Transcript Political Economy of Competition and Regulation in Developing Countries

Political Economy of Competition and
Regulation in Developing Countries
Pradeep S. Mehta, Secretary General
CUTS International
Interim Review Meeting
7Up4 project, The Gambia
July 30th, 2009
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Background
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
Appropriate regulation, competition policy and law are
fundamental requirements in a market oriented economy

Developing countries pose unique challenges

Political economy considerations
institutions and are under researched.

Strong need exists to address and overcome problems
influence
regulatory
Problems

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Constraints that frustrate the adoption and implementation of
competition and regulatory regimes
•
Lack of political will to adopt and implement the law
•
Non-conducive government policies
•
Conflicting objectives of stakeholders
•
Overlap between competition and regulatory authorities
•
Public interest considerations
Contd….
•
Barriers posed by vested interests
•
Lack of competitive neutrality
•
Unsynchronised regulation
•
Lack of basic institutional infrastructure
•
Lack of commitment to growth as a political objective
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Consequences
•
Over or under regulation depending upon pressure exerted by
interest groups
•
Sub-optimal level of competition especially in industries
where competition has to be sustained by cooperation among
players (roaming agreement)
•
Use of regulation to promote economic power of vested
interest groups at the expense of weaker socio economic
groups
•
Proliferation of anti-competitive practices leading to lower
output, limited choice, and poor quality
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Overcoming problems
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Alignment of competition policy outcomes and creation of
incentives for all stakeholders
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Political will and consensus for reforms
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Mechanism to synchronise regulatory activities
•
Prioritisation of work
•
Allocation of behavioural issues to competition authorities,
and structural issues to the regulators
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Contd…
•
Pursuit of public interest as an important policy objective:
- Promotion of employment opportunities
- Promotion of participation of SMEs in the
economy
•
Pursuit of efficiency objectives including promotion of
adaptability, and economic development
•
Resolution of conflict through trade offs
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Recommendations for the Future
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•
Important to create a culture of competition
•
Necessary to better understand the nexus among regulation,
politics and markets
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Customisation is necessary
•
Perceived successes and failures should be studied
•
Consumer advocacy and empowerment is crucial
Thank You
Email: [email protected]
Cell: +919829013131
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