Keywords: capital stock; downstream sectors; employment; labour productivity; network sectors; OECD; product market regulation; structural reforms (search for similar items in EconPapers)
JEL-codes: C23 L16 L5 O43 O57 (search for similar items in EconPapers)
Date: 2025-06-25
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Persistent link: https://EconPapers.repec.org/RePEc:oec:ecoaaa:1835-en

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