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The underlying study analyzes the impact of competition on economic growth, and tests whether this impact might change according to the technological gap between the observed country and the technological leader country. Using panel data estimation for a sample of 115 countries over the period 1995-2010, and controlling for the MENA countries in the sample, the results suggest that intensive domestic competition, proxied by business freedom, tends to hinder the growth rate of an economy independent of the country's distance from the technological frontier, providing evidence in support to the Schumpeterian argument. However this effect is almost negligible for MENA countries. On the other hand, the impact of competitive pressures from foreign markets, measured by trade freedom, is dependent on the country's technological gap. In particular, the results show that trade freedom has a stronger negative impact on growth as countries move closer to the technological frontier. Such an impact of trade freedom on growth applies to all countries, including MENA ones.



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Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.