Research
CRC's research has aimed to develop a rigorous analysis of competition and regulation directly applicable to the challenges and circumstances of developing economies. One of the main objectives of this research has been to draw lessons that will be useful for policy makers.
Current research
The current range of CRC research covers:
Reforms in China 's Infrastructure Sectors
Yin-Fang Zhang
Innovation and Catch Up in Brazil and India
Edmund Amann, Fred Nixson and Arun Thankom
Water Subsidies for the Poor
Diana Mitlin and Julia Brown
Financial informalisation in the Zimbabwe to Botswana migration corridor: dreams of poverty reduction or nightmares of dysfunctional economic regulation?
Sarah Bracking
Completed research
Regulation, Regulatroy Governance and Competition in Developing Countries
Research in this area was funded by DFID and formed a core element of CRC's work. The programme was built around three pillars of research based on regulation, competition and regulatory governance and was pursued through a range of complementary and mutually reinforcing themes.
Chinese competition and regulatory policy
CRC entered into a collaborative relationship with the British Council, Beijing, to establish a China competition and regulation project. This project aimed to strengthen integrated policy making in the area of Chinese competition and regulatory policy. The programme was funded by the Foreign and Commonwealth Office.
Regulation, Regulatory Governance and Competition in Developing Countries
Regulation
The research on Regulation was pursued through two main themes, Theme 1 Economic Regulation and policy and Theme 2 Regulatory Impact Assessment
The research in this area had two main objectives:
- To improve understanding of the role of regulation in enhancing economic performance and poverty alleviation in developing countries.
- To contribute to better regulation policy-making in developing countries through the dissemination of research evidence and support for regulatory capacity building.
The methods and approaches used to develop a research programme to realise these objectives have included:
- Descriptive mapping of regulation in CRC's partner countries
- Literature reviews of key theoretical developments, regulatory methods and empirical research on regulation.
- Statistical and econometric investigation of the extent and effectiveness of regulation.
- Country and sector case studies of regulation and regulatory impact assessment.
- Practice-based workshops
Theme 1 Economic Regulation and Policy
In this theme we were examining the impact of state regulation on enterprise performance in developing countries and examined alternative regulatory models which can contribute both to improved economic performance and to poverty alleviation.
- The impact of competition, regulation and privatisation on the performance of electricity generating firms in developing economies. This project by Kirkpatrick, Parker and Zhang involved the first econometric study of the roles of competition, regulation and privatisation on the performance of generating firms, using a range of performance measures. Although major claims have been made for the advantages of these reforms in the electricity sector, the empirical evidence suggested that while competition is important in raising performance the role of privatisation is less clear cut. On its own privatisation did not appear to raise economic performance. It seems that only when it is combined with a more competitive market or a more effective regulatory system are performance improvements likely.
A further econometric study by Zhang, Parker and Kirkpatrick was undertaken on the effects of sequencing of electricity sector reform in developing countries. The study found that establishing an independent regulatory authority and introducing competition before privatisation is correlated with higher performance, implying that the sequencing of reforms does matter.
Related working papers: 62, 31
Related policy briefs: 5
- Regulatory reform and economic growth
In conjunction with Dr H Jalilian of the University of Bradford, Kirkpatrick and Parker conducted an econometric investigation into the relationship between regulatory reform (including institutional structure) and economic growth rates in developing countries. The results confirm that sound regulatory systems are of fundamental importance in explaining economic performance.
Related working papers: 54
- Privatisation in developing countries
Parker and Kirkpatrick completed a comprehensive review of the main empirical evidence on the impact of privatisation on economic performance in developing countries. The evidence review suggested that if privatisation is to improve performance over the long run, it needs to be complemented by policies that promote competition and effective state regulation, and that privatisation works best in developing countries when it is integrated into a broader process of structural reform. Cook and Uchida using an extreme bounds analysis examined the relationship between privatisation and economic growth for 63 developing countries. After conducting a number of outlier tests leading to the removal of two influential observations, the results indicated that privatisation alone has not contributed to growth in developing countries. A further study by Cook and Uchida examined the financial performance of utilities and non-utilities following privatisation. The study found that financial performance of privatised utilities has deteriorated over time when compared to privatised non-utilities and private sector enterprises.
Related working papers: 7, 16, 55
- Regulating prices and profits in developing countries
No comprehensive data exist on the methods of tariff regulation used in the developing world. However, the available, mainly case study, evidence suggested that price caps were widely adopted. Based on a detailed reading of the economic literature on price caps and alternative regulatory methods, notably rate of return and sliding scale regulation, a paper was prepared by Parker and Kirkpatrick that warned of serious potential problems in the successful operation of price caps in developing countries.
Related working papers: 88
Related policy briefs: 5
- Regulations and SMEs
This project, led by Aryeetey in Ghana, focused on the changing regulatory environment for small and medium-sized enterprises in Ghana and how the enterprises had been responding to the new environment. The research examined the influence that public regulators and self-regulatory agencies have had on the performance of SMEs in the last decade. Interviews were conducted with 10 regulatory agencies and a sample survey of SMEs is being implemented. A further study by Eyiah was conducted on regulation in the small contractor (construction industry) sector in Ghana. This study, using a survey of small contractors, concluded that regulation in the sector is contributing to corruption and encourages inefficient rather than efficient enterprises with adverse consequences for the development of infrastructure in Ghana.
Related working papers: 10, 46, 80
Theme 2 Regulatory Impact Assessment
In this theme we developed a method for assessing the potential impact of regulation proposals, which can inform the process of regulatory policy making and thereby contribute to better regulatory policy in developing countries.
- Regulatory Impact Assessment (RIA)
CRC investigated the potential contribution of RIA to better regulation policy-making in low-income countries. A paper was written by Kirkpatrick and Parker on 'Regulatory Impact Assessment and Regulatory Governance in Developing Countries.' The purpose of the paper was to assess the contribution that RIA can make to 'better regulation' in developing countries. The paper discussed the capacity building requirements for the adoption of RIA in developing countries, and also proposed a framework for RIA that can be applied to improve regulatory decision-making and outcomes.
A comprehensive survey of the familiarity with, and adoption of, RIA in developing countries was undertaken. An initial trial survey was undertaken for the Philippines and Malaysia, and the results were reported in the 'RIA and Regulatory Governance in Developing Countries' paper. A questionnaire was distributed to a further 96 countries in June 2003. Zhang, Kirkpatrick and Parker completed a preliminary analysis of the questionnaire returned for 35 countries
- Application of Regulatory Impact Assessment
Three case studies on the application of regulatory impact assessment were undertken for Sri Lanka , (Knight-John), Ghana (Aryeetey) and India (Garg). The findings from an initial paper on Sri-Lanka by Knight-John confirmed the general impression that in practice the policies governing the regulatory process had been ad hoc and based on short-term political interests. There had been no systematic effort to carry out an objective evaluation of proposed regulations or to consider alternative regulatory options. Interestingly, the need to carry out speedy competition and regulation reforms to satisfy donor conditionality had been cited as justification for the failure to introduce impact assessment mechanisms.
Related working papers: 5, 30, 56, 74, 83, 99, 101, 102
Related policy briefs: 3
Competition
The research on competition was pursued through two main themes, Theme 3 Competition, Innovation and Development and Theme 4 Competition Policy and Development.
The research in this area had three main objectives:
- to improve understanding of the ways in which competition and innovation contribute to development and poverty reduction.
- to assess restrictions to competition and evaluate the effectiveness of competition policy in developing countries.
- to examine the relationship and interaction between global rules for competition and domestic policy.
The methods and approaches used to develop a research programme to realise these objectives had included
- descriptive 'mapping' of competition regimes in CRC's partner countries.
- Literature reviews of theoretical issues relating to competition and competition policies.
- Statistical and econometric analysis of competitiveness, structural change and development.
- Country and sector case studies.
- Practice-based workshops with regulators.
Theme 3 Competition, Innovation and Development
In this theme we were attempting to understand how processes of competition and innovation contribute to structural change, and in particular to focus on how structural change affects growth, income distribution and poverty.
- Competition and Development
Metcalfe and Ramlogan worked on understanding the relationship between competition and economic development by focusing upon the process of competition and its relation to structural change, productivity growth and related phenomenon. The central emergent theme of their work was of competition as a regulator of development. This was put this way quite deliberately to emphasise that work in this project was not directly concerned with the regulation of competition in the traditional sense. A key argument in their work was that a pro-innovation policy was one of the most effective ways of ensuring real competition in an economy. Click here for a link to related publications. WP36,
Related policy briefs: 1
- Competitiveness, Innovation and Competition
This study by Cook and Uchida developed indices for trade and technological specialisation for a wide range of developed and developing economies over a nineteen year period. A concordance table was developed to permit the comparison of the two indices for 28 manufacturing sectors. The relationship between the two indices was econometrically examined and tested for causality are applied. The results showed that patterns of trade and technological competitiveness had been changing among developing economies. In some countries the shift in specialisation had been quite rapid and the speed of change could have been significantly influenced by public policies. There appeared to be a strong causal relationship between trade and technology as far as the more successful developing countries are concerned, with innovation driving trade success. Lee has examined the determinants of innovation using a survey of enterprises in Malaysia. Cook and Uchida also examined the relationship between specialisation and competition across a range of countries over time and found that domestic competition had played an important part in developing international competitiveness. Click here for a link to related publications. WP 72, WP63 WP60
Henderson and Phillips developed a case study of the electronics sector Malaysia using a global production network framework and pointed to numerous factors that constrained the development of this sector. WP 106
- Competition, Structural Change and Income Distribution
This study conducted by Cook and Uchida investigated the relationship between structural change and income distribution. A key finding was that the development of high tech industries led to greater income inequality. The role of competition in structural change was examined.
Theme 4 Competition Policy and Development
- Competitive Markets and Competition Policy
These studies examined the various policy and non-policy restrictions to competition and measure the sectoral intensity of competition in a range of countries. A critical review of theory by Cook indicated that an approach to competition policy that concentrated on market structure may lead to policy decisions that increase rather than reduce the risk of anti-competitive practices among enterprises. Lee compared various international approaches to competition policy. Individual country studies of competition and competition policy were undertaken in Brazil by Mendes De Paula and Amann, in Indonesia by Yonnedi, in Bangladesh by Raihan, in the Philippines by Fabella and Aldala, in Malaysia by Lee, and in Iran by Khodadad Kashi. Overall results indicated the heterogeneous nature of competition policy and enforcement techniques between sectors. In several countries formal competition laws were not adopted. Governments in some countries were aware of these shortcomings, and were making substantial changes, including in some instances, a reduction of powers away from individual regulatory agencies. Henderson and Ewert conducted a study on the development of the South African wine industry and the implications for a newly emerging competition policy.
Click here for link to related publications. WP2, WP33, WP68, WP73, WP75, WP95, WP87, WP96, WP97,
Related policy briefs: 7
- Global Rules and Competition Policy
Holmes examined the impact of WTO rules and WTO jurisprudence on the domestic regulation of goods and services, with particular emphasis on risk regulation. This was complemented by research by Arun on the specifics of telecommunications regulation and global rules in China, India, Malaysia, Indonesia and Taiwan. Yang investigated the implications of the WTO for China and what this implied for the development of competition policy. Yang, argued that implementing a competition law without creating a culture of competition would harm the development of the market-based economy, and that competition policy in China was likely to be based on one that focused on the support and promotion of domestic industries to aid international competitiveness.
Related working papers: 78
Regulatory Governance
The research on regulatory governance was pursued through two main themes: Theme 5 Institutional Innovation in Regulatory Governance and Theme 6 Regulation, Politics and Poverty.
The research in this area had five broad objectives:
- to improve understanding of the institutional structures and relationships that form the essential foundation for regulatory policy and practice, with particular reference to legal, administrative and political systems in developing countries
- to establish what forms of policy transfer are associated with regulatory governance reforms, and the effects of these innovations
- to contribute to delineation of the chain of connections between regulation and competition reforms, and the poor
- to help policymakers to a better understanding of the regulatory strategies and policies for which they are responsible or to which they make a contribution
- to enable regulatory officials to analyse and enhance their internal capacity building systems
The methods and approaches used to develop a research programme to realise these objectives included:
- descriptive 'mapping' of regulatory systems in CRC's partner countries.
- literature reviews of developed country regulatory concepts and practice, the 'best practice' models deployed by donors and governments, related public management reforms, and the role of political factors in regulatory systems
- country and sector case studies, in collaboration with CRC partners
- practice-based workshops with regulators
Theme 5 Institutional Innovation in Regulatory Governance
In this theme we sought to provide a better understanding of the practical operation of existing regulatory systems in developing countries, and the impact on them of institutional change and innovation, in particular focusing on the operation of the legal frameworks and the context provided by public management reforms and restructuring.
- Rule of law, corruption and regulation
This was a case study by Ogus of the legal principles, procedures and institutions best able to meet regulatory aims in developing countries, with particular regard to issues of transparency and accountability. Key findings were that the complex history of legal institutions in developing countries meant that their clear inadequacies could not easily be resolved by the transplantation of Western models; and that realism was required both in relation to embedded corruption, and to the nexus between legal and political systems. Click here for link to related publications. WP4, WP27, WP65,
Related policy briefs: 2
- Public Management Reforms, Regulation and Policy Transfer
This study by Minogue reviewed an extensive range of literature on public management reform models in developed country governance, and a much sparser literature and documentation on the application of these models in developing country governance. Initial findings were that public management and regulatory governance reforms were clearly linked in developing countries, but were significantly under researched in terms of evaluation of effectiveness and outcomes. There were clear administrative and political limits to 'best practice' regulation and these did much to explain variations in national performance. A key finding emerging from this review and related partner studies in South Africa (Schwella et al), Sri Lanka (Knight-John) and the Philippines (Cario et al) was that regulation by and inside government was likely to be the dominant form of regulation in developing countries, with serious implications for donor models of independent, arms-length regulation. Click here for link to related publications WP3, WP32, WP40, WP64, WP94
Related policy briefs: 6
- Internal Capacity in Regulatory Agencies
This project was led by Eldridge. The intention was to analyse regulators' perceptions of their own internal human resource needs, and to consider the possible utility of a performance management model in identifying managerial capacity deficits. The study was based on workshops and interviews with officials of regulatory agencies in South Africa, the Philippines, and Malaysia, with possible inputs from Vietnam and China. These exercises demonstrated that regulatory staff showed confused and inadequate understanding of many aspects of 'best practice' regulatory models, and recognised that these are clear managerial capacity needs in their agencies. A sectoral application related to capacity building issues in the telecommunications sector in South Africa, led by Brian Goulden. Click here for link to related publications. WP98, WP90, WP19,
Related policy briefs: 4
- Licensing and regulation
A principle assumption in the existing literature on economic regulation was that if it is excessive, economic growth will be hindered. These assumptions were tested in a comparative survey of the Philippines, Sri Lanka and the Peoples' Republic of China. The initial finding was that licensing remains extensive and that deregulation could bring measurable benefits. The research was conducted by Ogus and Zhang, with support from a study of local economic governance in the Philippines by Legaspi. Click here for link to related publications. WP91, WP92
- Analytical and Research Methods in Regulatory Governance
A challenge for CRC research was the absence of an agreed methodology for comparative work on regulatory governance systems. Initial work was undertaken to survey comparative methods in the study of the politics of regulation, and issues of policy transfer, with regard to cross-national and cross-sectoral comparisons, and the use of case studies (Levi-Faur). This analytical work was continued by Minogue, with a focus on problems of scope, definition, and measurement of regulatory governance in developing countries. Click here for link to related publications. WP94 (CRI), WP50
Theme 6 Regulation, Politics and Poverty
In this theme, we examined the principal relationships in developing countries between regulators and regulatees, and how these relationships and interactions of economic, political and social interests affected regulatory systems and outcomes.
- Political Factors Affecting Regulation
In Sri Lanka, a study by Knight-John of the interaction of economic and political institutions in the regulatory reform process in the telecommunications, water and electricity sectors and the effects on outcomes for the poor, established that political factors have been influential in determining the pace and outcome of regulatory reforms.
- Regulatory Governance and Poverty: the Water Sector
This project was wide-ranging, using the water sector to examine institutional and political issues surrounding water provision, as well as the impact of market reforms on issues of access and exclusion, affordability, quality standards, and accountability.
Initial work in South Africa examined reforms in water management and water quality systems (Brown and Woodhouse, Mackintosh). Research into water provision and regulation in Greater Manila showed the problems created by weak regulatory arrangements (Cuaresma). Recent work by Mitlin centred on water subsidies and issues of affordability, and drew on country studies by Lee (Malaysia), Fabella (the Philippines) and Brown and Woodhouse (South Africa). Click here for link to related publications. WP37, WP93, WP89, WP81
- Ethical Trade and Regulatory Governance
This project was a collaboration between Heeks, Duncombe and Carino. The intention was to use the field of ethical trade to define alternatives to directive regulation based on ideas of self-regulation, and to analyse the potential use of information management systems in such alternatives. Initial work was established an Ethical Trade Regulatory Information System (ETRIS), and a methodology based on stakeholder analysis, and the concept of 'design reality' gaps. The Philippines component examined how Northern initiatives in ethical trade are 'received' in a developing economy, and on whether this form of regulation had created incentives for more ethical business and labour practices in the small business sector.
Related working papers: 8, 41, 53
Related policy briefs: 8
China Research Programme
This FCO funded project focused on key themes in state-led private sector development and economic governance, covering regulatory and competition reforms, public-private provision and consumer participation.
A series of studies were conducted in association with the Law School Tsinghua University, the Research Institute of Market Economy (RIME) of the State Council Development Research Centre, the UNIRULE Institute of Economics and the Institute of Economic System and Management (IESM) of the National Development Reform Commission. The initial research period of three years ended in March 2006.
The five projects in the series were:
Mapping competition policies and institutions
Mapping regulation systems and practices and competition in public services
The regulation of corporate governance
The consumer's role in regulation and competition
Institutional models of regulation in the water sector
Programme activities included briefing and study visits to CRC/UK by all the principal Chinese researchers, and documentary assistance from CRC research staff. CRC staff made evaluation visits to Beijing in March 2004, and March 2005. The final conference was held in Beijing in February 2006 and was attended by key international and local experts, policy-makers and academics from the field. The Chinese researchers presented their initial findings and papers were also given on a wide variety of topics. Click here to view the papers.
Report on the final conference February 2006
Report on the Beijing visit of March 2005 and year 2 progress
Report on the Beijing visit of March 2004 and year 1 progress
Report on the visit to the UK from the Chinese delegation in February 2004
