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Competences
> • Regulation
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Regulation |
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Regulations correct failures in market forces and compensate for external effects. However, there are also costs entailed in regulation: directly, in the form of administration and controlling; and indirectly, resulting from incompatible incentives or flawed governance. There is no theoretical ideal level of regulation. If this question is to be answered at least in part, use must be made of empirical studies. Regulations impact on an economic system at many levels and so the relationship between economic growth and economic regulation is correspondingly complex. The International Benchmarking Database contains two indicators for measuring the general level of regulation at national level: product market regulation and labour market regulation. |
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Buttom-up indicator |
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The indicator for product market regulation operates on a “bottom-up” principle. It encompasses basic indicators for describing the proportion of state ownership, state price regulation, the administrative hurdles facing companies, and trade barriers. The indicator for labour market regulation also takes account of employee protection legislation. |
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OECD data as a basis |
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The indicators on regulation cover the period from 1980-2005. The calculations are based on OECD regulation evaluations carried out in 1990, 1998 and 2003. The general indicators on regulation, on which those in the International Benchmarking Database are based, encompass a wide spectrum of information, the individual elements of which are weighted in a factor analysis process. The time series for development between the fixed years 1990, 1998 and 2003 are estimated. BAKBASEL also takes account of sector-specific indicators from the OECD’s International Regulation Database and sub-indices from the “Index of Economic Freedom”, published by the Fraser Institute (CATO Index). The approach taken by the CATO Regulation Index is comparable with that of the OECD and comparisons between them result in similar country ratings. |
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Contact:
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Michael Grass
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+41 61 279 97 23
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michael.grass@bakbasel.com
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