Tuesday, March 1, 2011
Posted by D. Daniel Sokol
Tay-Cheng Ma, Department of Economics, Chinese Culture University analyzes THE EFFECT OF COMPETITION LAW ENFORCEMENT ON ECONOMIC GROWTH.
ABSTRACT: To identify the effect of competition law on productivity growth, this article conducts a cross-country study using a sample of 101 countries that enforce competition law. The evidence shows that the effect exhibits an asymmetrical pattern depending on the stage of development of each country. For the poor less developed countries (LDCs) whose institutional frameworks cannot exceed a threshold level, competition law has a very limited effect on changing economic activity, and its legislation is neither harmful nor helpful in terms of market competition or economic growth. As to the developed countries (DCs) and middle-income LDCs, although their institutional frameworks have passed the threshold level, the effect of competition law on growth still depends on the law enforcement efficiency of the government. Without an efficient enforcement scheme, a stronger competition law not only cannot support productivity growth, but might also slow down the potential path of growth.