Tuesday, May 23, 2017

How British Columbia cut regulations by almost 30 percent & turned its economy around

See Using Regulatory Reform to Boost Growth by James Broughel of Mercatus. Excerpts:
"Regulatory reform could be a form of low-hanging fruit to boost growth at a time when state and federal budgets are pinched. The experience of the Canadian province of British Columbia offers a model for how this can be done. In 2001, the province began a red tape cutting effort, with a goal of reducing regulatory requirements by a third within three years. In June of 2001, the province had 382,139 requirements in place. By March of 2004, that number had fallen to 268,699—a decline of almost exactly 30 percent.

As the first chart illustrates, in the years leading up to the reform, British Columbia was experiencing a “dismal decade”—a phrase used to describe the sluggish economy in the province around that time. Real GDP in the province grew, on average, 1.9 percent less than Canada’s between 1994 and 2001. Meanwhile, growth shot up in the years after the reform began. British Columbia experienced a rebound, and growth was 1.1 percent higher per year, on average, than Canada’s between 2002 and 2006.

The absolute numbers make British Columbia’s improvement in economic performance more clear, as the second chart shows. In the 1994–2001 period, real GDP grew on average by 2.6 percent per year; this jumped to 3.8 percent in the 2002–2006 period. This difference is statistically significant (p=.08). A difference of just over one percentage point in growth might not sound like a lot, but consider the following: An economy that grows at 1 percent per year will double in size roughly every 70 years, but an economy growing at 2 percent takes half the time to double—just 35 years. An economy growing at 4 percent will double GDP in a mere 18 years."

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