Does more intense competition lead to higher growth?

The relationship between the intensity of competition in an economy and its long-run growth is an open question in economics. Theoretically, there is no clear-cut answer. Empirical evidence exists, however, that in some sectors more competition leads to more innovation, and accelerates productivity growth. To complement those findings, and capture economy-wide effects, the authors conduct a cross-country study. They examine the impact on growth of various measures having to do with intensity of domestic competition - beyond the effects of trade liberalization. Their results indicate a strong correlation between long-run growth, and effective enforcement of antitrust, and competition policy.Environmental Economics&Policies,Economic Theory&Research,ICT Policy and Strategies,Labor Policies,Decentralization,Economic Theory&Research,Environmental Economics&Policies,ICT Policy and Strategies,Achieving Shared Growth,Governance Indicators

Regulatory reform, competition, and innovation - a case study of the Mexican road freight industry

Discussions of competition and regulatory reform typically focus on price and quantity effects. But improving certain infrastructure services can also stimulate entry, and competition in user industries downstream, allowing new firms to enter, incumbent users to offer new products, and rivalry to intensify. The authors present a case study of how innovations in road freight services affect selected downstream users of those services after regulatory reform. After a period of rigid regulation, and heavy government interference, Mexico in 1989 developed a new policy framework for road transport, with free entry, and market-based price setting. The result: faster, more reliable trucking has allowed user companies to offer new, previously unavailable products, and to reach new areas with existing products. Cheaper, more customer-responsive trucking services have allowed logistical innovations in user firms, and some user firms have decided not to keep their own fleets of trucks, but to outsource trucking services on the open market, thereby converting fixed costs to variable costs. For one fertilizer company, the benefits of reform included a ten percent improvement in operating margin. Successful reform requires careful planning and execution, and political support at high levels. Regulatory reform also profoundly changes the sectoral institution formerly responsible for the regulation. Enough resources should be provided to help organizations in the reformed industry make the transition to the post-reform environment - helping with such tasks as defining the organization's new role, and facilitating the redeployment of staff. The national competition agency can help greatly in laying the groundwork for reform by making a compelling case for the reform's expected benefits. After reform, the competition agency should also help with enforcement, to ensure that the cozy, cartel-like behavior stimulated by tight entry restrictions does not persist. In Mexico, three strong interventions were required to discipline attempted anti-competitive practices in the trucking industry in the years following reform.Common Carriers Industry,Environmental Economics&Policies,Roads&Highways,Transport and Trade Logistics,Banks&Banking Reform,Roads&Highways,Transport and Trade Logistics,Common Carriers Industry,ICT Policy and Strategies,Environmental Economics&Policies

Black sea aquaculture: Legacy, challenges & future opportunities

Responsible aquaculture, the farming of aquatic organisms, is a sustainable strategic sector for land and coastal communities. It significantly contributes to food security and enhancement of economic development; it provides employment opportunities and often contributes to the ecological services provided by the environment. According to the Food and Agriculture Organization of the United Nations (FAO), the contribution of aquaculture to the global food security is widely demonstrated by an astounding industry growth of 7.5% per year since 1970. In 2018, aquaculture reached the all-time highest production of 114.5 million tonnes in live weight with a total farm gate sale value of USD 263.6 billion. This makes aquaculture a key player within the Blue Growth concept and a strong contributor to some of its key Sustainable Development Goals (SDG). This is particularly true in geographical areas where dependence of local economies on fishery products is high, and yet access to sustainable landings is hampered by ecological barriers. One such area is represented by the Black Sea basin. Whilst the Black Sea annual capture fishery production has varied considerably since 1990 and its current landings are significant, growing attention is currently given to boost aquaculture development along the Black Sea bordering countries, with marine aquaculture being considered as an important contributor to the total fisheries production. Nonetheless, aquaculture development in this region is not homogenous and its development has, so far, been limited by environmental, economic, social, and more generally governance issues. This paper, for the first time, attempts to provide a comprehensive fresh outlook of the aquaculture sector in the Black Sea, stressing the importance of regional cooperation as an essential pillar to support the sustainable development of the industry. The paper addresses aquaculture in the Black Sea from different perspectives: it outlines the key characteristics of the Black Sea environment; it discusses the most common farmed aquatic species and the potential for new ones; it frames the national approaches to aquaculture development, sharing information about success stories, while shedding light on the main challenges and priorities ahead. This collective endeavour will represent a helpful contribution to Black Sea riparian countries to answer the many questions they have, and expectations they hold from the aquaculture sector.Additional co-authors: Dilek Fidan, Linda Fourdain, Marco Frederiksen, Archil Guchmanidze, Housam Hamza, Jessica Harvey, Magda Nenciu, Galin Nikolov, Victor Niţă, Muhammed Doğan Özdemir, Elitsa Petrova-Pavlova, Gabriel Popescu, Ferit Rad, Şafak Seyhaneyildiz Can, John A. Theodorou, Behnan Thomas, Nicolò Tonachella, Ekaterina Tribilustova, Irina Yakhontova, Ahmet Faruk Yesilsu, Güzel Yücel-Gie

Debt Relief

This paper develops a model for pricing sovereign debt under continuous time uncertainty, allowing creditors to carry out debt reductions. Focusing on the sovereign’s willingness to pay rather than on their ability to pay, it models debt reductions as a non-cooperative game. The formulae derived from the model successfully predict the outcomes of the Brady debt relief deals. The model also predicts that the sovereign will get a positive share of the surplus generated by the debt reductions and that the country will be on the ‘wrong’ side of its Debt Laffer curve well before the debt reduction.Brady deals; Continuous-time uncertainty real options; Debt Reduction; Debt Relief

Regulatory reform competition and innovation a case study of the mexican road freight industry

Discussions of competition and regulatory reform typically focus on price and quantity effects. But improving certain infrastructure services can also stimulate entry, and competition in user industries downstream, allowing new firms to enter, incumbent users to offer new products, and rivalry to intensify. The authors present a case study of how innovations in road freight services affect selected downstream users of those services after regulatory reform. After a period of rigid regulation, and heavy government interference, Mexico in 1989 developed a new policy framework for road transport, with free entry, and market-based price setting. The result: faster, more reliable trucking has allowed user companies to offer new, previously unavailable products, and to reach new areas with existing products. Cheaper, more customer-responsive trucking services have allowed logistical innovations in user firms, and some user firms have decided not to keep their own fleets of trucks, but to outsource trucking services on the open market, thereby converting fixed costs to variable costs. For one fertilizer company, the benefits of reform included a ten percent improvement in operating margin. Successful reform requires careful planning and execution, and political support at high levels. Regulatory reform also profoundly changes the sectoral institution formerly responsible for the regulation. Enough resources should be provided to help organizations in the reformed industry make the transition to the post-reform environment - helping with such tasks as defining the organizations new role, and facilitating the redeployment of staff. The national competition agency can help greatly in laying the groundwork for reform by making a compelling case for the reforms expected benefits. After reform, the competition agency should also help with enforcement, to ensure that the cozy, cartel-like behavior stimulated by tight entry restrictions does not persist. In Mexico, three strong interventions were required to discipline attempted anti-competitive practices in the trucking industry in the years following reform. Document type: Boo