Business Dynamics and Red Tape Barriers

Abstract:
Entry is a key element of the transmission mechanism through which product market reforms ultimately affect productivity and growth. Therefore, reforms aiming at facilitating firms' entry can be considered as giving an extra bonus in the sense that they facilitate the materialization of the full effect of other competition-enhancing reforms.

By the light of these considerations, this study aims at estimating the impact of changes in the administrative cost of starting a business and/or exporting on entry dynamics in 17 European member countries (AT, BE, CZ, DE, DK, EE, ES, FI, FR, HU, IT, NL, PL, PT, SE, SK and UK) during the period 2004-2011. Results confirm the theoretical expectation: the higher the level of red tape barriers, the lower entry dynamics.

European Commission: DG Economic and Financial Affairs:European Economy: Economic Papers No.532, September 2014:Business Dynamics and Red Tape Barriers http://ec.europa.eu/economy_finance/publications/economic_paper/2014/ecp532_en.htm

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