Economic Effects of Regulatory Reform in Korea

  • Received : 2017.08.12
  • Published : 2017.11.30


This paper adapts the World Bank Regulatory Quality Index (RQI), which is produced annually to provide a better understanding of the effects of regulatory reforms, instead of the Production Market Regulation (PMR) indicators, which are published every five years. We find that 9.9 to 36.0 billion USD worth of regulatory cost could be reduced if the regulatory quality in Korea improves to the level of the OECD average considering that the total burden of regulation in Korea is estimated to range from 2.2 to 357.4 billion USD. The estimated reduction in the regulatory cost accounts for roughly 0.76 to 2.47% of Korea's GDP in 2013, underscoring the importance of regulatory reforms for the Korean economy. This paper introduces a new method with which to examine the distribution of regulatory costs across different industries and firm sizes. This alternative method is largely consistent with the conclusions reached by other studies, specifically that small firms typically bear a disproportionate regulatory burden.


  1. Barro, R. 1997. Determinants of Economic Growth: A Cross-Country Empirical Study, Cambridge: The MIT Press.
  2. Crain, N. V. and W. M. Crain. 2010. "The Impact of Regulatory Costs on Small Firms," Report for the Office of advocacy, Washington: U.S. Small Business Administration.
  3. Crain, W. M. 2005. "The Impact of Regulatory Costs on Small Firms," Report for the Office of Advocacy, Washington: U.S. Small Business Administration.
  4. Kraay, Aart, D. Kaufmann and M. Mastruzzi. 2010. "The worldwide governance indicators: methodology and analytical issues," Policy Research Working Paper 5430, World Bank.
  5. Lee, Dongwon, Sunbin Kim, and Joon Park. 2008. "Analysis on Economic Regulatory Cost in Korea," Issue Paper 2008.3, Samsung Economic Research Institute, pp.1-37 (in Korean).
  6. Lee, Jonghan and Hyungjun Park. 2012. Regulatory Reform for Fairness of Small-Mid Size Firm, Korea Institute of Public Administration (in Korean).
  7. Simpson, R. D. 2014. "Do Regulators Overestimate the Cost of Regulation?" Journal of Benefit Cost Analysis 5(2), pp.315-332.