Regulation of Entry and the Variety of Manufactured Exports from Developing Countries

This paper analyzes the effect of regulation of firm entry on the variety of manufactured goods exported by developing countries. Using panel regressions, I find robust evidence that an increase in entry regulation significantly reduces the variety of manufactured goods that developing countries export. Given the evidence which clearly shows that export variety of manufactured goods positively affects productivity, the results imply that reducing regulatory barriers to entry can raise productivity, and this is especially important in low income countries where exports are heavily concentrated in primary products and the cost of entry regulation is quite high.