Independent regulatory agencies in emerging economies

While the diffusion of independent regulatory agencies (IRAs) across economically advanced countries has attracted much scholarly attention in recent years, systematic work on their spread across developing countries is still scarce. In an effort to address this gap in literature, this paper aims to analyze the diffusion of regulatory agencies in emerging economies in Latin America, Asia, and Central and Eastern Europe. At this early stage of our research, we aim to emprically map out regulatory agencies in economic regulation sectors (e.g. competition, finance, and utilities/infrastructure) enjoying some degree of autonomy or independence in emerging economies, rather than limiting our focus solely on those that meet all the criteria for independence in the strictest definition of the term. Such exploratory analysis constitutes the first step towards studying processes of diffusion in general and the mechanisms that lead to the creation of regulatory agencies in these economies in particular. The second objective of this paper is to examine the mechanisms which we expect to be at work in the spread of IRAs in the selected emerging economies. We argue that despite the creation of a number of agencies in the countries concerned before 1990, diffusion has become evident and “interdependent”, as opposed to spurious in the 1990s.independent regulatory agencies; emerging economies

International Accounting Rate Reform in Telecommunications

Twenty European countries came together in 1865 to form an organisation, the predecessor to the International Telecommunications Union and to arrive at mechanisms and agree upon a methodology of distributing the revenues from the international telegraph service. The current accounting rate system is a modified version of the then developed methodology for the International telegraph. This international settlement regime based on accounting rates has long been under attack by economists, policy-makers in developed countries and international trade organisations. The ITU, the OECD, the FCC and other regulatory bodies are pursuing various initiatives to reform or replace the existing accounting rate system. These regulatory initiatives are aimed at reducing the current pricing distortions embedded in the accounting rate system. In the wake of the WTO agreement, a system of traffic compensation that is not ‘cost oriented’ is not only unsustainable, it is also in violation of the regulatory principles set out in the WTO reference paper. The FCC has been at the forefront of the move to decrease accounting rates. In August 1997, the FCC adopted “benchmark” accounting rates for different groups of countries, which it considered more closely related to the actual costs of providing international service between those countries and the US. The benchmark rates range from $0.15-$.23 per minute, and are far below those currently in practice, particularly for most of the developing countries which are sometimes in excess of $1.00 per minute. If implemented, these rates would significantly reduce international calling revenues of these countries. While the FCC obviously has no direct regulatory jurisdiction outside of the US, it has threatened to deny access to the US market to PTOs from other countries that do not reduce their accounting rates to the benchmark levels. While the future of the existing accounting rate system is being debated in regulatory circles, an increasing proportion of international traffic is bypassing this traditional system of compensation. Facilitated by the global trend towards the liberalisation of telecommunications markets, new technological means for bypassing the accounting rate system are also developing rapidly.

Antitrust in China: The Problem of Incentive Compatibility

This paper reviews China's recent efforts to enact a competition policy (antitrust) law. We focus on three issues: (1) What is the substance of the proposed law, and how does it differ from existing antitrust law in other countries, (2) How will the law be implemented or enforced, and how will those who must implement this law interpret their mandate, and (3) What will be the likely effects of this law given China's unique history and cultural heritage. We emphasize China's economic, legal and regulatory contexts in which an antitrust law may be enforced. Our central focus is the problem of establishing a substantive and procedural legal framework that is incentive-compatible with economic efficiency and growth. The policy debate on antitrust within the Chinese government is not public. An unofficial draft of the proposed law was widely circulated outside China in 2003 and was the subject of a public commentary by the American Bar Association. A slightly revised draft was submitted for deliberation to the State Council in March 2004 (See comments from Shang Ming, Director of the newly established Antitrust Investigative Office in the Ministry of Commerce, on September 16, 2004, available at http://big5.china.com.cn/chinese/law/661991.htm).The changes from the prior draft seem to have chiefly to do with which agency of the government will administer the law. At this time, no further information is available to us. Our comments on the "proposed law" are therefore based on the version that has already circulated. We find a number of respects in which the draft law could be improved, both to increase its clarity and to make its enforcement more consistent with the goal of achieving improvements in economic efficiency. We also find much merit in the draft, especially its strong focus on reducing anticompetitive practices of state owned enterprises (SOEs) and other government bodies. However, our major difficulty with the new law is that, in the absence of a tradition of reliance on the rule of law, Chinese and foreign enterprises will find it very difficult to rely on the antitrust statute or the actions of the courts in China as a basis for predicting the antitrust liability that might result from various business practices. Therefore, the principal vector by which antitrust law (or indeed any law) affects economic behavior is absent from the Chinese scene. Unless the bureaucracy that enforces the new antitrust law actively pursues a policy of consistent enforcement based on written guidelines, stare decisis, or other sources of predictability, the substance of the statute itself will have little significance. That outcome would represent a significant loss for the economic welfare of the Chinese people.Technology and Industry, Regulatory Reform, Other Topics

Price Effects of Regulation: Telecommunications, Air Passenger Transport and Electricity Supply

Price Effects of Regulation draws on research undertaken at the OECD to quantify the effects of domestic regulatory regimes on prices in up to 50 economies for 3 sectors — international air passenger transport, telecommunications and electricity supply. The study finds wide variations in regulatory regimes across economies for each sector. The results suggest a positive relationship between the stringency of regulatory regimes and higher prices in each sector. For example, the bilateral system of restrictions on the number of air passenger flights between countries and the conditions under which they operate are estimated to collectively increase airfares by between 3 and 22 per cent.regulation - price effects - telecommunications - air transport - airlines - electricity - trade restrictions

Indo-US FTA: Prospects for the Telecommunication Sector

Since telecommunication is one of the main drivers of economic growth and globalization, WTO (World Trade Organization) negotiations and New Age FTAs (Free Trade Agreements) have focused on liberalizing trade in this sector. The present paper analyses the possibilities of liberalizing trade in telecommunication services if India and its largest trading partner-the US-enter into a bilateral agreement. The study found that India and the US have trade complementarities in telecommunication services and that it should be a priority sector in the FTA negotiations. The study identified certain areas such as R&D related to telecommunication and broadband infrastructure where collaboration between companies of both countries would be mutually beneficial. The study found that telecommunication services have been significantly liberalized in the US FTAs-much beyond the scope of the GATS and the Reference Paper on Basic Telecommunications. While the current policy regime in India is consistent with some of the requests made by the US in its bilateral negotiations, for meeting others, the policy regime needs to be examined and, if required, reformed. The present paper suggests certain reforms which would enhance the productivity, efficiency and global competitiveness of the sector and enable the country to benefit from the bilateral liberalization.Indo-US FTA, GATS, bilateral agreements, telecommunication, services

Competitiveness and Growth of the Mexican Economy.

We address the role that deep, structural factors may have as determinants of Mexico’s economic growth. We argue that Mexico’s poor growth performance appears to be associated not only with shorter-run events such as the "lost decade" of the eighties, but also with supply-side features of the economy that have been present for at least four decades. Mexico’s low competitiveness and poor growth potential seem to reflect an institutional framework that tends to support rigid, non-competitive market structures, and incentives that promote the allocation of resources towards unproductive rent-seeking activities relatively more than into investment, production, productivity, and adoption of superior technologies. We present examples of input markets where we believe these issues are central. We conclude that solving this situation requires microeconomic policies that lead to fundamental changes in the incentive structure of the economy.Competitiveness and growth, productivity, efficiency, comparative advantage.

Reforming Trade in Services and Negotiation Processes in Morocco

Arguments in favor of liberalizing the market for services are becoming increasingly widespread. These arguments particularly apply to financial services, telecommunications, and transportation, which are key sectors that significantly contribute to a nation's economic development. However, the challenges of liberalizing the market for services to foreign competition are evident. Furthermore, this liberalization entails a broad and complex set of policies, regulatory instruments, institutions and constituencies, domestically and in the foreign arena, in the public and the private sector. Experience has shown that considerable care must be given to the assessment of the nature, pace and sequencing of regulatory reform and liberalization in order to meaningfully enhance a nation's economic growth and development. Morocco has signed, ratified, and implemented several Free Trade Agreements (FTAs) and is engaged in discussions with other partners. Issues that concern the market of services are gaining in importance in Morocco's foreign trade policy. Moreover, Morocco has continued to reform its sectoral policies, making notable progress in services sector performances in a bid to diversify its economy. This paper tries to outline some features that concern the trade in services policies and reforms in Morocco and its negotiation process adopted by enforcing bilateral, regional and multilateral agreements.Morocco; Trade in Service; Trade Policy; Reform, Liberilization, Regulatory impacts.