Chapter 2: Lessons from the Introduction and Implementation of Competition Policy in Economies at Different Stages of Development: The Case of APEC Economies | 39
Figure 6: Institutional quality and effectiveness of competition policy 3
2.5
2
HK
SG
Regulatory quality
G1
1.5
NZ
CA
AU
CL US
JP
TW
1
KR G2
0.5
0
MY
TH
MX PE
PH
G3 CN
RU
ID
-0.5
VN
-1 3
3.5
4
4.5
5
5.5
6
6.5
Effectiveness of anti-monopoly policy High Income (G1)
Upper Middle Income (G2)
Lower Middle Income (G3)
Low Income (G4)
The size of individual bubbles reflects the level of per capita GDP (PPP). * Brunei Darussalam and Papua New Guinea are excluded from the analysis because of lack of information. Notes: Regulatory quality index for 2005. Effectiveness of antimonopoly policy index for 2007. GDP per capita PPP for 2007. Sources: 1/ World Bank – Governance indicators. 2/ World Economic Forum (2007/2008). 3/ International Monetary Fund, World Economic Outlook Database, April 2008.
High income economies exhibit higher levels of regulatory quality and effectiveness of antimonopoly policy than upper middle and lower middle ones. In fact, the strong and positive correlation between regulatory quality and the effectiveness of antimonopoly policy is consistent with the fact that regulatory quality measures, inter alia, the government’s ability to implement sound policies. The above analysis may be summarized as follows: -
The effectiveness of competition policy is positively correlated with the intensity of local competition (and negatively correlated with market dominance). The intensity of local competition is positively correlated with institutional quality (and negatively correlated to the extent of market dominance). Institutional quality is positively correlated with the effectiveness of competition policy.
Furthermore, economic development levels are positively correlated with the intensity level of local competition, with a strong institutional quality and with an effective competition policy. 5.
CONCLUSIONS
1.
An historical review of the adoption of competition law shows that some economies enacted competition laws to weaken the concentration of economic power (e.g., the United States and Canada); in other cases the primary purpose of competition law was to eliminate economic concentration of state-owned companies (e.g., Chile, Mexico, Peru and New Zealand); and in other cases, the main rationale was to prevent a loss of competitiveness by domestic industry in relation to global markets (e.g., Japan, Korea and Chinese Taipei).