9 J.L. Pol'y & Globalization 1 (2013)

handle is hein.journals/jawpglob9 and id is 1 raw text is: 

Journal of Law, Policy and Globalization                                                          wwwiiste.org
ISSN 2224-3240 (Paper) ISSN 2224-3259 (Online)
Vol.9, 2013                                                                                             1154

    The Impact of Regulation according to International law on economic growth in ECO


                                   Zaei, Karim' Gudarzi Farahani, Yazdan2

     1. M.A student in International Law, Faculty of Law and Political Science, University of Tehran, Iran.

     2. M.A. student in Economics, University of Tehran, Faculty of economics, Shomali Kargar, Tehran, Iran.
 E-mail of the corresponding author: karimzaeiayahoo.com.

This paper investigates the long-run relationship between regulation and economic growth for a panel of ECO
countries over the period 1990-2011 by employing the recently developed panel data unit root tests and the Pedroni
panel data cointegration techniques. In particular, building effective regulatory structures in ECO countries is not
simply an issue of the technical design of the most appropriate regulatory instruments; it is also concerned with the

quality of supporting regulatory institutions and capacity. This paper explores the role of state regulation using an
econometric model of the impact of regulation on growth. Furthermore, conditional on finding cointegration, the
paper extends the literature by employing the Pedroni Panel Fully Modified Ordinary Least Squares (FMOLS)
procedure to generate consistent estimates of the relevant panel variables. The results based on two different

techniques of estimation suggest a strong causal link between regulatory quality and economic performance.

Keywords: Regulatory, Economic Growth, Panel Cointegration, ECO countries.

1. Introduction

        The role of an effective regulatory regime in promoting economic growth and development has generated

considerable interest among researchers and practitioners in recent years. Regulation can take many forms and the
form of regulation policy adopted in developing countries has shifted over time (Minogue, 2005). From the 1960s to
the 1980s, market failure was used to legitimize direct government involvement in productive activities in
developing countries, by promoting industrialization through import substitution, investing directly in industry and
agriculture, and by extending public ownership of enterprises. However, following the apparent success of market
liberalization programmers in some developed countries, and the evidence of the failure of state-led economic
planning in developing ones, the role of state regulation was redefined and narrowed to that of ensuring an

undistorted policy environment in which efficient markets could operate. Deregulation was widely adopted, often as
part of structural adjustment programmers, with the aim of reducing the regulatory burden on the market economy

(Jalilian and et al, 2007).

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