Transcript Cranfield_Landscape - Competition Commission of India

CONDUCTING REGULATORY IMPACT
ANALYSIS: INTERNATIONAL EVIDENCE
David Parker
Cranfield School of Management and University of Manchester
Workshop on Competition Assessments and Regulatory impact
Analysis: 17-18 March 2006, Imperial Hotel, Delhi
• ‘Better regulation does not always mean less
regulation’ (World Bank, 2001)
• ‘Investment climate improvements are, at their heart,
about improving the quality of governance and
policymaking’
World Bank, World Development Report, 2005
Conducting Regulatory Impact
Page 2
1.The Principles of RIA
• RIA “is a key tool in delivering better regulation.
The RIA process will help departments deliver
successful policy”
(UK’s Beter Regulation Executive)
• RIA is a tool for improving the quality of regulatory
decision-making, by providing a framework for the
systematic assessment of potential or actual
impacts of regulation measures
• And thereby improve the quality of regulatory
policy (regulatory governance)
Conducting Regulatory Impact
Page 3
Most countries using RIA rely on ex ante assessments.
Ex post assessments are rarer
New
regulations
(ex ante)
RIA
BETTER
REGULATION
RIA
Existing
regulations
(ex post)
Conducting Regulatory Impact
Page 4
The RIA Process
Stage 1: Identify the problem
Is regulation the appropriate response?
YES
NO
Regulation
avoided
Are all those likely to be affected
included in the consultation?
Stage 2: Consultation
YES
Stage 3: Preparation of the
legislation
Does the legislation reflect the
evaluation undertaken and does it
adequately address the problem?
YES
Stage 4: Re-evaluation of the
regulation legislation during
Parliamentary passage
NO
Regulation
abandoned or
legislation redrafted
Does the legislation still meet the
objectives as originally intended?
YES
Stage 5: Monitoring existing
regulation
NO
Regulation abandoned
or consultation
exercise repeated
NO
Regulation
abandoned or
legislation redrafted
Is the regulation still achieving its intended
benefits and without unanticipated costs?
Regulation remains
appropriate – but still
re-assess periodically
YES
Conducting Regulatory Impact
NO
Abolish the
regulation or
amend it
Page 5
What is in a “good” RIA
• A clear definition of the problem
• A discussion of the RIA process (including the
consultation process)
• Qualitative analysis (benefits and costs)
• Quantitative analysis (wherever possible)
• A clear explanation of the decision taken
• Publication of the RIA document
Conducting Regulatory Impact
Page 6
OECD RIA CHECKLIST
•
•
•
•
•
•
•
•
•
•
Is the problem correctly defined?
Is 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?
Source: OECD (1995)
Conducting Regulatory Impact
Page 7
• RIA is a tool for decision-making, not a decision-making
tool
• RIA can contribute to:
1. Better outcomes for the regulatory intervention, by
assessing impacts in terms of goals and
objectives
2. Better processes for decision-making, consistent
with the principles of “good regulation”
Conducting Regulatory Impact
Page 8
2. The Use of RIA internationally
• Widespread adoption of RIA in OECD countries;
100% adoption in UK central government
• Growing experimentation with RIA in other
economies e.g. transition economies of Central and
Eastern Europe.
• Arguably, however, there is still a need for a
framework for applying RIA in a development context
Conducting Regulatory Impact
Page 9
The use of RIA in developed economies
• Origins in the USA.
• Recommended for use in the OECD.
• A well developed policy in the UK (although still with
some need for further development) – see criticisms
of the National Audit Office (e.g. rarely are benefits
quantified, description of monitoring and evaluation
procedures in-complete:NAO, 2004, 2005).
• Similar weaknesses found in studies of the use of
RIA in the USA and the European Commission.
Conducting Regulatory Impact
Page 10
The Use of RIA in Developing Countries
OECD reports use in Mexico and South Korea: with mixed results:
• eg.in Mexico – “The biggest problem for the Costs and Benefits
Section of the RIA is that the quality of data is generally poor
and this quantitative analysis of proposals is virtually
impossible. Regulatory authorities are not asked to produce net
benefit estimates for fear of creating additional incentives to
distort already inadequate data” (OECD, 1999, p.159).
• In Korea: “the bulk of the RIA is still being conducted at quite a
low level of sophistication” (OECD, 2000, p.29)
Conducting Regulatory Impact
Page 11
Research at the Centre on Regulation and Competition
• The CRC at the Universities of Manchester and Cranfield sent a
Questionnaire to a range of regulators in 99 countries and replies
were received from 40 countries
.
• The majority of responses were from regulators of utilities
(energy -25; telecoms – 23).
• All respondents were in senior positions (e.g. 23 held the post of
director-general or equivalent).
Conducting Regulatory Impact
Page 12
Questions asked related to:
• existing familiarity with RIA as a concept and the OECD
guidelines;
• the existing use of RIA within the country;
• legal requirements to adopt RIAs and the existence of published
RIA guidance within government;
• the form RIAs take when used;
• the processes used within government when undertaking RIAs;
• RIA transparency, in terms of published documentation;
• public consultation and participation in RIA exercises;
• RIA and wider regulatory reforms.
Conducting Regulatory Impact
Page 13
Countries from which completed Questionnaires were
returned
Asia (9 countries)
India, Jordan, Korea, Malaysia, Oman, Pakistan, the Phillipines,
Sri Llanka, Thailand
Africa (16 countries)
Algeria, Botswana, Cameroon, Gabon, Ghana, Guinea Bissau,
Kenya, Malawi, Mauritius, Morocco, Nigeria, South Africa,
Tanzania, Uganda, Zambia, Zimbabwe
Latin America & Caribbean (9 countries)
Barbados, Brazil, Colombia, Jamaica, Mexico, Nicaragua, Peru,
Uruguay, Venezuela
Transition Economies (6 countries)
Albania, Estonia, Georgia, Lithuania, Moldova, Romania
Conducting Regulatory Impact
Page 14
When are RIAs used?
Region
RIA Applied to All or Most
New Regulations
RIA Never Applied
Do not Know
Asia (no. of countries)
8
0
1
Africa (no. of countries)
11
3
2
Latin America (no.of countries)
6
3
0
Transition Economies
(no. of countries)
5
1
0
Only 6 respondents, however, were familiar with the OECD guidelines.
Mainly used for ex ante assessment only. Few reported existence of guidelines.
Conducting Regulatory Impact
Page 15
Application of RIA
Region
Economic
Regulation
Social
Regulation
Environmental
Regulation
8
8
5
10
5
7
Latin America (no. of
countries
5
3
5
Transitional
Economies
(no. of countries)
5
5
4
Asia (no. of countries)
Africa (no. of countries)
Conducting Regulatory Impact
Page 16
RIA:covers costs & benefits?
Number of Countries
Applying RIA
30
Assessing benefits
only
2
Assessing benefits
and costs
18
Inconsistent
responses/don’t
know
10
Conducting Regulatory Impact
However,
Few claimed
to use
sophisticated
techniques
to quantify
costs and
benefits
Page 17
Conclusions from the research 1
• Relatively higher awareness of RIA in Asia than in Africa
(where around 60% of replies suggested little or no
awareness)
• Consultation occurs as part of RIA but usually with business
rather than consumer bodies.
• Only in a half of the cases were the results of consultation
made public suggesting scope for more regulatory
transparency.
• In 22 of the 40 countries from which replies were received,
respondents reported that there was a strategy in place
promoting government-wide reforms in regulation.
Conducting Regulatory Impact
Page 18
Conclusions from the research 2
• Level of awareness of RIA in developing and transition
economies is higher than we might have expected, based on the
limited information previously available.
• Sample bias possible: perhaps the countries from which replies
were not received have less knowledge of RIA?
• We need to know more about exactly how RIA is being used and
its precise results – this is the subject of on-going case study
research with our partners.
Conducting Regulatory Impact
Page 19
4. Overall Conclusions
• We need to adapt RIA to meet the needs and
conditions of lower-income economies.
• We need to develop a focus on poverty reduction.
• We need to guard against ‘capture’ of the process.
Conducting Regulatory Impact
Page 20