Competitive Advantage and Competition Policy in Developing Countries

Competitive Advantage and Competition Policy in Developing Countries

The CRC Series on Competition, Regulation and Development

Edited by Paul Cook, Raul Fabella and Cassey Lee

The book discusses competition from different theoretical perspectives and examines the implications these viewpoints have for policy. The contributors assess competitiveness in domestic markets and the impact of foreign competition. They also review the experiences of a range of countries in developing competition policy and examine both the strengths and weaknesses of these policies.

Chapter 4: Legal Traditions and Competition Policy

Cassey Lee

Subjects: development studies, development economics, law and development, economics and finance, competition policy, development economics, public sector economics, law - academic, law and development

Extract

Cassey Lee INTRODUCTION The two decades beginning from the early 1980s witnessed significant institutional changes in many economies in the world. Socialist countries in Eastern Europe and Central Asia underwent political transformation into democracies and embraced the market system. Other socialist countries that did not undergo political transformation, such as China and Vietnam, began using market mechanisms selectively to enhance their economic performance. At the same time, countries that have already adopted the market system undertook to give market forces a greater role in their economies by divesting state-owned enterprises through large-scale privatization. Economists have also become more interested in the role of institutions in economic growth and development. In the context of the institutional changes that have taken place, economists are pondering over the type of institutions such as property rights protection that should be considered to be essential for the proper functioning of market economies. However, the questions are not just about market institutions but of state interventions that are required to address problems of market failures. One such intervention is competition policy. Currently more than 100 countries around the world have implemented national competition laws. There is sufficient theoretical and empirical support to motivate the implementation of competition policy (UNCTAD, 1997). What is debatable, especially from the viewpoint of developing countries, is the form and timing of implementation, that is, whether multilateral competition rules are useful and whether more exemptions ought to be allowed for conflicting industrial policies. For countries that have decided to...

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