Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Monday, February 25, 2008

An Empirical Evaluation of Long Term Advisors and Short Term Interventions in Technical Assistance and Capacity Building

Posted by D. Daniel Sokol

SokoldStiegert D. Daniel Sokol (i.e., me, the tall and lanky one on the far left) of the University of Missouri School of Law and Kyle Stiegert of the University of Wisconsin Department of Agricultural and Applied Economics (20lbs lighter since the picture was taken thanks to regular biking and snacking less) have just posted An Empirical Evaluation of Long Term Advisors and Short Term Interventions in Technical Assistance and Capacity Building.  This is an important work in trying to figure how to assistant young agencies in creating effective antitrust regimes in their respective countries.

ABSTRACT: Technical assistance to improve the capacity of regulatory agencies around the world remains a key priority for international aid efforts. Technical assistance is critical to younger antitrust agencies because more effective agencies can protect consumers against anti-competitive conduct. Beginning in the 1990s, the rapid adoption of antitrust laws and development of agencies to interpret and enforce these laws has transformed the competitive landscape in many countries. Indeed, more than half of the countries with an antitrust legal framework enacted antitrust laws in the past 15 years. Many of the newer antitrust agencies are not as effective as they need to be to improve the well being of consumers and protect against anti-competitive conduct. Consequently, donors have assigned a significant amount of time and financial resources to technical assistance to raise the capacity and effectiveness of these younger agencies. However, quantitative analysis of the impact of this technical assistance remains limited at best. In a previous paper, we undertook a general analysis of antitrust technical assistance. In this paper we focus on what appears to be a particularly important part of technical assistance and capacity building - the use of long term advisors (LTA) and short term interventions (STI).

In 2005, the International Competition Network conducted a survey of antitrust agencies that received LTA and STI services from a wide array of donor agencies. We first perform a descriptive assessment of the survey data. We find LTAs to be more effective than STIs in preparing the agency for tackling work they could not have undertaken previously and in confronting cartels. Most LTA and STI services arrived directly from developed world antitrust agencies and lawyers were superior to economists for STI work while economists tend to perform best as LTAs. In a more general empirical framework, we model the effectiveness of LTA and STI interventions using key survey questions about the initial preparation phase, the ability of the interventions to improve internal tactical qualities of the agency, and the ability of the interventions to improve the agency in its strategic mission. We estimate a three equation seemingly unrelated regression system designed to tease out the factors that led to a successful preparation of tactical and strategic technical assistance. The most important findings are related to two structural features of recipient antitrust agencies. Our most prominent finding is that recipient agencies absorb LTA and STI services best when the agency head has a rank of minister or higher and/or when agencies had prosecutorial discretion. At the heart of these agency features is the relative power position of the agency in the domestic political and economic structure. Those agencies with a strong power base seem well positioned to receive the current formatted technical assistance involving LTAs and STIs. Donors should focus on modifying the technical assistance to agencies with less power and should push for stronger agency autonomy and authority. A second prominent finding was that bilateral donor relationships did remarkably better in helping the agencies with their strategic mission. Perhaps bilateral LTA and STI perform better because of a better understanding of the political and economic realities these agencies face or because these donors provide aid through developed world competition agencies. Our suggestion is that multilateral donor agencies work hard to overcome deficiencies that their organizational structure presents to recipient agencies. Overall, our analysis of technical assistance efforts in one field of complex regulation (antitrust) may prove relevant to policies of how to make assistance more effective across regulatory fields.

http://lawprofessors.typepad.com/antitrustprof_blog/2008/02/an-empirical-ev.html

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