Competition policy and economic activity: An empirical panel data assessment

Competition policy occupies a central place in stimulating economic activity by protecting and strengthening market competition. There is empirical evidence showing that countries with more effective competition policies experience higher levels of economic development relative to countries with less effective policies. The aim of this paper is to empirically assess the impact of competition policy effectiveness in post-socialist countries on their level of economic activity. This group of countries has undergone intensive market reforms, but with different outcomes in terms of establishing the preconditions for effective competition. The article conducts static and dynamic panel regression analysis on a sample of twenty post-socialist countries. Specifically, the LSDV model is used to examine the underlying relationships among variables, while the GMM model is used to capture dynamic influences. The study covers the period from 2007 to 2017, due to limited data availability on competition policy measures. The measure of competition policy effectiveness is the indicator of antimonopoly policy effectiveness from the World Economic Forum's Global Competitiveness Report, while economic activity is measured by the gross domestic product (GDP). The research results show that an increase in competition policy effectiveness has a positive effect on GDP levels.