OECD 2018 Product Market Regulation Indicator

WHAT ARE THE 2018 OECD PRODUCT MARKET REGULATION INDICATORS?

Competitive markets Competitive markets are essential for sustained economic growth Channels through which market competition leads to better performance are: o Allocative efficiency: a better allocation of resources towards higher-productivity firms o Productive efficiency: incentives to eliminate slack, reorganise work to gain efficiency and lower costs o Dynamic efficiency: new entrants often bring new ideas while incumbents face incentives to innovate

What fosters competition?

Well-functioning and competitive markets require: o A sound legal and judicial infrastructure o An effective competition regime o A competition-friendly product market regulation o An efficient insolvency regime

Measuring Product Market Regulation In 1998 the OECD developed a set of indicator of product market regulation (PMR) to measure a country’s regulatory stance in an internationally comparable way These indicators allow policymakers and scholars to: • understand where a country stands compared to internationally accepted best practice • track reform progress over time • investigate the links between regulatory practices and economic performance

Key characteristics The PMR indicators measure the degree to which policies promote or inhibit competition in markets for products and services The PMR are de jure indicators: they reflect the status of the existing laws and regulations, but do not capture the level of enforcement The information is scored against accepted international best practice The PMR values range between (0) and (6) from the most to least competition friendly regulatory regime.

Coverage of PMR indicators The database used to build the PMR indicators covers: • A number of network sectors • A number of service sectors • A number of cross-sector regulatory domains The information thus collected allows the PMR indicators to provide a good overview of how markets for goods and services are regulated and to what extent this regulatory setup fosters competition and entry

Coverage of the 2018 PMR indicators The sectors and regulatory domains assessed in the 2018 vintage of the PMR indicators are different from those included in other vintages.

These changes, due to a major revision of the methodology 20 years after their launch, means that the 2018 PMR indicators cannot be compared with previous vintages.

This presentation focuses on the content and structure of the 2018 PMR indicators.

Network sectors  Production, transmission, distribution and supply of natural gas and electricity  Collection, treatment, distribution and retail supply of water for domestic, agricultural and industrial purposes.  Mobile and Fixed E-communications  Transport of freight and passengers by: Rail Air Road Water

Service Sectors  Retail Distribution  Retail sales of medicines  For-hire urban passenger transport services  Professional Services provided by: Lawyers Notaries Accountants Architects Civil engineers Estate Agents

Horizontal regulatory domains

Administrative burden on start-ups Licensing procedures Simplification and Evaluation of Regulations Presence of SOEs in the economy Interaction of Public Officials with Interest Groups Governance of SOEs Public Procurement Barriers to foreign trade Barriers to foreign investments

Information sources

The information on laws and regulations is collected through a questionnaire and vetted by OECD experts The questionnaire is filled in by ministries, regulators and other relevant authorities in the countries surveyed Information is collected at federal/national level, but (representative) lower level jurisdictions are involved if the relevant sector or area is regulated by them

Economy wide Indicators 2018 This scored information is regrouped into 18 regulatory areas, and then combined into broader areas until it generates one overall indicator Product Market Regulation Distortions Induced by State Involvement Public Ownership

Scope of SOEs Gov’t Involv. in Network Sectors Direct Control over Enterprises Governance of SOEs

Involvement in Business Operations

Simplification and Evaluation of Regulations

Retail Price Controls and Regulation

Assessment of Impact on Competition

Command and Control Regulation

Interaction with Interest Groups

Public Procurement

Complexity of Regulatory Procedures

Barriers to Domestic and Foreign Entry Admin.

Burden on Start-ups Admin.

Requirements for Limited Liability Companies and PersonallyOwned Enterprises Licences and Permits

Barriers in Service & Network Sectors Barriers in Services Sectors Barriers in Network Sectors

Barriers to Trade and Investment Barriers to FDI Tariff Barriers Differential Treatment of Foreign Suppliers Barriers to Trade Facilitation

Building the economy-wide PMR indicator High-level indicators are aggregated in economy-wide indicator using equal weights Medium-level indicators are aggregated in 2 high level indicators using equal weights Low-level indicators are aggregated in 6 medium level indicators using equal weights Coded data is aggregated in 18 low level indicators using weights presented in the PMR schemata

Sectoral Indicators 2018 A subset of the scored information is used to measure regulation in specific sectors Network Sectors

Professional Services

Retail Sector

- State Involvement - Regulation

- Entry Regulation - Conduct Regulation

- Regulation of B&M sales - Regulation of online sales

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• • • • • •

Energy Transport E-communications

Lawyers Notaries Accountants Architects Civil engineers Estate agents

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General Retail Distribution Retail Sale of Medicines

Structure of Network Sector Indicators Network Sectors

Energy

Transport

Ecommunications

Electricity

Air

Fixed

Natural Gas

Rail Road Water

Mobile

Structure of Service Sectors Indicators Professional services

Lawyers

Notaries

Retail Distribution

Accountants

Architects

Engineers

Retail Sale of Pharmaceuticals

Estate Agents