Competition Regulation and Regulatory Governance

Seminar paper from the year 2018 in the subject Business economics - Economic Policy, grade: 1, language: English, abstract: In the global economy, privatization has become a central issue within economic reforms taking place in developing countries, and it is associated with the neo-liberal model reforms from the 1980s. Developing countries struggle to maintain high standards in public services such as water, energy, telecommunications, transportation, health, education, and, therefore, the adoption of policies to increase the effectiveness are needed. Privatization in theory should help these entities to become more efficient and benefit the majority of the population though, in practice, these objectives are rarely accomplished. The role of competition and regulation in such businesses are essential for development and growth, especially through the injection of private capital and fostering of competition. The principal common factor of these businesses is the natural component of monopolies which, according to Hellwig (2008), represents the use of a fixed network infrastructure that translates into largely sunk costs. Federal reforms aim for the improvement of performance in such important sectors of public services; however much of the research proves that; this has been reasonably unsuccessful in developing countries based on lack of institutional capacity. Even in theory, regulatory framework imported from developed countries was not suitable to the social and economic context in developing countries consequently the application of such previous experiences was not productive. This paper attempts to show that competition and regulation in the privatization process within developing countries could be successful if necessary reforms are based on the countrys economic, social, and political structure. As mentioned, the privatization process, as successfully applied in developed countries, requires significant adjustment for it to be pursued in transitiona