OECD Product Market Regulation (PMR) Indicators: How does Chile compare? ___________________________________________________________________________________ Competitive product markets foster economic growth and can improve the living standards of citizens. OECD’s Product Market Regulation Indicators assess the alignment of a country’s regulatory framework with internationally accepted best practices. The Economywide Indicator measures the distortions to competition that can be induced through the involvement of the State in the economy, as well as the barriers to entry and expansion faced by domestic and foreign firms in different sectors of the economy. This indicator is complemented by a set of Sector Indicators that measures regulatory barriers to competition at the level of specific network and service sectors.
Overall PMR Indicator Index scale 0 to 6
Chile
1.41
OECD average
1.38
5 Most competitionfriendly countries 5 Least competitionfriendly countries
1.00 1.82 0.0
2.0
4.0
6.0
Economy-wide PMR Indicators: a breakdown by major components Index scale 0 to 6 from most to least competition-friendly regulation
6
Chile
OECD average
5 Most competition-friendly countries
5 Least competition-friendly countries
5 4 3 2 1 0 Public Ownership
Involvement in Business Operations
Simplification and Evaluation of Regulations
Admin. Burden on Start-ups
Barriers in Service Barriers to Trade & Network sectors and Investment
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. Source: OECD 2018 PMR database.
ECONOMY-WIDE HIGHLIGHTS
Overall, regulatory barriers to competition in Chile are very close to the OECD average. The presence of the state in the economy through the ownership of firms is limited when compared with most other OECD countries, in particular when it comes to ownership of shares in the largest operators in network sectors. The administrative burden on startups and regulatory barriers in service sectors are below those present in many OECD countries. In contrast, regulatory procedures are complex and the framework that regulates the public procurement of goods, services and public works is not well aligned with OECD best practices. In addition, while barriers to foreign direct investments are low, foreign suppliers of goods and services face higher barriers to entry than in many OECD countries.
Economy-wide PMR indicators: a breakdown by sub-components Index scale 0 to 6 from most to least competition-friendly regulation Distortions Induced by State Involvement Simplification and Evaluation of Regulations
Complexity of Regulatory Procedures
6 5 4 3 2 1 0
Interaction with Interest Groups
Involvement in Business Operations
5 Least competition-friendly countries
Assessment of Impact on Competition
6 5 4 3 2 1 0
Price controls
Governance of SOEs
Direct Control
Scope of SOEs
Gov’t Involv. in Network Sectors
Public Ownership
6 5 4 3 2 1 0
5 Most competition-friendly countries
Public procurement
OECD average
Command & control regulation
Chile
Barriers to Domestic and Foreign Entry
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. Source: OECD 2018 PMR database.
Barriers to Trade Facilitation
Barriers to Trade and Investment
Treatment of Foreign Suppliers
6 5 4 3 2 1 0
Tariff Barriers
Barriers in Service & Network sectors
5 Least competition-friendly countries
Barriers to FDI
6 5 4 3 2 1 0
5 Most competition-friendly countries
Barriers in Network sectors
Licenses and Permits
Admin. Burden on Start-ups
Admin. Requirements for Lim. Liab. Companies and Pers.Owned Enterp.
6 5 4 3 2 1 0
OECD average
Barriers in Services sectors
Chile
SECTOR-SPECIFIC HIGHLIGHTS Regulation of retail trade is among the most conducive to competition in the OECD. Similarly, professional services are less regulated than in most other OECD countries, except for notaries. In contrast, there is scope to align the regulatory set-up for network industries with international best practices, especially in the gas, water transport and mobile e-communications sectors.
Regulation in network and service sectors PMR Indicators for network sectors Index scale 0 to 6 from most to least competition-friendly regulation Chile 5 Most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4 3 2 1 0 Electricity
Gas
Rail
Air
Energy
Road
Water
Fixed
Transport
Mobile
E-Communications
PMR Indicators for professional services* and retail distribution Index scale 0 to 6 from most to least competition-friendly regulation Chile 5 Most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4
3 2 1
0 Lawyers
Notaries
Accountants
Architects
Professional services
Civil engineers
Real estate agents
Retail distribution
Retail sale of Medicines
Retail trade
* When comparing the indicators across countries, it should be kept in mind that the activities undertaken by specific professions may vary between countries. Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Source: OECD 2018 PMR database.
OVERALL ASSESSMENT
Regulatory barriers to competition in Chile are limited, but there is room for improving product market regulation in some sectors and domains.
Strengths
Challenges
The government owns enterprises in very few sectors of the economy. In the network sectors, it only holds shares in the largest operator in some segments of the gas industry and in the market for the transport of passengers by rail.
The regulation of most professions is among the most competition-friendly in the OECD. In particular, there are almost no conduct restrictions: fees are not regulated, advertising is permitted, inter-professional cooperation is possible, and there are no restrictions on who can hold ownership and voting rights in professional firms.
The law-making process is among the least transparent in the OECD, as there are no requirements to use plain language when drafting new regulations, nor to regularly publish a regulatory agenda setting out a calendar of the laws and regulations that will prepared, reformed or repealed.
Notaries are the only profession in Chile that faces stringent entry requirements and tight conduct restrictions.
The regulatory framework for retail trade is among the most competition-friendly in the OECD. Shop opening hours can be set freely, no authorisations are required to open retail outlets, even large ones, and there are no restrictions on sales and discounts.
“What are the 2018 OECD PMR indicators?” PowerPoint presentation on OECD PMR website
Vitale, C., et al. (2020), " The 2018 Edition of the OECD PMR Indicators and Database – Methodological Improvements and Policy Insights", OECD Economics Department Working Papers
Further information
Please visit our website : http://oe.cd/pmr Contact us at: PMR2018@oecd.org