MOEA Training Course 2011 Competitiveness and regulation Charles-Henri MONTIN Senior Regulatory expert Ministry of economy and finance France French representative to OECD/RPC [email protected]
Dec 31, 2015
MOEA Training Course 2011
Competitiveness and regulation
Charles-Henri MONTINSenior Regulatory expertMinistry of economy and financeFranceFrench representative to OECD/[email protected]
Starting point
Price variations across countries for the same goods
How important a factor is regulation in a country’s competitiveness
What is the economic basis of regulatory quality
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National Competitiveness “policy clusters”
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Dangers: ideological bias (“liberalisation”) lack of economic analysis
Source: Weymouth and Feinberg
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How to nurture competitiveness
The economic basis
Economic studies (Nicoletti and Scarpetta 2003) show that product market reform are positively correlated to total factor productivity growth, with the strongest cause is reducing admin burden;
Gelauff (2006): a 25% cut of administrative burdens would lead to +0.9% GDP by 2005
Distinguish between:– Other factor market regulations (labour, H&S)– Product market regulation
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How regulation can support competitiveness
Reduce regulation that raises the cost of doing business Assure basic legal guarantees (land law, contracts,
dispute resolution, etc) and corporate governance FW Preserve level playing field for markets: competition
policy and law, financial markets supervision, – remove impediments to entry to markets and discriminations (regs or taxes) or
protecting incumbents against competitors
– Seek out anticompetitive behavior, to avoid rents, for lower prices
Enforce standards to disseminate major technologies
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Use regulation to support competitiveness
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Quality of the business environment
Regulatory policyRules and incentives to foster investment and innovationRules that do not unduly skew allocation of corporate resourcesQuality sectoral legislation (land law, contracts, etc)
Competition policyRules and policies that favour efficient functioning of marketsNo undue barrier to entryAnti-trust legislationOpenness to foreign competition
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How regulation can hamper competitiveness
Costs– direct /indirect; compliance /admin costs– SMEs and the economies of scale
Unintended microeconomic choices: interfering with optimal allocation of resources within the company to different business processes. Regulatory uncertainty causes risk of deferral of investment
Barriers to efficient market functioning
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Qualities of regulation supporting competitiveness
Necessary Clear/ accepted Light (costs) Well targeted Stable Proportional Well applied
Professional assessment on the basis of international best practice
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Regulatory quality (RQ) supports NC
Not to be confused with regulatory competition Does not equate with deregulation RQ aims at making the best use of regulation in
support of the full range of public policies RQ pursues several objectives (growth, social
cohesion, risk management, protection), NC is one of the aims, not the only objective.
RQ can be more, or less, geared towards NC
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Dimensions of regulatory quality
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Competitiveness a main concern in RIA
The best tool is RIA: regulatory impact assessment: “competition” and “competitiveness” are the 2 first listed economic impacts to be studied
European Commission has made this even clearer by introducing the “competitiveness test” for all new EU law (Oct 2010) with public announcement
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