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 14: Competition and Regulation: The Connection with Poverty and Income Distribution

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


INTRODUCTION In this final chapter we focus on the relationship between regulation, competition and poverty reduction as identified and examined in our research. Halving absolute poverty by 2015 is the first Millennium Development Goal (UN, 2000). How can regulators contribute to achieving this? Helping to create the conditions for economic growth, though important, is not enough – there is no guarantee that wealth will ‘trickle down’ to the poorest. Pro-poor regulation involves much more than a preoccupation with correcting market failure. Wider issues such as managing a risk society and social justice need to be seen as equally important goals of regulation. Opinion is divided and so is evidence (or at least differently interpreted) as to how growth and poverty – as represented by inequality of income distribution – are related (Cook and Uchida, 2005). For example, does one have to come first and does it preclude the other? Specifically, it used to be believed that in poorer countries, in the early stages of increased economic growth, inequalities in income would inevitably increase as some people were able to take advantage of new opportunities, while others were excluded from the potential benefits (Kuznets, 1955). Some people argued that, if growth sufficiently increased average income, this could somehow offset such inequalities. But more recent evidence has not supported the idea (comfortable for economic and political elites of course) that for overall gain, it is the poor who must feel the pain (Dollar and Kraay, 2002). Recent research in...

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