How do laws and regulations affect competitiveness

Abstract

The impacts of laws and regulations on competitiveness have strong implications for OECD economies, as they can lead to unforeseen negative externalities and considerable regulatory costs for businesses and citizens. Nevertheless, the use of regulatory policy to assess the impacts of regulations on competitiveness has seldom been examined. This paper fills this gap by reviewing OECD members' regulatory appraisal practices for competitiveness undertaken as part of their regulatory impact assessment (RIA) frameworks. This paper finds that most OECD members already assess the impacts of regulations on some components of competitiveness; however, they fail to present a holistic and comprehensive analysis that examines the full impacts of regulations. The report categorises regulatory impacts on competitiveness into three strongly interrelated components: cost competitiveness, innovation, and international competitiveness. Given these interlinkages, there is scope to develop a more complete framework for policy makers to define and assess the competitiveness impacts of regulation as part of their RIA processes.