THE EFFECTIVENESS OF COMPETITION LAW IN PROMOTING ECONOMIC DEVELOPMENT

Abstract

Enforcement of competition law can promote economic development in developing countries. Competition law can stimulate economic development through its impact on intensity of competition and through a signaling effect to investors and entrepreneurs. There is evidence that a country that has enacted and applied a competition law has on average a higher GDP per capita than a country without a competition law. This quantitative impact is half as large as the impact of an institutional variable such as rule of law. The characteristics of competition law also matter. De facto independence of the competition agencies and the substantive contents of the law matter for economic development.