OECD Product Market Regulation (PMR) Indicators: How does Estonia 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
Estonia
1.29
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
Estonia 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 2019. Source: OECD 2018 PMR database.
ECONOMY-WIDE HIGHLIGHTS
In Estonia, the regulatory set-up is competition-friendly in many areas. Laws and regulations are easy to access and to understand, and the public procurement framework is aligned with key OECD best practices. The system for assessing the impact on competition of new laws and regulations is effective, and barriers to international trade and investments are low. The administrative requirements to set up a new firm are low, though the licensing regime could be further simplified. In contrast, public ownership of the largest operators in network sectors is more extensive than in many other OECD countries. The country has no rules to ensure transparency in the interactions between public officials and interest groups during the regulatory process.
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
Estonia
Barriers to Domestic and Foreign Entry
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
Estonia
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2019. 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.
SECTOR-SPECIFIC HIGHLIGHTS In terms of sector specific regulation, the regulatory framework is in line with international best practice in gas and e-communications. In contrast, in the electricity sector the state controls firms in all segments of the industry. Similarly, public ownership is widespread in the transport sectors, with the government owning some of the biggest operators in the rail and air sectors. Regulation of retail distribution is conducive to competition, while the rules on retail sale of medicines lag somewhat behind best practices. Accountants, architects, civil engineers and estate agents face few regulatory restrictions, but regulations are comparatively strict for the two legal professions.
Regulation in network and service sectors PMR Indicators for network sectors Index scale 0 to 6 from most to least competition-friendly regulation Estonia 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
Transport
Fixed
Mobile
E-Communications
PMR Indicators for professional services* and retail distribution Index scale 0 to 6 from most to least competition-friendly regulation Estonia 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 2019. 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 Estonia are limited; still there is room for improving product market regulation in some sectors and areas.
Strengths
Challenges
The framework for the public procurement of goods, services, and public works is aligned with most of the OECD key best practices in this area.
The regulatory set-up in the e-communications sector is close to international best practice and state ownership in this sector is extremely low.
The regulatory framework for retail trade is among the most competition-friendly in the OECD. Shop opening hours can be set freely, no authorisation is required to open retail outlets, even large ones, and there are no restrictions on sales and discounts.
There are no rules ensuring transparency in the interaction between interest groups and policymakers. For example, public officials are not required to make their agenda available to the public, nor to disclose the identity of the interest groups they encounter during the regulatory process. Senior civil servants have a compulsory cooling-off period when they leave their post, but the same does not apply to other elected or appointed public officials.
Lawyers are very heavily regulated, and notaries face some of the most stringent entry requirements and conduct regulations in the OECD.
Further information
“What are the 2018 OECD PMR indicators?” PowerPoint presentation on OECD PMR website
Vitale, C., et al. (2020), "2018 Update of the OECD PMR Indicators and Database - Policy Insights for OECD and some non-OECD Countries", OECD Economics Department Working Papers
Please visit our website : http://oe.cd/pmr Contact us at: PMR2018@oecd.org