Received: 2020-09-18  |  Accepted: 2021-02-08  |  Published: 2021-03-30

Title

The effect of regulatory performance on economic growth


Abstract

The tendency to fall into a middle-income trap position due to weak regulatory performance remains a longstanding issue faced by the majority of upper-middle-income economies (UMIE). Although regulatory performance is considered as one of the most vital factors that determine the financial progression and stability of a nation, this variable is often overlooked in previous economic growth literature. Hence, this study aims to examine the important role of regulatory performance in accelerating the economic growth of 30 upper-middle-income economies countries within the timeframe of 2000 to 2018. Using the two-step system Generalised Method of Moments (GMM), the findings reported that regulatory performance is indeed essential in stimulating economic growth. The results also indicated that lengthy procedures and waiting period involved in opening and registering new businesses are a common predicament for start-up firms. This proves to be a demotivating factor for new investors, indirectly slowing down the economic performance of the UMIE. As this study leads to various policy implications, future studies can consider advancing research in this area by further examining the link between regulatory performances and economic growth for individual countries based on a time series analysis.


Keywords

middle-income trap, upper-middle-income economies, regulatory performance, economic growth, system GMM


JEL classifications

K20 , K22 , O43 , O47


URI

http://jssidoi.org/jesi/article/802


DOI


Pages

604-617


Funding

This research was supported in part by Universiti Teknologi MARA Melaka and Universitas Pendidikan Indonesia, under 2020 Teja’s International Matching Grant Scheme (Grant no: GSAT2020–13).

This is an open access issue and all published articles are licensed under a
Creative Commons Attribution 4.0 International License

Authors

Rahman, Nur Hayati Abd
Universiti Teknologi MARA, Shah Alam, Malaysia https://www.uitm.edu.my
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Ismail, Shafinar
Universiti Teknologi MARA, Shah Alam, Malaysia https://www.uitm.edu.my
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Ahman, Eeng
Universitas Pendidikan Indonesia, Bandung, Indonesia https://web.upi.edu
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Nurasyiah, Aas
Universitas Pendidikan Indonesia, Bandung, Indonesia https://web.upi.edu
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Wulandari, Neni Sri
Universitas Pendidikan Indonesia, Bandung, Indonesia https://web.upi.edu
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Journal title

Entrepreneurship and Sustainability Issues

Volume

8


Number

3


Issue date

March 2021


Issue DOI


ISSN

ISSN 2345-0282 (online)


Publisher

VšĮ Entrepreneurship and Sustainability Center, Vilnius, Lithuania

Cited

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References