Friday, August 17, 2007
Posted by D. Daniel Sokol
Francisco Marcos of Instituto de Empresa Business School asks provocatively Do Developing Countries Need Competition Law and Policy? According to Marcos, there are critical antecedents to a functioning competition law in the developing world. I agree and have argued this myself here and here.
ABSTRACT: When international institutions (UN, IMF, The World Bank, OECD) evaluate the conditions countries should meet in the road towards economic development and prosperity, the formulation and implementation of an effective competition policy (CP) appears always as one of the major requirements.
Besides, in the case of young and developing nations the relevance given to CP is stressed by several specific programmes aimed at helping them in the adoption of competition laws and the establishment of effective competition policies. A considerable amount of resources is committed by international organizations to this end.
Looking at some of the experiences of developing countries adopting competition laws in the last few years and also of countries resilient to the establishment of a CP, this paper analyzes whether the efforts of international institutions are justified and evaluates the conditions upon which CP may root.
Several prior institutional conditions are needed before the implant of CP may be successful (rule of law, State's commitment to respect a free market economic system). Institutional factors aside, widespread consciousness about the benefits of the market system and acceptance of the merits of free competition in the market by the business community and by the consumers are needed. This paper analyzes all those conditions and stresses the institutional background affecting how CP should be arranged in practice.