regulation and the governance agenda in the 21 st century josef konvitz, public governance...
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Regulation and the Governance Agenda in the 21st Century
Josef Konvitz, Public Governance Directorate
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Context
1. The Crisis2. Is regulation necessary for
globalisation?3. Relations between regulations and
the regulated.4. Crystallizing issues that are not
new.
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Definitions/History
DefinitionsRegulation by rulesRegulation by other policy
instrumentsCommand and controlHistoryFrom local to national (to 1900)By sectors
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OECD Regulatory Policy Concept
Regulatory quality is the driving principle behind reform today
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Deregulation where markets work better than governments
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
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2005 OECD Recommendations for Regulatory Quality
Less focus on regulatory reform
Promote concept of dynamic, long-term, pro-active effort
Economic and social objectives are mutually supportive
Regulatory quality, competition and market openness are mutually supporting
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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
Performance Set a Regulatory Policy
• Efficiency, transparency and 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
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Regulatory policies improve thefunctioning 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 shocks7
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Gains from reform: 1998 to 2003 Greater homogeneity across OECD countries for
« good » regulation:• Quality regulation, not just de-regulation• Incentive-based regulation in place of command-and-
control
Setting priorities on sectors where change will do the most good
The countries that have made the most progress had been the most restrictive• Reducing high degree of state control (price controls,
legal restrictions)• Using multilateral agreements to open trade,
investment• Removing barriers to entrepreneurship 8
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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 right9
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Narrow focus: The administrative burden is not everything
Administrative Burdens(Administrative compliance costs imposed by regulation)
Public Sector(Regulation Inside Government) Private Sector
Businesses• Inspections• Reporting• Permits
Citizens• Inspections• Reporting• Permits
= time ismoney
Tools: one-stop shops, reduced reporting frequencies, benchmarking exemptions, unified data bases…
Othercompliance costs
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Responsible regulation
•Capital•Administrative Burdens -public, private•Indirect
Regulatory Capacity for integrated approach 11
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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
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The Crisis - I
Regulatory gaps, captureMulti-levelPressure on the process
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The Crisis - II
Housing and educationEntrepreneurshipInnovation and risk
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After the Crisis
Tools (RIA)Policies (Ministers)Institutions (core; agences)Stronger role for the state but limits
on what the state can do:• Collective security – cross-border• Quality of Life – cross-sectoral, regional
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