Regulatory Reform in OECD Countries

Regulatory Policies in OECD
Benefits, costs, and best
by Josef Konvitz
Head of OECD Regulatory Policy Division
What are regulatory policies?
policies are designed to maximise
the efficiency transparency and accountability
of regulations based on an integrated rulemaking approach and the application of
regulatory tools and institutions.
Regulatory policies improve the
functioning of markets
 Boosts consumer benefits
• reducing prices for services and products such as electricity, transport, and
health care, and by increasing choice and service quality.
 Supports sustainable, non-inflationary growth
 Improves competitiveness
• Reducing the cost structure of exporting and upstream sectors in regional
and global markets.
 Fosters flexibility and innovation
 Increases job creation
by creating new job opportunities, and by doing so reducing fiscal demands
on social security, particularly important in ageing populations.
 Reduces risk of crisis due to external shocks
OECD Regulatory Policy Concept
Regulatory quality is the driving principle behind
reform today
 Deregulation where markets work better than
 Re-regulation and new regulatory institutions where
markets cannot work without governments
 More efficient government and social regulations to
achieve high standards of health, safety and
environmental protection at lower economic cost
Main Elements of a Regulatory Policy
 What is a ‘good’ regulation?
The 1995 OECD Checklist for Regulatory Quality
The 1997 OECD Recommendations on Regulatory Reform
The 2005 OECD Principles for Regulatory Quality and
 Set a Regulatory Policy
• Efficiency, transparency & accountability
 Assure political support
• Institution building
 Set a strategy to drive the Policy
• Capacity building for
Improving rule-making
 Reviewing existing regulations
 Implement the Policy
The Regulatory Checklist of the OECD
1995 Recommendations
Is the problem correctly defined?
Is the government action justified?
Is regulation the best form of government action?
Is there a legal basis for regulation?
What is the appropriate level (or levels) of government
for this action?
Do the benefits of regulation justify the costs?
Is the distribution of effects across society transparent?
Is the regulation clear, consistent, comprehensible and
accessible to users?
Have all interested parties had the opportunity to
present their views?
How will compliance be achieved?
Strategies for Assuring Regulatory Quality
I. Building a regulatory management system
 Regulate the regulators through transparency and accountability
mechanisms (laws, policies, institutions, procedures, enforcement,
II. Improving the quality of new regulations
 Control of the flow (consultation, RIA, alternatives, co-ordination,
III. Upgrading the quality of existing regulations
 Control of the stock (deregulation, up-dating, codification and
restatement, administrative simplification)
Since 1997
 Twenty multidisciplinary country reviews: Canada, Czech
Republic, Denmark, Finland, France, Germany, Greece, Hungary,
Ireland, Italy, Japan, Korea, Mexico, Netherlands, Norway, Poland,
Spain, Turkey, United Kingdom, United States
 Detailed assessments of progress in: regulatory management,
competition policy, international market openness, sectoral reforms
 Research on the link between regulatory reform and
economic performance
Visible developments
• Regulatory policy is now on governments’ road map
• Rapidly emerging best practices across all fronts
• Specific achievements, for example with transparency
• Visible development of more competitive markets
• “Whole of government” approach to high quality regulation not
yet achieved
Uneven progress across OECD countries: a growing gap
between leaders and the rest
Regulatory reform often still perceived to mean a “one-off” effort
on specific issues, rather than a continuous, dynamic process.
Regulatory reform and economic performance
 Drivers of economic performance and sustained growth: structural
reforms are a powerful complement to fiscal and monetary
 Product market reforms, including regulatory reforms, have a
confirmed positive effect
• Productivity: countries that have extensively reformed their product
markets experienced an acceleration of productivity in the 1990s
• Employment: reform can also play an important role in lowering
structural employment rates
 Regulatory policies that help economic performance and market
Reducing barriers to international trade
Promoting domestic competition
Simplifying administrative procedures
Lessons of experience
Leadership as most important ingredient for success
Crises as catalyst for change
Harmful effects of a short-term perspective
Role of central regulatory bodies to change
administrative culture
 Need for communication strategy to build
constituency for reform
 Getting the level of intervention right
Towards the future: interface between
the public and private sectors
 Management of complexity of policy
objectives, with often unexpected outcomes
 Greater use of alternatives to regulation
 Evaluation of regulations and of their social
and economic impacts
 Risk awareness
 Extending coverage to public services such
as education, health, environment
Future challenges (1)
 Cultural change: needs to be promoted across government
 A culture which is fully aware of the importance of good regulation is not yet fully
embedded in administrations
 Improving the State-citizen relationship is a start, efforts are now needed to
improve capacities for effective rule-making
 Particular weaknesses are the integration of competition principles, and
communication between trade policy and regulatory officials
 Evaluation: integrating the lessons of past experiences
 Developing a better understanding of the link between regulatory processes and regulatory
 Learning from failures as well as successes
 Further development and integration of best practices
 Communication: engaging all stakeholders
 Engaging currently marginalised but important stakeholders such as SMEs and foreigners
 Dealing with vested interests
 Engaging all relevant stakeholders, including the general public
Future challenges (2)
 Putting regulatory policy to work
 The current agenda still needs attention
 Deregulation of closed and sheltered product and service markets is still needed
in many countries
 Reforms of the network sectors need to continued, in some cases more
 An emerging challenge: the public sector
 The public sector – “regulation within government” and of public services – has
been comparatively neglected
 The public spending to GDP ratio in the OECD is 40%, so the potential for
raising economic performance and social welfare through the application of
regulatory quality to this part of the economy is huge
 Managing competition in public services is an important area for the “regulatory
 Public services at the local government level need special attention
 Adopt whole-of-government approach;
avoid ad-hoc and piecemeal solutions
 Adopt
improvements; the benefits of reform
wear off
 Learn from each other's experience,
including failures as well as successes
 Change the administrative culture and
expectations of citizens