Editing Red tape (section)

===Red tape and economic growth===
While efficient government institutions can foster economic growth, cumbersome and unnecessary bureaucracy that delays permits and licenses slows technological advances.<ref name=Mauro/>
Red tape has been found to be an obstacle to investment and growth in a study using data for 68 countries.<ref name=Mauro>{{cite journal | title=Corruption and Growth | first=Paolo | last=Mauro | journal=The Quarterly Journal of Economics | doi=10.2307/2946696 | url=https://academic.oup.com/qje/article-abstract/110/3/681/1859244 | date=August 1995 | volume=110 | issue=3 | pages=681–712 | jstor=2946696 | url-access=subscription }}</ref>

Policies that require government regulation and bureaucratic intervention can stifle economic progress, as has been documented by economist [[Anne Osborn Krueger|Anne Krueger]] in the context of an import-substitution development strategy.<ref name=Krueger/><ref name=Duvanova>{{cite journal | journal=World Development | title=Economic Regulations, Red Tape, and Bureaucratic Corruption in Post-Communist Economies | first=Dinissa | volume=59 | last=Duvanova | doi=10.1016/j.worlddev.2014.01.028 | date=2014 | pages=298–312 }}</ref>{{rp|298}}
This type of policy reduces the incentive to produce exports, thereby generating a foreign exchange "shortage" that puts pressure on governments to restrict imports to high priority areas such as medicines over consumer luxuries.
These restrictions require increased intervention, such as additional customs inspections and import approvals.  In turn, this leads to delays and greater complexity of the system, which raises costs for importers.
The higher costs create an incentive for black-market activity, thereby leading to political pressure to tighten still further the restrictive import regime.  
Over time, regulation and red tape promote more red tape and regulation in a vicious circle, as supporters of import substitution become more entrenched, while those who oppose it, such as exporters, cannot survive in the new environment.<ref name=Krueger>{{cite journal | title=Virtuous and Vicious Circles in Economic Development | first=Anne O. | last=Krueger | journal=American Economic Review | date=May 1993 | volume=83 | issue=2 | pages=351–355 | url=https://www.jstor.org/stable/2117689 | doi= | jstor=2117689 }}</ref>
Rising costs of administration in the private sector, along with costs of delays and market inefficiency, weigh on economic performance and often result in an economic crisis.<ref name=Krueger/>