Market Opening, Regulation and Growth in Europe

Abstract

Deregulation A political economy analysis Lack of urgency explains why continental Europe trails in the deregulation process. Yet there are lessons to be learnt from deregulation elsewhere. This paper reviews the situation and focuses on the political preconditions for successful deregulation. It finds a clear negative relationship between regulation and economic performance. It characterizes European countries by the degree of regulation of labour and product markets, and finds that the latter seems to be more important for economic performance. Finally, it notes the importance of a proper management of the deregulation effort – which may include some re-regulation: deregulation is more likely to succeed the more transparent the economic benefits, and the more clearly stated the objectives and the time schedule. —Kees Koedijk and jeroen Kremers