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Are
Regulator Efficient and Independent? - Effective Consumer
Advocacy Required
New
Delhi, March 24, 2007
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Regulatory agencies face a number of constraints
in implementing their mandate. These range from
political interests to business interests.
Powerful political interest and powerful business
interest will attempt to capture regulatory
agencies, while disorganised consumers find it
difficult to organize themselves into coalitions
due at to a number of reasons.
It was
in this context the symposium emphasised the role
of consumer advocacy in attempting to bring
consumer interest to the forefront. Another theme
that cut across all the different sessions of the
symposium was ‘political will’.
MEDIA PLAYS A CRUCIAL ROLE
Experts highlighted that despite all good
intentions in framing competition policies, their
implementation was dependent upon the will of the
government to take the process forward. India’s
example, where the fiercely independent media
played a major positive role during the
transformation was cited as a lesson for other
developing countries.
Local
conditions or the institutional context was
another theme that reverberated across the
sessions. In designing an institutional framework
for a new regulatory agency, a US type independent
regulatory agency could be an option, as could
regulation by contract. Besides these two polar
cases, a hybrid system combining attributes of the
two was proposed as a model for utility sectors
especially water.
In the
water sector, private participation is most
frequently structured as a concession or lease
contract, to be monitored by specialized
regulatory agencies or courts. But most
governments have not used contracts since they are
incomplete and compliance is voluntary and it is
accepted that welfare outcomes are better under a
regulatory agency.
In
judging performance of a regulatory agency, the
outcomes could be quantitative but what variables
determine performance may be subjective. It could
be overall FDI as one paper argued or it could be
the effect on price, quality of service, access to
the services etc. Which outcomes matter or are
important would again be a function of the local
context.
DON’T AIRLIFT EXPERIENCE FROM RICH COUNTRIES
One
area of future research highlighted in the
discussion was to develop measures of
effectiveness of regulatory agencies. And to make
the regulatory regime of developing countries more
effective, technical assistance was proposed as an
instrument. While technical assistance in needed,
a word of caution was sounded in that ‘airlifting’
developed country regimes on to the developing
country context is neither desirable nor optimal.
For
small developing countries, other policy
instruments could be considered complementary to
establishing regulatory regimes. If the size of
the market makes it inefficient to establish
single sector or single country regulators, two
possibilities exist. Either one could have a multi
sector regulator in a small country like Barbados
or a multi country, single sector regulator is an
option through regional cooperation arrangements
as in the Caribbean.
Country based studies voiced concern on
independence (autonomy), expertise and
accountability of competition and regulatory
authorities in developing countries. The concerns
mostly relate to funding of regulatory agencies
and their hiring (and firing) practices.
Developing country studies showed how difficult it
is for governments not to get involved in funding
and in hiring decisions of regulatory agencies.
Interestingly, the paper from Belgium echoed
similar concerns for developed countries
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