Leading Issues in Competition, Regulation and Development
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Leading Issues in Competition, Regulation and Development

Edited by Paul Cook, Colin Kirkpatrick, Martin Minogue and David Parker

The book draws together contributions from leading experts across a range of disciplines including economics, law, politics and governance, public management and business management. The authors begin with an extensive overview of the issues of regulation and competition in developing countries, and carefully illustrate the important themes and concepts involved. Using a variety of country and sector case studies, they move on to focus on the problems of applicability and adaptation that are experienced in the process of transferring best practice policy models from developed to developing countries. The book presents a clear agenda for further empirical research and is notable for its rigorous exploration of the links between theory and practice.
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Chapter 4: Economic regulation in developing countries: a framework for critical analysis

David Parker and Colin Kirkpatrick


David Parker and Colin Kirkpatrick INTRODUCTION In the 1990s more than 120 developing countries introduced private investment in infrastructure schemes in the public utilities (Gray, 2001, p. 2). Traditionally the public utilities – electricity, gas, water services, telecommunications and transport – have been associated with economies of scale and scope in production that rule out competition in the market. For much of the last century state ownership of public utilities was the preferred option in most countries, including developing ones. Private-sector monopolies are not attractive given the possible threat of abuse of market power. More recently, however, in the face of evidence of ‘state failure’, the emphasis in public policy has switched from direct state ownership to private ownership but with state regulation. State regulation is the means by which the state attempts to affect private sector behaviour. Economic regulation by government is associated with righting ‘market failures’, including ameliorating the perceived adverse consequences of private enterprise including its income and wealth distribution effects. An additional argument lies in the role of the state as a facilitator of economic growth. From the 1960s to the 1980s it was fashionable to promote industrialisation through import substitution, in which the state played a primary role as a regulator of both domestic and external trade and as a direct investor in industry and agriculture. However, following the apparent successes of privatisation and market liberalisation programmes in developed economies, including Europe and North America, and evidence of government failure in developing ones (World Bank, 1995), since...

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