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Better Competition Policy Significantly Improves Productivity Growth

Press Release of July 16, 2014

Economists have long discussed the correlation between the quality of competition policies and a country's productivity growth. It is, however, very difficult to prove this connection, to determine its extent or to quantify it. Commissioned by the European Commission, a team of international researchers, led by DIW competition expert Tomaso Duso, has developed the first evaluation system to assess the effectiveness of competition policy, enabling economists to make observations regarding the impact of changes in competition policy on productivity growth. The study shows that a one-percent improvement in competition policy, based on the indicators used here, is responsible for an average increase in Total Factor Productivity (TFP) of 4.5 percent.
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