Their Implications for Competition Law
Edited by Michal S. Gal, Mor Bakhoum, Josef Drexl, Eleanor M. Fox and David J. Gerber
Chapter 3: Lifting the veil: rethinking the classification of developing economies for competition law and policy
The advancement of competition law and policy in developing economies (DEs) has been the center of major efforts at international, regional and national levels. Such steps, it is widely believed, can potentially increase welfare, at least in many circumstances. Accordingly, a rich body of theoretical and empirical research emerged in order to suggest the optimal design of competition policies in DEs. Yet a bothering generalization characterizes much of the literature. Its object, DEs, is broadly defined. As a result, divergent economies are often grouped together—from Micronesia to India, from Zimbabwe to the Philippines. An implicit assumption lies at the basis of such grouping: that DEs have enough socio-economic characteristics in common, which differ from the characteristics of other groups, to justify a reference to them as a single group. This chapter challenges this assumption, when applied for purposes related to competition law and policy. Indeed, the most commonly used definition of DEs is based on a single factor: the size of per capita gross national income (GNI). This definition captures 65 percent of the jurisdictions of the world and 81 percent of the world population. Its single focus creates a black box with regard to the market characteristics that lead to a limited national income.
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