OECD Product Market Regulation (PMR) Indicators: How does Romania 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
Romania
1.86
OECD countries 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
Romania 5 Most competition-friendly countries
OECD average 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
Product market regulation in Romania is somewhat less competition friendly than in most OECD countries. Public ownership is extensive, and there is scope for bringing the corporate governance of state-owned enterprises more in line with OECD best practices. There is also scope for greater simplification of the administrative requirements imposed on new businesses, as well as for a reduction in the complexity of regulatory procedures. On the other hand, rules governing public procurement are in line with most key OECD best practices, and barriers to foreign trade and investments are low.
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
Romania
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
Romania
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 regulations, Romania falls short of international best practices in many industries. With the exception of mobile e-communications and transport by water and road, network sectors are characterised by a regulatory framework that is less-competition friendly than the OECD average. Most professional services are hampered by strict entry requirements and distortive conduct regulations. Regulatory constraints to competition in general retail distribution are higher than the OECD average. In contrast, the regulatory framework for the retail sale of medicines is competition-friendly.
Regulation in network and service sectors PMR Indicators for network sectors Index scale 0 to 6 from most to least competition-friendly regulation Romania 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 Romania 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. f 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
With regulatory barriers to competition that are higher than the OECD average in several areas, there is scope for improving product market regulation in Romania.
Strengths
Challenges
The retail sale of medicines is less regulated than in most OECD countries. In particular, there are no restrictions on the location and ownership of pharmacies, and non-prescription medicines can also be sold in para-pharmacies and drugstores and online.
There are no significant barriers to international trade and to foreign direct investment.
There is scope for improving the corporate governance of state-owned enterprises, as the latter still benefits from exemptions from some of the laws and regulation that apply to privately owned firms. In some sectors, state-owned enterprises can also benefit from better financing conditions, as well as other favourable treatments. In addition, in some sectors there is no separation between the public body that exercises the ownership rights and the industry regulator.
In the energy industry, as well as in most transport sectors, unnecessary constraints to competition are still common and more prevalent than in many OECD countries.
There is room for reducing barriers to entry and constraints on conduct in the market for professional services. Notaries and lawyers, in particular, face extremely rigid constrains on their conduct, as they are prohibited from advertising their services, they cannot cooperate with any other profession and they face rigid constraints on who can hold ownership rights in legal firms.
More lessons could be drawn from international best practices, such as regularly publishing a regulatory agenda ex-ante, and implementing explicit programs to reduce the compliance costs and the administrative burden imposed by the government on enterprises.
Further information
“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
Please visit our website : http://oe.cd/pmr Contact us at: PMR2018@oecd.org