THE IMPACT OF REGULATION ON ECONOMIC GROWTH IN THE CARIBBEAN: A PANEL DATA INVESTIGATION

Author(s): MAMINGI, NLANDU; YEARWOOD, NICHELLE; MAYNARD, TRACY;

Created 29 Dec, 2014
Categories Working Papers
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The paper uses random effects models based on a sample of 14 Caribbean countries over the period 2004-2012 in order to investigate the impact of the aggregated as well as disaggregated levels of regulation on the economic growth performance in the region. The estimation results indicate that overall a heavy regulatory burden is a drag on the economies. This outcome also holds for the most part when the disaggregated measures of regulation are considered. Indeed, the longer it takes to start a business, a heavier tax burden, higher trading costs results in lower output; while the more effective the government, the higher the output. The study also reveals a positive relationship between regulation targeting enforcing contracts and economic growth. Additionally, gross capital formation and foreign direct investment positively affect economic growth. These results have policy implications.

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