More than a billion people live in countries in which the government does not consult openly on new business regulations (see Figure 1). There, officials don’t engage chambers of commerce, civic groups or the broader public on draft regulations. They don’t test out whether a draft regulation is a good idea, whether it targets the right problem or whether it is feasible to comply with. Moreover, more than half of the world's countries do not conduct formal assessments of the possible effects that a new regulation might have – socially, environmentally, or on compliance costs to businesses.
Source: Global Indicators of Regulatory Governance dataset
We’re not talking here about top-secret national-defense regulations or emergency-response measures. We’re talking about plain-vanilla, basic, run-your-small-business types of regulations that thousands of constituents will need to follow.
A new dataset, Global Indicators of Regulatory Governance, explores how governments interact with the public when shaping regulations that affect their business communities. Concerned stakeholders could be professional associations, civic groups or foreign investors.
The project charts how interested groups learn about new regulations that are being considered, and the extent to which they are able to engage with officials on the content. It also measures whether or not governments assess the possible impact of new regulations in their country (including economic, social and environmental considerations) and whether those calculations form part of the public consultation. Finally, the project assesses two additional components of a predictable regulatory environment: the ability of stakeholders to challenge regulations in the case of an adverse decision, and the ability of people to gain access to the laws and regulations that are currently in force in a single place that is frequently updated.
These areas are more or less well-mapped-out in developed countries. Rule-of-law advocates, trade-agreement negotiators and regulatory-governance experts have been working (in large part with the support of data collected by the OECD) to improve regulatory transparency and to strengthen their ecosystem for good regulations since the 1980s. What is new here is the extension of this approach to developing countries.
The Global Indicators of Regulatory Governance cover 185 countries, from Australia and Angola to Zambia and Zimbabwe. It is the first time we have gotten a clear picture of the range of practices in developing countries and the direction of reforms.
Some of the observations have been surprising. You might think that public-outreach campaigns are too time-consuming and too burdensome for the overstretched bureaucracies to handle in most poor countries. Or that rich countries have predictably open, inclusive and well-thought-through regulatory processes. These generalities hold for many cases, but are far from watertight.
We found poorer countries that have fairly systematic stakeholder outreach (such as Kenya, Kosovo and Comoros) and richer countries with very little transparency (such as Argentina, Qatar and Brunei Darussalam). We also found different modes of engaging with stakeholders – extensive online engagement, public meetings and private sessions with known stakeholders (see Figure 2). Poorer countries use newspaper and radio announcements to call interested people to meetings, while wealthier economies tend to conduct more consultations online. While there are strong regional and income-level trends, the level of transparency and engagement is by no means constant across countries of similar income levels.
Source: Global Indicators of Regulatory Governance dataset
We also found a surprising number of reforms to public consultation and impact-assessment practices. You might consider the method of creating new regulations as linked inextricably to the political system of a country, or reflective of particular norms of society. But, as with so much else in the regulatory sphere, governments look to each other to adopt best practices in their rulemaking, drawing upon better approaches in other parts of the world that might help fix prevailing issues in their land.
We found more than 20 countries that had introduced new elements of regulatory governance in the last five years. For example, Zambia created a Business Regulatory Review Committee tasked with conducting regulatory impact assessments of proposed business regulations; Vietnam made public consultation mandatory for all draft regulations; and Estonia is actively cutting back the volume of rulemaking to reduce the regulatory burden on firms. And we know through conversations with local officials that more are coming.
These data will be explored further in the coming months. For an area that was previously studied primarily among OECD countries, regulatory practices in developing countries show a rich field for investigation.
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