The effect of business regulation on social progress

Abstract

This study sought to determine the effect of business regulation on social progress. The dependent variable, social progress, was measured in terms of social progress index of the sampled countries. On the other hand, the independent variable, business regulation, was measured in terms of business regulation score. Consequently, the study used secondary data from a sample of 248 countries over a period of five years (2014-2018). In order to determine the appropriate model for analysis, the study conducted the Hausman test where it was established that the random effect model was more appropriate as compared to the fixed effect model. Using the Stata computer program to run multiple regression analysis of the random effect model, the study findings indicated that business regulation has a positive and significant effect on social progress as given across all the six models that were estimated in this study. However, the overall effect of regulation, as given by the estimated regression coefficients under the respective models, kept varying with the introduction of an additional control variable. These findings were in accordance with the study expectations that business regulation significantly affects social progress. Further, the findings implied that, governments should devote additional resources towards addressing the social indicators of progress to meaningfully improve the living standards of residents, instead of solely focusing on economic and environmental factors. On the other hand, considering that the current study did not categorize countries according to their levels of development, it recommends for further research to determine the effect of business regulation on social progress in low-income, middle-income, and high-income countries to allow for comparison of findings from countries that are at different levels of development.