1

The OECD Indicators of Product Market

Regulation

Selected results from the PMR project 2007-2010, with contributions from Tomasz Kozluk, Giuseppe Nicoletti, Oliver Röhn,

Isabelle Wanner and Anita Wölfl (presenting)

Ifo/cesifo-OECD conference on regulation,Munich, 29-30 January 2010

2

A reminder: PMR - What is it all about?

Basic idea– Turn qualitative data on laws and regulations that inhibit competition into

quantitative indicators.

Bottom-up approach based on regulatory data– Data derived from a survey of member countries (and external data sets)– Policy focused – i.e., not based on opinion surveys or market outcomes– Vetted by government officials with peer-review

A policy tool– Benchmarking to allow comparison across countries– Diagnostic tool for specific policy advice– Empirical analysis of the competition-performance link

– Indicators available on line for government agencies and academics at www.oecd.org/eco/pmr

3

PMREconomy-wide regulation

40 countries1998, 2003 and 2007/8Updated every 5 years

NMRNon-manufacturing regulation

Border barriersTariff/non-tariff & FDI restrictions

ETCRRegulation in energy,

transport &communications7 sectors

30 countries1975-07

Continuous update

RBSRRegulation in retail &

business services5 sectors

30 countries1998, 2003 and 2007

Updated every 5 years

FDIRestrictions in manuf

and non-manuf10 sectors

30 countries1980-2007

Updated continuously

TariffsManufacturing

industries30 countries1988-2007

2-digit ISIC Rev. 3Updated continuously

RIRegulation impact/burden

All sectors (manuf and non-manuf)30 countries

1975-07Continuous update

State control Barriers to entrepreneurship Barriers to trade and investment

Sectoral indicator system

Economy-wide indicator system

The PMR indicator system

4

The “integrated” PMR indicator

Scope of public enterprise

(0.33)

Direct control over business

enterprises(0.33)

Scope of public enterprise

(0.33)

Direct control over business

enterprises(0.33)

Licenses and permits system

(0.50)

Communication and

simplification of rules and procedures

(0.50)

Licenses and permits system

(0.50)

Communication and

simplification of rules and procedures

(0.50)

Sector-specific administrative

burdens(0.33)

Sector-specific administrative

burdens(0.33)

Legal barriers(0.25)

Antitrust exemptions

(0.25)

Legal barriers(0.25)

Antitrust exemptions

(0.25)

Discriminatory procedures

(0.33)

Discriminatory procedures

(0.33)

Regulatory barriers

(1.0)

Regulatory barriers

(1.0)

Gov’t involvement in network sectors

(0.33)

Gov’t involvement in network sectors

(0.33)

Barriers in network sectors

(0.25)

Barriers in services(0.25)

Barriers in network sectors

(0.25)

Barriers in services(0.25)

Barriers to FDI(0.33)

Barriers to FDI(0.33)

Product market regulationProduct market regulation

Tariffs(0.33)Tariffs(0.33)

Admin. burdens for corporations

(0.33)

Admin. burdens for sole

proprietor firms(0.33)

Admin. burdens for corporations

(0.33)

Admin. burdens for sole

proprietor firms(0.33)

Price controls(0.50)

Use of command

and control regulation

(0.50)

Price controls(0.50)

Use of command

and control regulation

(0.50)

State control(0.33)

State control(0.33)

Other barriers(0.50)

Other barriers(0.50)

Explicit barriers to trade and investment

(0.50)

Explicit barriers to trade and investment

(0.50)

Barriers to competition

(0.33)

Barriers to competition

(0.33)

Regulatory and administrative

opacity(0.33)

Regulatory and administrative

opacity(0.33)

Involvement in business

operations(0.50)

Involvement in business

operations(0.50)

Public ownership

(0.50)

Public ownership

(0.50)

Barriers to trade and investment (0.33)

Barriers to trade and investment (0.33)

Barriers to entrepreneurship(0.33)

Barriers to entrepreneurship(0.33)

Administrative burdens on start-ups

(0.33)

Administrative burdens on start-ups

(0.33)

5

OECD indicators of regulation impact/burden (RI)

Measure the direct and indirect effects of regulation on each sector of the economy

Can distinguish border vs. domestic regulations and direct competition effects vs. cost of input effects

Computed as weighted sum of (sectoral) regulation, with weights reflecting the inter-industry linkages:

Where c=country, s=sector, k=intermediate input, t=period, PMR = regulation (domestic or border regulation, aggregate or individual subsets, …) w = weights from I-O-tables, e.g.:

– direct competition effects: 1, (equ. Individual regulatory indicators)– indirect first stage effects: technical coefficients– indirect all stage effects: coefficients of the inverted Leontief matrix

Computed for 38 ISIC sectors in 29 countries over 1975-2007

∑ ∗=k

cktckscst PMRwRI

6

A note on the potential burden on other industries Percentage share of demand components in total output

of services and manufacturing

Source: Pilat and Wölfl (2005), based on I-O-Tables, France, 2002

53.9% 29.7%

28.1% 28.4%

5.1% 26.6%

10.1%

9.8%

ICServices

IC Manu-

facturing

DomesticFinal

Demand

Exports Exports

DomesticFinal

Demand

7

A note on the potential burden on other industriescomputed input flow matrix (in terms of employment used)

FranceDirect Total

Manu-facturing Services Other Ind Total

indirect

Use of employment of ..

Manufacturing 1263 858 375 2496 1716 4213in % 25.1 5.6 13.0 29.3 11.5 18.0Services 1502 2722 641 4865 11570 16435in % 29.8 17.6 22.2 57.1 77.9 70.3Other Industries 551 305 302 1158 1575 2733in % 10.9 2.0 10.4 13.6 10.6 11.7Total Indirect 3315 3885 1318 8519in % 65.9 25.1 45.6 100.0

1716 11570 1575 14862in % 34.1 74.9 54.4 100.0

5032 15456 2893 23381in % 100 100 100 100

Dire

ctTo

tal

.. to produce final demand in ..Indirect

Indi

rect

Source: OECD I-O-Database 2004, Pilat & Wölfl (2005)

8

PMR in OECD and non-member countries, 2008Index scale of 0-6 from least to most restrictive

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0U

nite

d K

ingd

omU

nite

d St

ates

Irel

and

Icel

and

Can

ada

Net

herla

nds

Den

mar

kSp

ain

Nor

wa y

Japa

nN

ew Z

eala

ndSw

itzer

land

Finl

and

Ger

man

yH

unga

ryA

ustra

liaB

elgi

umSw

eden

Kor

eaFr

ance

Ital

yPo

rtuga

lA

ustri

aLu

xem

bour

gSl

ovak

Rep

ublic

Cze

ch R

e pub

licM

exic

oTu

rke y

Pola

ndG

reec

e

Esto

nia

Slov

enia

Chi

leIs

rael

Rus

sia

Bra

zil

Chi

na

Integrated PMR

OECD average

Non-member countries average

9

This is the result of substantial reform progress Index scale of 0-6 from least to most restrictive, OECD

12

34

Sca

le 0

-6 fr

om le

ast t

o m

ost r

estri

ctiv

e

1998 2003 2008

Aggregate PMR in OECD countries, 1998-2008

10

Significant differences in reforms across countriesTests based on Country-Product Dummy Approach (CPD)

1998 to 2003 2003 to 2008 1998 to 2008Australia (-) (+) (-)Austria (-)* (-) (-)***Belgium (-) (-) (-)*Canada (-) (-) (-)Czech Republic (-)** (-) (-)***Denmark (-) (-) (-)*Finland (-)*** (-) (-)***France (-)*** (-) (-)***Germany (-)* (-) (-)***Hungary (-) (-)** (-)***Iceland (-) (-) (-)**Italy (-)** (-) (-)***Japan (-)* (-) (-)***Korea (-) (-) (-)*Luxembourg . (+) .Mexico (-) (-) (-)Netherlands (-) (-)* (-)***New Zealand (-) (+) (-)Norway (-)* (-) (-)***Poland (-) (-) (-)**Portugal (-)** (-) (-)***Spain (-)* (-)* (-)***Sweden (-) (-) (-)**Switzerland (-)* (-) (-)***Turkey (-)* (-) (-)**United Kingdom (-) (+) (-)United States (-) (-) (-)

11

… and slowing pace of convergenceLevel and change in index points, with 0=least and 6=most restrictive

Panel A. 1998-2003 Panel B. 2003-2008

AUS

AUTBEL

CAN

CZE

DNK

FIN FRA

GER

HUN

ICE

ITAJAP

KOR

MEX

NLDNZL

NOR

PRT

ESP

SWE

CHE TUR

GBRUSA

-1.20

-1.00

-0.80

-0.60

-0.40

-0.20

0.00

0.20

0.40

0.600.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50

2003-1998 …

1998 values

Correlation coefficient: -0.84

AUS

AUT

BELCAN

CZE

DNKFIN

FRAGER

HUN

ICE

ITA

JAP KOR

MEX

NLD

NZL

NOR

POL

PRT

ESP

SWE

CHE

TUR

GBR

USA

-1.20

-1.00

-0.80

-0.60

-0.40

-0.20

0.00

0.20

0.40

0.600.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50

2008-2003 …

2003 values

Correlation coefficient: -0.62

12

Strong reform in certain regulatory areas …Average change in index points, 0=least and 6=most restrictive

-1.4

-1.2

-1.0

-0.8

-0.6

-0.4

-0.2

0.0

0.2Average change 98-03 Average change 03-08

Barriers to entrepreneurshipBarriers to trade and investment

State control

13

… with signs of reform complementaritiesIndex scale of 0-6 from least to most restrictive

Aus

AutBel

Can

Cze

Dnk

Fin

Fra

GerHun

Isl

Ita

Jpn

Kor

MexNld

Nzl

Nor

Pol

Prt

Esp

Swe

Che

Tur

Gbr

Usa

-0.1

-0.1

-0.1

-0.1

0.0

0.0

0.06 8 10 12 14 16

Cha

nge

in P

MR

'98-

'08,

rela

tive

to n

umbe

r of

refo

rms

Number of regulatory areas with reforms

Correlation coefficient: -0.59***

14

Scope for reforms remainsDistance from best practice, OECD,

Index scale of 0-6 from least to most restrictive

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Mean across countries

Variance across

countries

State control Barrier to entrepreneurship Barrier to trade and investment

15

Regulation matters for GDP per capita

aus

aut

belbra

bgr

can

chl

chn

hrv

cze

dnkest

fin

fra

deu

grc

hun

isl

ind

idn

ire

isr

itajpn

kormex

nld

nzl

nor

pol

prt

rou

rus

slo

zafesp

swe

che

turukr

gbr

usa

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0 10000 20000 30000 40000 50000 60000

PMR 1998

GDP per capita, PPP (current international $), 2007

Correlation coefficient = -0.51

t-statistic = -3.78

1. Based on a "simplified" PMR indicator. PMR measured in 1998 for OECD countries; 2008 for candidate countries for accession countries, Brazil and China; 2007 for Croatia, Indonesia, South Africa and Ukraine; 2006 for Bulgaria, India and Romania.

16

With barriers to competition driving the result IDep.Var: ln growth in GDP per capita, Cross section analysis, BMA

Notes: Constant always included but not reported. All standard deviations are robust. + Post Inclusion Prob. >=50 and <75; * Post Inclusion Prob. >=75 and <95; ** Post Inclusion Prob. >=95 and <99; ** Post Inclusion Prob. >=99

Post-Inclusion probability

Post-Inclusion probability

Post-Inclusion probability

Ln(GDP p.c.), initial -0.002 27.1 -0.003 37.1 -0.008 * 78.1Ln(population growth) 0.000 12.4 0.001 13.8 -0.003 19.3Ln(investment/GDP ratio) 0.012 + 52.4 0.013 + 56.1 0.031 ** 97.2Secondary enrollment ratio 0.000 14.5 0.000 15.7 0.000 + 60.7Inflation 0.000 14.2 0.000 15.1 0.000 5.6Government consumption 0.000 14.2 0.000 15.2 0.000 6.6Domestic credit to private sector 0.000 + 61.8 0.000 + 60.9 0.000 8.7Rule of Law 0.000 19.9 0.001 22.7 0.000 12.6Life expectancy at birth -0.002 * 88.5Ethnic fragmentation -0.007 + 52.7% of land area in tropics -0.027 *** 99.0

Public ownership 0.000 9.9Involvement in business operations 0.000 5.1Administrative burdens on start-ups 0.000 7.6Regulatory and administrative opacity 0.000 18.6Barriers to competition -0.003 + 57.3 -0.005 * 79.4 -0.010 *** 100.0Explicit barriers to trade and investment 0.000 6.5Other barriers to trade 0.000 5.8

Coefficient Coefficient Coefficient

Integrated PMR Simplified PMR Simplified PMROECD OECD Full sample

17

With barriers to competition driving the result II Dep.Var: ln growth in GDP per capita , Panel analysis, BMA

Notes: Constant always included but not reported. All standard deviations are robust. + Post Inclusion Prob. >=50 and <75; * Post Inclusion Prob. >=75 and <95; ** Post Inclusion Prob. >=95 and <99; ** Post Inclusion Prob. >=99

Post-Inclusion probability

Post-Inclusion probability

Post-Inclusion probability

Ln(GDP p.c.), initial -0.001 16.8 -0.002 23.2 -0.001 11.9Ln(population growth) 0.001 13.6 0.001 13.5 -0.007 25.7Ln(investment/GDP ratio) 0.005 28.7 0.006 32.5 0.039 *** 99.9Secondary enrollment ratio 0.000 16.3 0.000 12.7 0.000 26.8Inflation 0.000 + 72.5 0.000 + 66.4 -0.001 * 88.6Government consumption 0.000 13.5 0.000 23.0 0.000 10.1Domestic credit to private sector 0.000 * 92.6 0.000 * 87.0 0.000 40.4Rule of Law 0.000 13.3 0.000 13.8 -0.006 + 65.5Life expectancy at birth -0.002 ** 96.5Ethnic fragmentation -0.004 25.2% of land area in tropics -0.022 * 84.8

Public ownership 0.000 14.3Involvement in business operations 0.000 3.6Administrative burdens on start-ups 0.000 6.5Regulatory and administrative opacity 0.000 8.4Barriers to competition -0.005 + 70.0 -0.008 * 94.4 -0.009 *** 99.6Explicit barriers to trade and investment 0.000 3.6Other barriers to trade 0.000 5.5

Coefficient Coefficient Coefficient

Integrated PMR Simplified PMR Simplified PMROECD OECD Full sample

18

To be continued – work in progress

Refinement of new generation PMR– To cover evolving regulatory issues:

• Regulatory quality – sector regulators• Governance of state-owned enterprises• More elaborate treatment of non-tariff barriers to trade

Further extension to other countries– Integrated PMR for all accession candidate and enhanced engagement

countries.

Refined analysis of the regulation-performance link– e.g. interaction term model, individual regulatory areas, – “true” panel analysis for non-members,– more analysis of the inter-industry linkages and the role of regulation– impact of PMR on other outcome variables.

19

Thank you !

For further information:www.oecd.org/eco/pmr

20

The current tree structure of NMR [1]

ETCRETCR

Gas RoadAirlines

Public ownership

Entry EntryEntry EntryEntry Entry

TelecomsElectricity PostRail

Public ownership

Market structure

Public ownership

Vertical integration

Public ownership

Market structure

Entry

Public ownership

Public ownership

Market structure

Vertical integration

Prices

Vertical integration

Energy Transport Communication

21

Conduct regulation

Prices and fees

Registration Shop opening

hours

Conduct regulation

Entry regulation

Entry regulation

Advertising

Form of business

Licenses and permits

Large outlet restrictions

Price controls

Licensing

Education requirements

Retail distribution Professional services

Protection of incumbents

Quotas and economic needs tests

Inter-professional cooperation

The current tree structure of NMR [2]

22

Reconsidering the weights (JRC)PMR 2008, computed with PCA based on data for different years

23

Reconsidering the weights (JRC)PMR 2003, PCA based on different number of low-level indicators

AUS

AUT

BELCAN

CZE

DNK

FIN

FRA

DEU

HUN

ISL

ITA

JPN

KOR

LUX

MEX

NLD

NZL

NOR

POL

PRTESP

SWE

CHE

TUR

UKMUSA

0

3

6

9

12

15

18

21

24

27

30

0 3 6 9 12 15 18 21 24 27 30

PCA

18 in

dica

tors

PCA 15 indicators

PCA weights computed from 15 or 18 indicators

24

Testing progress in reform bilateral comparisons, CPD

USA GBR CAN NZL AUS DEN NLD ICE NOR SWE GER FIN BEL JAP AUT PRT HUN KOR MEX CHE FRA ESP ITA CZE TUR POLUSA . (+)* (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)***GBR . (+)** (+)* (+)*** (+)*** (+)** (+)** (+)*** (+)*** (+)*** (+)** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)***CAN . (+)* (+)* (+)** (+)*** (+)** (+)** (+)*** (+)*** (+)*** (+)** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)***NZL . (+)* (+)* (+)*** (+)*** (+)** (+)** (+)*** (+)*** (+)*** (+)** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)*** (+)***AUS (-)* . (+)** (+)** (+)* (+)** (+)*** (+)** (+)* (+)*** (+)** (+)*** (+)*** (+)*** (+)*** (+)*** (+)***DEN . (+)* (+)* (+)* (+)*** (+)* (+)*** (+)** (+)*** (+)*** (+)*** (+)***NLD (-)*** . (+)* (+)* (+)** (+)* (+)*** (+)* (+)*** (+)*** (+)*** (+)*** (+)*** (+)***ICE (-)*** . (+)* (+)* (+)* (+)*** (+)* (+)*** (+)** (+)*** (+)*** (+)*** (+)***NOR (-)*** (-)** (-)* (-)* . (+)** (+)** (+)* (+)** (+)** (+)*** (+)***SWE (-)*** (-)* (-)* (-)* . (+)** (+)*** (+)***GER (-)*** (-)*** (-)** (-)*** (-)** . (+)* (+)*** (+)***FIN (-)*** (-)*** (-)*** (-)*** (-)** (-)* . (+)* (+)*** (+)***BEL (-)*** (-)** (-)** (-)** . (+)** (+)***JAP (-)*** (-)** (-)** (-)** (-)* . (+)** (+)***AUT (-)*** (-)*** (-)*** (-)*** (-)** (-)* (-)* (-)* . (+)*** (+)***PRT (-)*** (-)*** (-)*** (-)*** (-)*** (-)* (-)** (-)* . (+)*** (+)***HUN (-)*** (-)*** (-)*** (-)*** (-)** (-)* (-)* (-)* . (+)** (+)**KOR (-)*** (-)** (-)** (-)** (-)* . (+)* (+)**MEX (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)** . (+)** (+)**CHE (-)*** (-)*** (-)*** (-)*** (-)** (-)* (-)* (-)* . (+)**FRA (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)** . (+)** (+)**ESP (-)*** (-)*** (-)*** (-)*** (-)*** (-)** (-)*** (-)** (-)* . (+)**ITA (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)** . (+)**CZE (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)** (-)** (-)* (-)* .TUR (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)** (-)** (-)*** (-)*** (-)** (-)* (-)** (-)** .POL (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)*** (-)** (-)** (-)** (-)** (-)** (-)** (-)** .

White: PMR not significant different between country pair, un-shaded: sign. different in 1998, shaded: sign. different still in 2008

25

Reforms particularly in network sectors…Index scale of 0-6 from least to most restrictive

26

… passing through to lower knock-on effectsNormalised index scale of 0-1 from least to most restrictive

27

Some signs of reform complementaritiesBilateral correlations

Scop

e of

pub

lic e

nter

pris

e se

ctor

Dire

ct c

ontro

l ove

r bu

sine

ss e

nter

pris

e

Gov

ernm

ent i

nvol

vem

ent

in n

etw

ork

sect

or

Pric

e co

ntro

ls

Com

mun

icat

ion

and

sim

plific

atio

n of

rule

s

Adm

inis

trativ

e bu

rden

s fo

r cor

pora

tion

Adm

inis

trativ

e bu

rden

s fo

r sol

e pr

oprie

tor f

irms

Lega

l bar

riers

Antit

rust

exe

mpt

ions

Barr

iers

in n

etw

ork

sect

ors

Dis

crim

inat

ory

proc

edur

es

Reg

ulat

ory

barr

iers

Tarif

fs

08-'98 '08-'98 '08-'98 '08-'98 '08-'98 '08-'98 '08-'98 '08-'98 '08-'98 '08-'98 '08-'98 '08-'98 '08-'98

Scope of public enterprise sector 1 0.48 0.49 0.37 0.02 0.31 0.06 0.54 0.01 0.42 -0.20 -0.11 0.12

Direct control over business enterprises 0.48 1 0.29 0.42 -0.03 0.38 0.11 0.29 0.05 0.34 -0.08 0.02 0.20

Government involvement netw ork sector 0.49 0.29 1 -0.13 0.44 0.06 0.00 0.32 0.32 0.45 -0.06 0.22 0.27

Price controls 0.37 0.42 -0.13 1 -0.16 0.37 0.24 0.12 -0.22 0.25 -0.44 -0.05 -0.17

Communication and simplif ication 0.02 -0.03 0.44 -0.16 1 0.16 0.07 0.30 0.30 0.11 0.08 0.23 -0.14

Administrative burdens for corporation 0.31 0.38 0.06 0.37 0.16 1 0.46 0.22 0.08 0.39 -0.05 0.04 -0.09

Administrative burdens for sole proprietors 0.06 0.11 0.00 0.24 0.07 0.46 1 0.27 -0.01 0.06 -0.36 0.03 -0.14

Legal barriers 0.54 0.29 0.32 0.12 0.30 0.22 0.27 1 0.06 0.30 -0.14 -0.23 -0.05

Antitrust exemptions 0.01 0.05 0.32 -0.22 0.30 0.08 -0.01 0.06 1 0.32 0.56 0.07 0.28

Barriers in netw ork sectors 0.42 0.34 0.45 0.25 0.11 0.39 0.06 0.30 0.32 1 0.22 0.36 0.54

Discriminatory procedures -0.20 -0.08 -0.06 -0.44 0.08 -0.05 -0.36 -0.14 0.56 0.22 1 0.10 0.33

Regulatory barriers -0.11 0.02 0.22 -0.05 0.23 0.04 0.03 -0.23 0.07 0.36 0.10 1 0.44

Tariffs 0.12 0.20 0.27 -0.17 -0.14 -0.09 -0.14 -0.05 0.28 0.54 0.33 0.44 1

28

Intermediate inputs in an Input-Output-Table

29

A simulation using the Leontief-Framework

• The question:

– How would output per industry change if total final demand for services or manufacturing increased by 10%?

• The procedure:

– Leontief-approachBasic equation: ∑ ⋅−=

=

n

jjijii ymyd

1

di : final demand for goods or services of industry i,yi : gross output of industry i, mij : be the technical coefficient, i.e. the share of inputs from industry

i in total production of the input using industry j.

=> output can be computed from: with being the the Leontief-Inverse( ) 1−−MI

( ) DMIY ⋅−= −1

30

Percentage change in domestic output if final demand for goods or services increased by 10%

Source: INSEE I-O-Tables, 2002, Wölfl (2006)

0

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12

16

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it ies

e sea

rch

& de

velo

p men

Lega

l, te

chn i

cal e

t al.

Publ

ic a

dmin

istra

tion

Ed u

catio

nH

ealth

& s

o cia

l wor

k

Dec

ompo

sitio

n of

effe

cts,

in p

erce

nt o

f dom

estic

out

put b

y in

dust

r

Exports servicesExports manufacturingDomestic demand servicesDomestic demand manufacturing

31

Pro-competitive regulation enhances incentives to adopt new technologies

Australia

Austria

BelgiumCanada

Denmark

Finland

France

Germany GreeceIreland

Italy

Japan

Netherlands

Portugal

Spain

Sweden

United Kingdom

United States

5

10

15

20

25

30

35

0 1 2 3 4 5 6

Average impact of regulation in ICT-using sectors , 95-03

correlation coefficient = -0.67t-statistic = -3.65

ICT share in total business investment, 95-03

Source: Arnold, Nicoletti, Scarpetta (2008)

32

Markups are lower where regulation is keener to competition

Non-manufacturing

BEL

UKUSA

CAN

AUT

GERNLD

JPNNORDNK FRA

FIN

KOR

ITA

0.10

0.15

0.20

0.25

0.30

0.35

0.40

1 1.2 1.4 1.6 1.8 2 2.2 2.4 2.6 2.8 3Product market regulation

Mark-up

Correlation coefficient = 0.82t-statistic = 5.04

Source: OECD

33

New generation: Non-tariff barriers are important Index scale of 0-6 from least to most restrictive, OECD

A. Explicit barriers to trade and investment

B. Other barriers

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Uni

ted

Kin

gdom

Net

herla

nds

Uni

ted

Stat

es

Spa

in

Hun

gary

Switz

erla

nd

New

Zeal

and

Swed

en

Belg

ium

Nor

way

Luxe

mbo

urg

Cze

chre

publ

ic

Aust

ralia

Aust

ria

Italy

Pola

nd

Ger

man

y

Tariffs Barriers to FDI Barriers to market access

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Uni

ted

King

dom

Net

herla

nds

Uni

ted

Sta

tes

Spai

n

Hun

gary

Switz

erla

nd

New

Zeal

and

Sw

eden

Bel

gium

Nor

way

Luxe

mbo

urg

Cze

chre

publ

ic

Aus

tralia

Aus

tria

Italy

Pola

nd

Ger

man

y

Barriers to trade facilitation Differential regulatory treatment

34

… as well as regulatory quality Index scale of 0-6 from least to most restrictive, OECD

0.0

1.0

2.0

3.0

4.0

5.0Independence Influence of the executive Powers

Accountability OECD averageElectricity

0.0

1.0

2.0

3.0

4.0

5.0Independence Influence of the executive Powers

Accountability OECD averageTelecommunication