Regulation, Markets and Poverty

Regulation, Markets and Poverty

The CRC Series on Competition, Regulation and Development

Edited by Paul Cook and Sarah Mosedale

Regulation, Markets and Poverty incorporates the main policy implications arising from theoretical and empirical research into competition, regulation and regulatory governance in developing countries. This analysis often challenges conventional wisdom and draws on the work of leading experts from a range of disciplines.

Chapter 2: Competition and Innovation

Edited by Paul Cook and Sarah Mosedale

Subjects: development studies, development economics, economics and finance, competition policy, development economics, politics and public policy, public policy, regulation and governance

Extract

INTRODUCTION If we are serious about driving down levels of poverty in the developing world then we urgently need to take a fresh look at competition. Developing countries have only recently started to focus on competition policy. This creates both an exciting opportunity and a potential risk. Exciting because policies are not yet set in stone so there is a real opportunity to create a self-sustaining pro-poor policy. Potentially threatening because if we fail to look beyond popular but damaging concepts of competition and a narrow conception of the market we will fail again, as we have largely failed for the last 25 years of economic reforms, to make significant progress towards eliminating poverty in the developing world. Poverty reduction can only occur in developing countries if their economies grow relative to the industrialized nations and so account for a greater share of world production of goods and services. This means the things they do that are productive must grow faster than their less productive activities. For this to happen these activities must take place within a competitive environment that facilitates structural change. Obviously for poverty reduction, the way the pieces of the economic pie are distributed among the population is also highly significant. We cannot hope however, to create policy to encourage competition if we cannot agree on what competition is. There has always been debate about the meaning of competition but for the last 25 years one particular viewpoint has dominated all others (Cook, 2002). According...

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