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03 October 2012

OECD reviews literature on measuring impact of regulatory policies

To target scarce resources for reform efforts, communicate progress and generate the needed political support for reforms, OECD countries require better information about where investments in programs to improve regulations should be focused to pay best growth and welfare dividends (which according to OECD can surpass 10% of GDP).
The OECD work on Measuring Regulatory Performance offers a framework to help countries evaluate the design and implementation of their regulatory and target their reform efforts. After two papers on regulatory performance, a third (authors David Parker and Colin Kirkpatrick) surveys the literature on existing attempts at measuring the contribution of regulatory policy to improved performance and gives some substance to a number of well-known truths (blogger’s summary):
- the effects of regulation are context specific: regulatory governance and the institutional framework in a country may mitigate the damaging effects of poor regulation. There is no one-size-fits-all solution and the regulatory management processes need to be adapted to meet each country‘s institutional and regulatory endowment.
- it is difficult to provide robust quantitative evidence of a causal relationship between a regulatory policy change and the impact on economic outcomes such as economic growth. This highlights the importance of evaluating the effects of regulatory policy and management in terms of better regulation outcomes, rather than relying only on evidence of economic impact;
- research has focused more on the costs of regulation than on the benefits and therefore does not necessarily capture the true welfare effects of regulation and therefore of reducing regulation;
- impacts of some of the components of the better regulation agenda (like consultation, RIA or ex-post evaluation) are still insufficiently studied in terms of the net economic benefits (tip from Helge Schroeder.)

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