Turning Crisis Into Opportunity: Achieving Regulatory Reform in Adverse Economic Climates
For many, the crisis has offered an opportunity to act on regulatory reform, but the question is how.
Challenge
Economic policymakers who recognize the need for regulatory reform face challenges in designing and implementing such reforms amid the pressures caused by the global economic crisis. For many, the crisis has offered an opportunity to act on regulatory reform, but the question is how. A forum for exchanges among policymakers to test options does not exist.
Approach
WBI convened a workshop with 75 regulatory reform experts from Brazil, China, Croatia, Italy, Korea, Mexico, and Serbia, as well as from regional integration bodies such as the Association of South East Asian Nations (ASEAN) secretariat. They spoke about their experiences and results achieved during previous national economic crises. Italy and China targeted labor regulations and removing barriers to trade and financing. China also used multilateral and regional trade integration to drive and lock-in regulatory reforms, and Mexico had success with a similar strategy. Korea and Serbia both pushed for "big-bang" comprehensive regulatory reforms in the wake of crises, and obtained good results. Brazil was successful in setting up its Fiscal Responsibility Framework after the 1998 crisis, but failed to achieve tax reform.
Results
Experts said that regional integration could be both a strategy for and a driver of reform, as it was for East Asia after the late 1990s and Mexico after the crises of the 1980s and 1990s. In those regions, trade agreements helped build consensus around national reform, regional risk management mechanisms emerged out of economic cooperation, and trade increased significantly. These examples and others provide reference points and lessons for government officials initiating or advocating for regulatory reform.
The participants reiterated the need to continue to learn from each other throughout the economic crisis. To meet this demand, the World Bank Institute will offer regional learning programs in 2010. WBI has also designed a core learning program, in consultation with partners, on "Effective Regulatory Reform: Why, What and How?"
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