author: Adams, S., & Atsu, F. year: 2015 title: "Assessing the distributional effects of regulation in developing countries" publisher: Journal of Policy Modeling uri: https://doi.org/10.1016/j.jpolmod.2015.08.003 pubtype: article discipline: economics country: global period: 1970-2012 maxlength: targeting: implicit group: developing countries data: panel data design: quasi-experimental method: system general method of moments, fixed effects, OLS; using Gini coefficient sample: 72 unit: country representativeness: national causal: 0 # 0 correlation / 1 causal theory: limitations: macro-level observations subsumed under region-level scale only observation: - intervention: trade liberalization (FDI) institutional: 1 structural: 0 agency: 0 inequality: income type: 0 # 0 vertical / 1 horizontal indicator: 1 # 0 absolute / 1 relative measures: Gini coeff findings: FDI unlikely to generate equity-oriented welfare effects; trade openness not significantly related channels: wrong targeting incentive structure for FDI direction: 1 # -1 neg / 0 none / 1 pos significance: 2 # 0 nsg / 1 msg / 2 sg - intervention: regulation (labour) institutional: 1 structural: 0 agency: 0 inequality: income type: 0 # 0 vertical / 1 horizontal indicator: 1 # 0 absolute / 1 relative measures: Gini coeff findings: labour regulations and business regulations negatively related to equitable income distribution while credit market regulation has no effect in income distribution; FDI unlikely to generate equity-oriented welfare effects; trade openness not significantly related channels: regulatory policies often lack institutional capability to optimize for benefits; policies require specific targeting of inequality reduction direction: 1 # -1 neg / 0 none / 1 pos significance: 2 # 0 nsg / 1 msg / 2 sg - intervention: education (school enrolment) institutional: 1 structural: 0 agency: 0 inequality: income type: 0 # 0 vertical / 1 horizontal indicator: 1 # 0 absolute / 1 relative measures: Gini coeff findings: school enrolment positively related to equitable income distribution channels: capacity-building for public administration practitioners; more context-adapted policies generated direction: -1 # -1 neg / 0 none / 1 pos significance: 2 # 0 nsg / 1 msg / 2 sg notes: LM regulations defined as hiring/firing, minimum wage, severance pay; business reg. bureaucracy costs, business starting costs, licensing and compliance costs; credit market oversight of banks, private sector credit, interest rate controls annotation: | A study on the effects of labour, business and credit regulations, FDI and school enrolment on the income inequality in developing countries from 1970 to 2012. It finds that in MENA, SSA, LAC and to some extend AP increased labour and business regulations are actually negatively related to equitable income distribution, with market regulation not having significant effects. Similarly, FDI is negatively related and the authors suggest it is unlikely to generate general welfare effects in developing countries as it often has the wrong targeting incentive structure. The authors identify developing countries lacking in institutional capability to accomplish regulatory policies optimized for benefits and see the need for policies requiring more specific targeting of inequality reduction as their agenda. On the other, they find school enrolment and thus education-oriented policies to be positively related with an equitable income distribution, suggesting it increases the capacity of public administration practitioners and in turn lead to more adapted policies specific to developing countries' institutional contexts. Overall, the authors suggest that regulatory policy in developing countries needs to be built for their specific contexts and not exported from developed countries due to their different institutional capabilities and structural makeup. The study is limited in its design focus that lying purely on the macro-level regional analyses and can thus, when finding correlations towards income inequality, also only identify far-reaching structural and institutional possible root causes.