Journal Article

The Costs and Benefits of Regulation: Implications for Developing Countries

J. Luis Guasch and Robert W. Hahn

in The World Bank Research Observer

Published on behalf of World Bank

Volume 14, issue 1, pages 137-158
Published in print February 1999 | ISSN: 0257-3032
Published online February 1999 | e-ISSN: 1564-6971 | DOI: http://dx.doi.org/10.1093/wbro/14.1.137
The Costs and Benefits of Regulation: Implications for Developing Countries

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The literature on the benefits and costs of regulation demonstrates that this issue can be explored systematically using standard economic analysis. It also shows that regulation can have a significant adverse impact on economic growth. Specifically, regulation aimed at controlling prices and entry into markets that would otherwise be workably competitive is likely to reduce growth and adversely affect the average standard of living. In addition, process regulation can impose a significant cost on the economy. Nonetheless, social regulations may have significant net benefits for the average consumer if designed judiciously.

There are several policies developing countries might consider adopting to improve their general approach to regulation. The appropriate regulatory tools and framework will depend on many factors, including bureaucratic expertise, resource availability, political constraints, and economic impacts. There is a general need to enhance the capability for evaluating regulation at the local and national levels.

Journal Article.  0 words. 

Subjects: Development Planning and Policy

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