WHAT ARE THE 2018 OECD PRODUCT MARKET REGULATION INDICATORS?
Competitive markets Competitive markets are essential for sustained economic growth Channels through which market competition leads to better performance are: o Allocative efficiency: a better allocation of resources towards higher-productivity firms o Productive efficiency: incentives to eliminate slack, reorganise work to gain efficiency and lower costs o Dynamic efficiency: new entrants often bring new ideas while incumbents face incentives to innovate
What fosters competition? Well-functioning and competitive markets require: o A sound legal and judicial infrastructure o An effective competition regime o A competition-friendly product market regulation o An efficient insolvency regime
Measuring Product Market Regulation In 1998 the OECD developed a set of indicator of product market regulation (PMR) to measure a country’s regulatory stance in an internationally comparable way These indicators allow policymakers and scholars to: • understand where a country stands compared to internationally accepted best practice • track reform progress over time • investigate the links between regulatory practices and economic performance
Key characteristics The PMR indicators measure the degree to which policies promote or inhibit competition in markets for products and services The PMR are de jure indicators: they reflect the status of the existing laws and regulations, but do not capture the level of enforcement The information is scored against accepted international best practice The PMR values range between (0) and (6) from the most to least competition friendly regulatory regime.
Coverage of PMR indicators The database used to build the PMR indicators covers: • A number of network sectors • A number of service sectors • A number of cross-sector regulatory domains The information thus collected allows the PMR indicators to provide a good overview of how markets for goods and services are regulated and to what extent this regulatory setup fosters competition and entry
Coverage of the 2018 PMR indicators The sectors and regulatory domains assessed in the 2018 vintage of the PMR indicators are different from those included in other vintages. These changes, due to a major revision of the methodology 20 years after their launch, means that the 2018 PMR indicators cannot be compared with previous vintages. This presentation focuses on the content and structure of the 2018 PMR indicators.
Network sectors Production, transmission, distribution and supply of natural gas and electricity Collection, treatment, distribution and retail supply of water for domestic, agricultural and industrial purposes. Mobile and Fixed E-communications Transport of freight and passengers by: Rail Air Road Water
Service Sectors Retail Distribution Retail sales of medicines For-hire urban passenger transport services Professional Services provided by: Lawyers Notaries Accountants Architects Civil engineers Estate Agents
Horizontal regulatory domains
Administrative burden on start-ups Licensing procedures Simplification and Evaluation of Regulations Presence of SOEs in the economy Interaction of Public Officials with Interest Groups Governance of SOEs Public Procurement Barriers to foreign trade Barriers to foreign investments
Information sources
The information on laws and regulations is collected through a questionnaire and vetted by OECD experts The questionnaire is filled in by ministries, regulators and other relevant authorities in the countries surveyed Information is collected at federal/national level, but (representative) lower level jurisdictions are involved if the relevant sector or area is regulated by them
Economy wide Indicators 2018 This scored information is regrouped into 18 regulatory areas, and then combined into broader areas until it generates one overall indicator Product Market Regulation Distortions Induced by State Involvement Public Ownership
Scope of SOEs Gov’t Involv. in Network Sectors Direct Control over Enterprises Governance of SOEs
Involvement in Business Operations
Simplification and Evaluation of Regulations
Retail Price Controls and Regulation
Assessment of Impact on Competition
Command and Control Regulation
Interaction with Interest Groups
Public Procurement
Complexity of Regulatory Procedures
Barriers to Domestic and Foreign Entry Admin. Burden on Start-ups Admin. Requirements for Limited Liability Companies and PersonallyOwned Enterprises Licences and Permits
Barriers in Service & Network Sectors Barriers in Services Sectors Barriers in Network Sectors
Barriers to Trade and Investment Barriers to FDI Tariff Barriers Differential Treatment of Foreign Suppliers Barriers to Trade Facilitation
Building the economy-wide PMR indicator High-level indicators are aggregated in economy-wide indicator using equal weights Medium-level indicators are aggregated in 2 high level indicators using equal weights Low-level indicators are aggregated in 6 medium level indicators using equal weights Coded data is aggregated in 18 low level indicators using weights presented in the PMR schemata
Sectoral Indicators 2018 A subset of the scored information is used to measure regulation in specific sectors Network Sectors
Professional Services
Retail Sector
- State Involvement - Regulation
- Entry Regulation - Conduct Regulation
- Regulation of B&M sales - Regulation of online sales
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• • • • • •
Energy Transport E-communications
Lawyers Notaries Accountants Architects Civil engineers Estate agents
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General Retail Distribution Retail Sale of Medicines
Structure of Network Sector Indicators Network Sectors
Energy
Transport
Ecommunications
Electricity
Air
Fixed
Natural Gas
Rail Road Water
Mobile
Structure of Service Sectors Indicators Professional services
Lawyers
Notaries
Retail Distribution
Accountants
Architects
Engineers
Retail Sale of Pharmaceuticals
Estate Agents