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Many governments face the predicament of how best to allocate resources between economic development and environmental protection. This article explores the relationships between political influence, regulatory stringency, and economic growth. Drawing from data measuring the stringency of state energy regulations in the United States, the analysis finds that political ideology and the organizational form of state environmental agencies are significantly associated with the degree of regulatory stringency. Also, more stringent regulations and a super agency or a combined environmental agency structure predict an increase in economic growth, while a more Traditionalist political culture predicts a decrease in economic growth. This study contributes to the literature by highlighting the importance of political factors in the design of governmental regulations. Moreover, the findings suggest that greater regulatory stringency may not be necessarily detrimental to economic development and that properly designed regulations may promote economic growth in the long run.

The politics of regulatory design: evidence from state-level energy regulations in the United States