| This study investigates the effect of regulatory policy on multi-factor productivity (MFP) growth, which is widely accepted as a measure of "technical change" in the economy. A regression analysis conducted on a panel of 19 OECD countries across seven non-manufacturing industries over the period 1990-2003 finds that, controlling for many types of regulation, entry regulation in the air transport industry and market structure in the telecommunications industry negatively related to MFP growth. Conversely, public ownership in the postal industry and vertical integration in the natural gas industry had a positive relationship with MFP growth. Most other regulatory policies have insignificant effects, although I identify certain patterns by relaxing the threshold for significance a little. Therefore, even though in general the indirect and negative effect of regulation on MFP growth may outweigh the benefits of regulation, policymakers should consider deregulation on a case by case basis, carefully considering the industry's characteristics and performance, as opposed to a blanket deregulation across industries. |
