Abstract
Using industry-level data from 14 OECD countries and doing business indicators of the World Bank, we analyze how country-level regulations of business activities affect investments in information and communication technologies (ICT). We find that investments in ICT decrease with the costs of starting and operating a business and registering property. Investments increase with the strength of legal rights. We also find that investments in software increase with the ability of shareholders to sue managers for misconduct, and investments in communication technologies decline with the extent of director liability for self-dealing.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
This statement is essentially an analogue of the Rybczynski theorem.
Clearly, we need to assume that \(1-\tau _{x}-\left[ \left( 1+\tau _{r}\right) r-g_{A}\right] \bar{\tau }>0\) in order to have positive investments.
In case when entry cost is proportional to m, similar inference holds for certain parameter values.
To our knowledge, this is the only database which contains sufficiently detailed industry-level data.
The consumption of communication services tends to exhibit strong differences between the period before financial crisis and the period of financial crisis.
We perform a simple ANOVA exercise for the share of ICT capital compensation in US industries for an extended period of 2000–2007. This exercise suggests that industry-level variation accounts for 96.5 % of the total variation.
Variables related to starting business are available from 2004.
A simple ANOVA exercise performed on these variables suggests that country-level variation explains 82.8–99.0 percent of the total variation. In turn, time variation explains only 0–2.9 percent.
Online appendix—data offer the correlations between country- and industry-level variables and additional basic statistics.
In an attempt of ruling out other explanations for our results, we perform various robustness checks and offer the results in Online appendix—robustness checks.
References
Acemoglu D, Johnson S, Robinson JA (2001) The colonial origins of comparative development: an empirical investigation. Am Econ Rev 91(5):1369–1401
Alesina A, Ardagna S, Nicoletti G, Schiantarelli F (2005) Regulation and investment. J Eur Econ Assoc 3(4):791–825
Amin M, Haidar JI (2012) The cost of registering property: does legal origin matter? Empir Econ 42(3):1035–1050
Andonova V, Diaz-Serrano L (2009) Political institutions and telecommunications. J Dev Econ 89(1):77–83
Barone G, Cingano F (2011) Service regulation and growth: evidence from OECD countries. Econ J 121(555):931–957
Barseghyan L (2008) Entry costs and cross-country differences in productivity and output. J Econ Growth 13(2):145–167
Bena J, Ondko P, Vourvachaki E (2011) Productivity gains from services liberalization in Europe. CERGE-EI Working Papers, p 452
Branstetter L, Lima F, Taylor LJ, Venâncio A (2014) Do entry regulations deter entrepreneurship and job creation? Evidence from recent reforms in Portugal. Econ J 124(577):805–832
Carlin W, Mayer C (2003) Finance, investment, and growth. J Financ Econ 69(1):191–226
Claessens S, Laeven L (2003) Financial development, property rights, and growth. J Finance 58(6):2401–2436
Djankov S, McLiesh C, Ramalho RM (2006) Regulation and growth. Econ Lett 92(3):395–401
Djankov S (2009) The regulation of entry: a survey. World Bank Res Obs 24(2):183–203
Grajek M, Röller LH (2012) Regulation and investment in network industries: evidence from European telecoms. J Law Econ 55(1):189–216
Gruber H, Verboven F (2001) The diffusion of mobile telecommunications services in the European Union. Eur Econ Rev 45(3):577–588
Gust C, Marquez J (2004) International comparisons of productivity growth: the role of information technology and regulatory practices. Labour Econ 11(1):33–58
Haidar JI (2009) Investor protections and economic growth. Econ Lett 103(1):1–4
Haidar JI (2012) The impact of business regulatory reforms on economic growth. J Jpn Int Econ 26(3):285–307
Heli K, Kretschmer T (2005) Entry, standards and competition: firm strategies and the diffusion of mobile telephony. Rev Ind Organ 26(1):89–113
Jorgenson DW, Stiroh KJ (2000) Raising the speed limit: US economic growth in the information age. In: Jorgenson DW, Stiroh KJ, Gordon RJ, Sichel DE (eds) Brookings papers on economic activity. Brookings Institution Press, Washington, DC, pp 125–235
Jorgenson DW, Ho MS, Stiroh KJ (2005) Information technology and the American growth resurgence. MIT Press, Cambridge
Ketteni E, Mamuneas TP, Stengos T (2007) Nonlinearities in economic growth: a semiparametric approach applied to information technology data. J Macroecon 29(3):555–568
Ketteni E, Mamuneas TP, Stengos T (2011) The effect of information technology and human capital on economic growth. Macroecon Dyn 15(5):595–615
Klapper L, Laeven L, Rajan RG (2006) Entry regulation as a barrier to entrepreneurship. J Financ Econ 82(3):591–629
Nardotto M, Valletti T, Verboven F (2012) Unbundling the incumbent: evidence from UK broadband. CEPR Discussion Papers, p 9194
Rajan RG, Zingales L (1998) Financial dependence and growth. Am Econ Rev 88(3):559–586
Venturini F (2009) The long-run impact of ICT. Empir Econ 37(3):497–515
Acknowledgments
We would like to thank two anonymous referees, Sophia Dimelis, Xavier Raurich, Fernando Sánchez-Losada, Montserrat Vilalta-Bufi, and seminar participants at the Arnoldshain Seminar XII in Valencia (2014) and the Armenian Economic Association Meeting in Yerevan (2014) for thoughtful comments. Vahagn Jerbashian acknowledges the financial support from the Spanish Ministry of Education and Science through grant ECO2012-34046 and the Generalitat of Catalonia through Grant 2014SGR493.
Author information
Authors and Affiliations
Corresponding author
Additional information
CERGE-EI is a joint workplace of the Center for Economic Research and Graduate Education, Charles University in Prague, and the Economics Institute of Academy of Sciences of the Czech Republic.
Electronic supplementary material
Below is the link to the electronic supplementary material.
Rights and permissions
About this article
Cite this article
Jerbashian, V., Kochanova, A. The impact of doing business regulations on investments in ICT. Empir Econ 50, 991–1008 (2016). https://doi.org/10.1007/s00181-015-0953-8
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s00181-015-0953-8