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From the 1980s onwards, more and more countries have chosen for an economic policy, in which the role of the government should be reduced. With less government, i.e. lower tax and premium rates, lower deficits, and lower debts, with less regulation, and with less compliance costs, markets would function better and economic development would prosper. The revival of the US and UK economy—and later that of many other economies—seemed to support the rightness of this approach.
But with the Internet crisis around 2000 and the dramatic financial and economic crisis of 2007–2010, the whole picture has changed once again. Is this reliance on market forces really such a good thing and are less government, less rules and regulations really the right alternative to realize the most desirable pattern of economic development? What is the relationship between the level of compliance and the pattern of economic development? Has this approach helped countries to better deal with the impact of the recent economic crisis? These questions are dealt with comparatively, both between countries and over time, using data from World Bank and OECD. The results are contrary to what long was the ruling ideology: Less regulation has not been beneficial for economic development and also has not made countries better able to deal with the recent financial and economic crisis.
Even though these analyses have been rather rough and preliminary, the results produced in this chapter do show that a reduction of regulation has not been as beneficial to the economic performance, as many have believed so far.
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CPB Netherlands Bureau for Economic Policy Analysis (2004), Reducing the administrative costs in the European Union. August 2004.
Esping-Andersen, G. (1990) Three Worlds of Welfare Capitalism. Princeton University Press, New Jersey.
European Commission (2006), First progress report on the strategy for the simplification of the regulatory environment, November 2006.
Kox, H., (2005), Intra-EU differences in regulation-caused administrative burden for companies, The Hague: CPB Memorandum 136.1.
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OECD Product Market Regulation http://www.oecd.org/document/1/0,3746,en_2649_34323_2367297_1_1_1_1,00.html
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World Bank Doing Business http://www.doingbusiness.org/
- Against the Tide? On the Development of Regulative Costs Over Time in Times of Crisis and Its Possible Impact on Economic Development
Kees van Paridon
- Springer New York
- Chapter 8
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