Rules for rule-makers

Regulatory Policies in OECD Countries: From Interventionism to Regulatory Governance
OECD Observer

Good fences make good neighbours, but fences can only work if they are constantly monitored and maintained. In the past 20 years, OECD countries have started taking a good look at how their national and local governments make and manage rules and regulations, and this publication serves as both an overview and a guide.

Regulatory policies are aimed at continuously improving the quality of legislation to reflect the changing needs of the public. This includes weeding out antique “horse-and-cart” ordinances and creating new laws to address current environmental, labour and economic conditions, as well as meeting public expectations.

It is not easy to strike a balance. Many corporations fight for fewer controls, yet others welcome the guidance good regulatory frameworks provide. The recent collapses of Enron and WorldCom are blamed on inadequate regulation, and the public constantly demands hard and fast rules on areas like transport security and food safety.

Regulatory frameworks can substantially improve market performance, public sector effectiveness and citizens’ satisfaction, through a mix of deregulation, re-regulation and better quality regulation. Tradable permits, for instance, have helped the US Environmental Protection Agency to achieve reductions in sulphur dioxide emissions as part of its acid rain programme. Denmark’s Green Tax System taxes energy use, emissions and wastewater discharge, and in Korea, long-term low-interest loans are available to firms that establish facilities that prevent, treat or recycle pollutants.

The OECD established a set of 10 “best practices” in 1997. Called Regulatory Impact Analysis (RIA), these guidelines ensure that the right questions are asked when creating regulations, and are the basis of a series of country reviews of regulatory reform by the OECD.

©OECD Observer No 234, October 2002

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