Democracy and Regulatory Reforms

We use a sample of 144 countries over the period 2003-2013 to investigate the link between democracy and regulatory reforms. Democracy may be conducive to reform, as politicians embrace growth-enhancing reforms to win elections. On the other hand, authoritarian regimes may not worry as much about public opinion and could undertake reforms that are painful in the short run but bring long-term benefits. We test these alternative hypotheses, using data on regulatory reforms from the World Bank’s Doing Business database. The results provide some support for the hypothesis that democracy is good for regulatory reforms. We also show that reforms are more likely just after parliamentary elections in poor and middle-income countries, thus providing further support for the democracy-reforms nexus