On 28 May 2005, Denis Christel Sassou Nguesso, son of the president of Republic of Congo, went shopping in Paris. He spent €2,375 in Dolce & Gabbana, followed by €6,700 in Aubercy Bottier, a high-end bootmaker. Less than three weeks later, on 14 June, he was back: another €4,250 on shoes at Aubercy and €1,450 at a designer handbag shop. A month later, on 15 July, he burned another €2,000 at Aubercy, apparently his favourite shoe shop at the time.
It goes without saying that rules, laws and regulations are meaningless if they are not enforced. Yet, the bulk of the literature on the effects of various laws is completely silent on the enforcement issue. The implicit assumption is that measures based on laws on the books are a reasonably good proxy for actual enforcement of laws and so an explicit reference to enforcement is not required. Is there any reason to think this is a plausible assumption?
Dambisa Moyo is a formidable critic - this much I learned from her presentation at the World Bank earlier this week. Moyo is the author of
In his presidential address to the American Economic Association, Avinash Dixit (2009) notes that laws and regulations are necessary for security of property rights, enforcement of contracts and overcoming collective action problems – something that the private sector cannot function without. However, laws and regulations are unlikely to have much beneficial effect if private agents are simply not aware of them. How easy is it for firms to obtain information on laws and regulations?
...the overriding importance of rules and management practices emerging from our data suggests that...even groups comprised of very poor borrowers in high risk conditions can achieve high repayment rates if proper rules and management practices are adopted.
Good policy making – in the development field or in any field for that matter – involves three steps. First, a problem must be identified or a goal needs to be set. Second, policy measures that can take us to the stated goal need to be identified. The third step is to find the “least costly” policy measure, or what is called the “first-best” policy for achieving the goal.
Is Bhutan suffering from an acute case of Dutch Disease? Despite its status as the Shangri-La destination for A-list tourists, Bhutan’s land-locked status and nascent private sector pose enormous challenges for a country that is gradually moving to a more market-based economy. Thinking about this question is enough to transform one Bhutanese MP’s happiness to
Existing studies on business regulation – its determinants and effects – are largely focused on aggregate level measures. These aggregate level measures attempt to summarize many different types of regulations into a single monolithic whole. The key question then is how similar the underlying sub-components are in terms of their effects on economic activity and their determinants.