What are the 2023 OECD Product market regulation indicators?

What are the OECD Product Market Regulation Indicators TITLE GOES IN HERE

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Introduction to the PMR indicators TITLE GOES IN HERE

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Product market regulation: A building block for a healthy economy Vibrant competition is an essential component of a healthy economic environment, as it fosters cost efficiency and stimulates productivity Having a regulatory environment that encourages effective competition is essential to long-term growth Laws and regulations can promote competition by removing unnecessary barriers to entry, expansion and exit of firms and avoiding the creation of new barriers 3 Unclassified - Non classifié

Competition improves economic outcomes Academic studies, as well as reports from OECD and other international institutions, show that a competitive economy delivers better results in terms of: – Lower prices and greater choice – Business dynamism – Productivity growth – More employment and dynamic labour markets – Greater investment – More innovation 4 Unclassified - Non classifié

Measuring regulatory barriers to competition Turning qualitative information on regulatory set-up into quantitative indicators is needed to – better identify areas of weaknesses regulatory weaknesses and select areas for pro-competitive reforms, and – assess links between a competition-friendly regulatory environment and macro variables

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The OECD PMR Indicators To address the need to measure the extent to which a country’s laws and regulations foster productivity-enhancing competition, in 1998 the OECD developed:

The Product Market Regulation Indicators The exercise has been repeated at 5-year intervals since then. Initially, the exercise included only OECD member countries, but over time the coverage has been considerably expanded 6 Unclassified - Non classifié

Content of the PMR indicators TITLE GOES IN HERE

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Coverage of the 2023 PMR indicators The PMR indicators are constructed from a large database on laws and regulations in force in a country This database includes information on laws and regulation across:

❑ A number of network sectors ❑ A number of service sectors ❑ A number of cross-sector regulatory domains

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Network sectors ❑ Natural Gas and Electricity ❑ Mobile and Fixed E-communications ❑ Transport (freight and passengers) by: ✓

Rail

✓

Air

✓

Road

✓

Water

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Service Sectors ❑ Retail Distribution ❑ Retail Sales of Medicines ❑ Professional Services ✓ Lawyers ✓ Notaries ✓ Accountants ✓ Architects ✓ Civil Engineers ✓ Real Estate Agents

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New Sector: Digital Markets

❑

Regulation of Digital Markets

Introduced in 2023

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Horizontal regulatory domains ❑ Design and Evaluation of New and Existing Regulations ❑ Rules on Stakeholder Consultation ❑ Lobbying Regulation ❑ Scope and Quality of the Governance of SOEs

❑ Public Procurement ❑ Administrative Burden on Limited Liability Companies and Personally Owned Enterprises

❑ Licensing and Permits Regime ❑ Barriers to Foreign Trade and Investments – based on other OECD databases and indicators 12 Unclassified - Non classifié

Calculating the PMR indicators TITLE GOES IN HERE

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Building the PMR indicators Data collection Send questionnaire to national authorities Collect data from other OECD database or indicators where possible

Data coding Verify legal sources Check consistency of answers across countries and over time Cross-check answers with OECD experts

Data verification

Data aggregation

Validation

Assign numerical values to qualitative information (0 to 6)

Aggregation of coded data into two sets of indicators:

Database and indicator scores presented to national authorities

Divide quantitative information into classes using thresholds and assign values

• •

Economy wide PMR indicator Sector PMR indicator

Database and indicators are then published on the OECD PMR webpage

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Data collection The information is collected through a questionnaire composed of 11 sections Sections of the questionnaire 1

Energy

7

Governance of SOEs

2

E-communications

8

Public Procurement

3

Transport

9

Design of Regulation

4

Retail Trade

10

Other sectors

5

Professions

11

Digital Markets

6

Administrative burden 15 Unclassified - Non classifié

Data collection (2) Each of the countries surveyed appoints a coordinator, who is responsible for distributing the sections of the questionnaire and collecting the answers For other countries, especially if included for the first time, a local expert may support the data collection To facilitate the verification process, the questionnaire asks for legal references and other information to support the answers provided Some information is taken from other OECD indicators and databases and from the UNCTAD Trade Analysis Information System database (for more details see the PMR Methodology Note) 16 Unclassified - Non classifié

Data verification An OECD team of experts verifies the answers to ensure that: ❑

questions have been correctly interpreted

❑

answers are consistent across countries

❑

answers are consistent over time {where relevant}

These checks allow the OECD to guarantee the comparability of the indicators

When doubts or uncertainties arise, the OECD team requires the authorities to provide clarifications or further information 17 Unclassified - Non classifié

Data coding The qualitative information is turned into numerical values The values range on a 0 to 6 scale, where a lower value reflects a more competition-friendly answer Some questions require the respondent to answer by giving a numerical value, in this case, the answers are grouped into classes according to a set of thresholds and 0 to 6 values are applied to these classes

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Data coding: an example

2 or 3

Number of public and private bodies to be contacted to start a limited liability company

4 or 5

6 or 7

8 or more

Score = 0

Score = 1.5

Score = 3

Competition friendliness

0 or 1

Score = 4.5

Score = 6 19

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Data aggregation: two sets of indicators 1. The Economy-wide PMR indicator organised along a number of horizontal areas 2. A group of sector indicators focused only on individual sectors: – energy, – ecommunications, – transport, – professions, – retail trade, – retail sales of medicines, and – digital markets 20 Unclassified - Non classifié

PMR economy-wide indicators

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Data aggregation the economy-wide indicator High-level indicators are aggregated in PMR 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 15 low level indicators using weights shown in PMR Schemata 22 Unclassified - Non classifié

2023 PMR sector indicators NEW

Professional Services

Network Sectors

Retail Sector

- Quality and Scope of Public Ownership - Regulation

- Entry Regulation - Conduct Regulation

- Regulation of Physical Shops Sales - Regulation of Online Sales

- Energy - Transport - Ecomm.

-

- General Retail Distribution - Retail Sale of Medicines

Lawyers Notaries Accountants Architects Civil Engineers Estate Agents

Digital Markets

- Assessment of Competition Challenges - Merger Control - Fair Trading for Business Users - Market Contestability - Use and Access to Data

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Using the PMR indicators TITLE GOES IN HERE

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Use of the PMR indicators These indicators:

❑ enhance the knowledge of regulatory practices in the countries surveyed ❑ permit to identify areas where regulations are not aligned with accepted best practice

❑ allow policymakers to compare policies and learn about other countries’ regulatory frameworks

❑ enable to track regulatory reforms over time (when exercises have been repeated over time)

❑ give the possibility to investigate the link between regulatory reforms and economic performance 25 Unclassified - Non classifié

Who uses the PMR indicators and how 1. OECD

❑ Economic Surveys by the Economics Department (ECO) ❑ Policy reports ❑ Competition Assessment Reviews 2. National governments

❑ Assessments and identification of priorities for reforms 3. Other international organizations, such as the European Union and the World Bank

❑ Assessment of the regulatory framework and suggestions for reforms 4. OECD, IMF, academics, and research institutions

❑ Quantification of the impact of pro-competition reforms 26 Unclassified - Non classifié

Examples Reports on Product Market Regulation in Indonesia and Brazil

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