RIA developments on both sides of the Atlantic

What happens when two leading research institutes (UCL CLES and ENA CERA, respectively in London and Paris), join forces to research good policy making? Excellent and very useful work, judging by the quality of the output of the Gutenberg project, headed by Drs I. Lianos and F. Larat. As announced on this blog, some 50 academics and practitioners from Europe and America gathered in Paris for "Theory and practice of RIA in Europe" on 10 June. The first session was largely devoted to a detailed presentation and discussion of the findings of the Gutenberg project, which aims to portray and analyse the development of the use of impact assessments (RIAs) throughout the European Union as a standard of good governance and, in some cases, as a legal obligation on regulators. Their research involved a large scale scrutiny of published RIAs in 18 countries (+ the EU) since 2005, supported by sound conceptual planning: the "evidence/politics nexus",six hypothetical models of RIAs, eight key features for rating RIAs, 125 indicators clustered in 5 lead indicators, etc. It has delivered a number of comparison tables which may rank with the Doing Business index for scientific backing and clear methodological basis. Their work will become a must-read for RIA practitioners.
Of the marathon of about 30 presentations which followed, highlights included, in order of appearance (with apologies to all those not mentioned):
- Andrea Renda (CEPS) examined, on the basis of a painstaking scrutiny of all EC RIAs, whether impact assessment has improved EU policymaking (answer: "mixed evidence, but tendency is promising") and gave an expert view on where smart regulation was heading;
- Jonathan Wiener (Duke) was riveting with a history of RIA forerunners since the XVIIIth century, then focused on recent challenges to making RIA a tool to improve policy making: the multiple, interconnected risks that the regulator faces requires broadening the scope of RIAs and CBA. The variety of risks also make it difficult to draw international comparisons (see his books Risk vs Risk, 1995, and The Reality of Precaution, 2011.)
- James Broughel (George Mason U.) presented the Regulatory Report Card, which actually rates "economically significally US RIAs since 2008 by reference to 12 criteria drawn from EO 12866. Results will interest Americans, while the methodology (especially the criteria) should be helpful to all European experts in search of quality RIAs;
- Michael Livermore (NYU) fascinated the audience with his account of how CBA developped in the US, with the shifting appeal to political sides, according to the use lobbies and interest groups could expect to make of the figures, and other political considerations (see also comment on Mike's work on "a new perspective on CBA" in policymaking;
- Alberto Alemanno (HEC Paris) presented some original research, new for most of the audience, into "courts as actors of RIA", with deep insights into the impact of RIAs on policymakers concern for quality and accuracy, in view of possible later repeal of legislation for insufficient evidence base, or ineffective consultation. For more on the topic, see Alberto's blog;
- Liza Bellulo, from the French Competition Authority, presented a useful guide for competition impact assessment of new legislation; English version available from the Authority;
- Elke Ballon, head of the new RIA unit of the European Parliament was sure to interest the audience with her report on the first year of the EP's RIA activities, in connection with EC work, which include screening of EC RIAs, drafting an "initial appraisal" of the Commission report - see April 2013 example - or a detailed assessment on request from an EP committee, producing an IA on substantive amendments to EC proposals. The unit's website will soon be online;

- Joachim Beck (Euro-Institute) introduced a topic which was new to most attendees: "cross-border RIA cooperation" in which he showed that EU lawmakers pursuing economic integration had not sufficiently addressed the issues of cross border regions which represent 40% of the EU territory and 30% of its population;
- Finally, more classicly, the conference was given updates on current RIA and smart regulation developments in the European Commission, the UK and France (with a notable presentation, on a personal basis by an administrator of the French national assembly.)

Measuring Regulatory Policy (OECD, Stockhom, 3-4 June)

This 5th expert workshop in Stockholm is part of the OECD programme on Measuring Regulatory Performance which addresses two very important issues for the Regulatory Policy Committee and the OECD: how can countries measure regulatory performance to diagnose success and failures, improve regulatory policies, programmes and tools, and to communicate progress? How can they demonstrate that an investment in their systems for regulatory policy and management is delivering improvements to their economies and societies? At the 5th workshop, delegates and experts will discuss best practice implementation of the 2012 Recommendation on Regulatory Policy and Governance and how to benchmark progress over time. This is an important step in measuring progress in the implementation of the Recommendation in countries, and the preparation by the OECD of a Regulatory Policy Outlook in 2014.
Background: The 2012 Recommendation provides a list of 12 "principles", which can be used as a checklist of measures that governments can and should take to support the implementation and advancement of systemic regulatory reform to deliver regulations that meet public policy objectives and will have a positive impact on the economy and society.

SCM and compliance costs fine-tuned in Malta

Quite a few of our colleagues were lucky to attend, in sunny Valetta, a meeting of the Standard Cost Model (SCM) network. 22 countries and the European Commission gathered by invitation of the government of Malta to discuss current projects and future steps to perfect, on the basis of experience developped by front-runners, an improved regulatory costs methodology.
Opened by the Parliamentary Secretary Dr Michael Farrugia, the meeting heard presentations by the hosts who were able to show how much they had advanced towards a comprehensive Better Regulation agenda (see MTsite of the unit in charge) in line with European Commission guidelines, where regulatory burden reduction figures prominently. Dr. Paul DeBattista (BR unit) presented a new "Bureaucratic Cost Measurement" index which includes fees charged, if any, for permits and the cost of delays. Then several countries (GE, UK,NL, SE) and the Commission gave an update on their national experience, thus sharing best practice.
In the second part of the SCM Working Group meeting, the delegates actively participated in a workshop tackling the way forward for Compliance Costs. The discussion revolved round the issue of when a fully fledged Impact Assessment is required in estimating the impact of Compliance Costs. Here again, the organisers had selected the most relevant recent developments in European countries.

Save-the-date of next meeting: 20th September 2013 in Finland (by invitation).

New Transparency Grades Issued for States (US)

U.S. Public Interest Research Group (U.S. PIRG, a consumer advocacy group) has been reviewing online transparency initiatives since early 2010. Its fourth annual report finds that many States have made significant improvements in the area of online transparency. The report scrutinizes the extent to which states posted a range of expenditures and made information easily accessible, issuing grades to each state government. For the first time, this year, all 50 states maintain some form of a spending transparency website, all of which were searchable except for California and Vermont. When U.S. PIRG first began reviewing online transparency initiatives in early 2010, only 32 maintained such websites. See also comment by media platform GOVERNING.

Commission to test the efficiency of national courts

On 27 March, the European Commission launched the EU Justice Scoreboard, "a tool to promote effective justice and growth", which according to the press release, offers a comparison of the justice systems of member states in a bid to assess how their activity can affect economic growth.The justice scoreboard will focus on the business and investment climate, such as the efficiency of EU courts to resolve civil and commercial disputes. The Commisison is working on the assumption that the quality of national courts can affect the entire EU, since a lack of implementation of EU law in one court can affect the functioning of the single market as well as undermine the rights of citizens and businesses operating across borders. Smart regulators will not disagree and they will welcome this additional tool to measure implementation and enforcement of regulation. For more, see Euractiv article: "Commission to test the efficiency of national courts" (tip from L. Allio.)

2013 Index of Economic Freedom

Not yet mentioned on this blog, another convenient international comparison of how regulations can impact economic achievement: the Index of Economic Freedom, calculated and published since 1995 by The Wall Street Journal and The Heritage Foundation, an American think tank. The 10 benchmarks used to gauge the economic success of 185 countries around the world are well supported in economic and political economy theory (primarily by A. Smith), and are illustrated by country case studies. The definition of economic freedom itself is not without interest: the 10 economic freedoms are grouped into four broad categories or pillars of economic freedom:

• Rule of Law (property rights, freedom from corruption);
• Limited Government (fiscal freedom, government spending);
• Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and
• Open Markets (trade freedom, investment freedom, financial freedom).

Each of these four pillars provide useful indications as they are, like the indicators used in the World Bank Doing Business ranking, dedicated to measuring the economic impact of a prudent use of regulation.

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.)

Two papers on regulatory performance (OECD)

Two must-reads have just been published by OECD, crowning several years of research into how governments can best invest in making smarter regulation. They are accessible from the project's publications webpage (see "expert papers"):

• A first paper discusses the complexity of attributing changes in economic or welfare outcomes to changes in regulation and regulatory policy. It shows the categories of measures for evaluating regulatory policies and reports a number of indicators that can be used to measure outcomes, which can inform the practical application of an evaluative framework;
• A second paper examines country practices for measuring the performance of regulatory policy, and develops options for a set of indicators that OECD countries can use for their regulatory policy evaluation.

Link between BR and economic performance (NZ)

A press release published today by the New Zealand Government provides fresh evidence that well managed regulatory systems can bring improvements in the overall economic performance of a country. It reports the main findings of a preliminary assessment of national regulations, incoporated in an official publication: Best Practice Regulation Model: Principles and Assessments. According to the finance minister, "this new model ... considers whether each regime gives appropriate weighting to factors that can help improve economic performance – competition, innovation, exports, compliance costs and trade and investment openness" and can suggest areas for further simplification.

Doing Business 2012 studies 245 business regulatory reforms

Released today, Doing Business 2012: Doing Business in a More Transparent World assesses regulations affecting domestic firms in 183 economies and ranks the economies in 10 areas of business regulation, such as starting a business, resolving insolvency and trading across borders. This year's report data cover regulations measured from June 2010 through May 2011. The report rankings on ease of doing business have expanded to include indicators on getting electricity. The report finds that getting an electrical connection is most efficient in Iceland; Germany; Taiwan, China; Hong Kong SAR, China; and Singapore.

The global report shows that governments in 125 economies out of 183 measured implemented a total of 245 business regulatory reforms—13 percent more reforms than in the previous year. In Sub-Saharan Africa, a record 36 out of 46 economies improved business regulations this year. Over the past six years, 163 economies have made their regulatory environment more business-friendly. China, India, and the Russian Federation are among the 30 economies that improved the most over time.

This year, Singapore led on the overall ease of doing business, followed by Hong Kong SAR, China; New Zealand; the United States; and Denmark. The Republic of Korea was a new entrant to the top 10.  The 12 economies that have improved the ease of doing business the most across several areas of regulation as measured by the report are Morocco, Moldova, the former Yugoslav Republic of Macedonia, São Tomé and Príncipe, Latvia, Cape Verde, Sierra Leone, Burundi, the Solomon Islands, the Republic of Korea, Armenia, and Colombia. Two-thirds are low- or lower-middle-income economies (from the press release.)

Australia scrutinises evaluation of reform

An  Australian active member of our network draws our attention to an interesting technical document issued by the Productivity Commission on 23 September. It is a "discussion draft." to support on-going work on Identifying and Evaluating Regulatory Reforms, currently one of the most relevant issues in RR (see OECD conference in Madrid on a very close topic).  It contains a considerable amount of in-depth analysis of methods for identifying and evaluating regulatory reforms, in both the main report and the very rich appendices.

Australia is part of a small group of countries that has chosen the "productivity" approach rather than focus on "competitiveness" (as Ireland, among others, does). In the opinion of this blogger, productivity makes more sense economically, is better rooted in theory, when dealing with the dynamics of  factors of production.

The site of the Australian ministry of finance contains some interesting insights into the history and relevannce of productivity in the national context.

OECD report measures pace of regulatory reform in 40 countries

This week, OECD published the second edition of one of its flagship reports « Government at a Glance », a mine of comparative information about the many facets of government performance in member and partner countries. Our interest lies principally in chapter X “Regulatory Governance” where we are presented with quantitative data carefully defined and collected to answer the question: how are better regulation policies doing across the world.
The comparative analysis of regulatory policies is supported by regulatory governance indicators defined for that purpose. The indicators compare the focus and scope of regulatory management systems across countries and identify trends over time, monitoring the spread of good practices. Data was collected via country responses to the OECD Survey on Regulatory Management Systems and refer to institutional practices as reflected in administrative arrangements and procedures. More specific country assessments can be found in in-depth country reviews of the OECD which analyse how governments implement these procedures in practice.
The indicators draw upon country responses to the OECD Regulatory Management Systems’ Indicators Survey conducted in 2005 and 2008 for the (then) 30 OECD member countries. Data were subsequently collected for the four countries that joined the OECD in 2010 (Chile, Estonia, Israel and Slovenia) as well as three other major economies (Brazil, the Russian Federation and South Africa). Country-specific data are available on line at: http://dx.doi.org/10.1787/888932392248.

RR helps Gross National Happiness (Bhutan)

According to a recent press release, IFC is working with Bhutan’s Ministry of Economic Affairs and the Gross National Happiness Commission to identify and minimize regulatory constraints, an initiative designed to improve the ease of doing business in Bhutan. The initiative aims to increase economic activity, reduce costs and risks of business operations, and improve the government’s capacity to build and sustain momentum for reform. The regulatory simplification project will focus on high-priority areas likely to include industrial licensing, approval process for foreign direct investment, and other clearances.  The project aims to improve access to information on requirements for business licenses and permits by creating an e-licensing portal. Bhutan had recently been within the scope of a regional study by Jacobs and Associates assessing regulatory practices, business environments, and related reforms across South Asia (summary available). As illustrated by the Doing Business ranking, the pace of reforms needs to be sustained for significant improvements to be achieved.
A post for a regulatory reform specialist, funded by ADB, was recently closed.

Doing Business 2011: regulatory reform going strong

Last month the World Bank issued its new edition of its famous Doing Business survey, which is well worth studying as it reports on global progress towards better regulatory management. In the past year, governments in 117 economies carried out 216 regulatory reforms aimed at making it easier to start and operate a business, strengthening transparency and property rights, and improving the efficiency of commercial dispute resolution and bankruptcy procedures.

There are some unexpected changes which demonstrate  the diversity of the possible approaches, and the complexity of what makes economies attractive. SMEs have often been the targeted beneficiaries of the improvements to the business climate.

For the fifth year running, Singapore leads in the ease of doing business, followed by Hong Kong SAR China, New Zealand, the United Kingdom, and the United States. Among the top 25 economies, 18 made things even easier over the past year.

Kazakhstan leads the list of countries having improved business regulation for local entrepreneurs which also includes three in Sub-Saharan Africa— Rwanda (a consistent reformer of business regulation), Cape Verde, and Zambia—as well as Peru, Vietnam, Tajikistan, Hungary, Grenada, and Brunei Darussalam.