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REGULATORY FRAMEWORKS AND ECONOMIC DIVERSIFICATION Laws, Institutions and Likely Effects

REGULATORY FRAMEWORKS AND ECONOMIC DIVERSIFICATION Laws, Institutions and Likely Effects. Gape KABOYAKGOSI & Masedi MOTSWAPONG 27/08/2014. INTRODUCTION. Regulation IS a tool of government-growing in use!

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REGULATORY FRAMEWORKS AND ECONOMIC DIVERSIFICATION Laws, Institutions and Likely Effects

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  1. REGULATORY FRAMEWORKS AND ECONOMIC DIVERSIFICATIONLaws, Institutions and Likely Effects Gape KABOYAKGOSI & Masedi MOTSWAPONG 27/08/2014

  2. INTRODUCTION • Regulation IS a tool of government-growing in use! • From government ownership to ‘arms-length’ regulation (globalisation, marketisation, & privatisation) • NOT studying (social regulation: the control of the effects of capitalism on people) • Institutions do matter (NIE) conception. What limits on government power? • Law • Organisation • Culture

  3. OBJECTIVES • Review the implications of regulatory arrangements on diversification • Develop a framework to predict the likely effects of regulatory instruments on economic regulation

  4. JUSTIFICATION • The limits of the ‘good governance’ metaphor • Many regulatory agencies coming up to manage policy • A signal of commitment to external players • Instrument to ‘capture’ certain activities • Regulation imposes costs [RIA] [FIAS/BIDPA • Interact with external business regimes

  5. APPROACH • Review of laws and organisations # non mining industries • Laws are enforceable and policies are not • Note that the EDD Strategy falls firmly in the latter

  6. THEORY & INSTITUTIONALISM • Economic theory • Principal Agent • Public interest • Types of Regulatory Entity • Social v Economic Regulation

  7. METHODOLOGY • Use of past BIDPA studies • Desk Review • Legal Review • Review of Official Documents

  8. POLICY APPLICATIONS • Advocacy for regulatory reform • Development of framework. • Contestability (highly competitive? High product/service differentiation?] • Ownership type (majority government? Private?] • Credibility (role of the minister? How predictable? Competitive neutrality?] • Entry/exit rules

  9. RESULTS: AIR TRANSPORT • Air Transport: • Loss making airliner/protected from competition • BASA and protectionism • Domestic entirely protected

  10. RESULTS: BMC • BMC • Poor performing monopoly • Domestically entry is allowed • Exports are disallowed-what’s a small economy to do?

  11. RESULTS: TELECOMMUNICATIONS • Telecommunications • Three players in Mobile • Highly competitive for price • Highly diversified for products • SMS + VoIP + Money Transmission etc • Model to copy?

  12. RESULTS: ELECTRICITY • Legal monopoly # ESA • Very poorly performing state owned utility • Electricity needed for economy to thrive • Minister may approve competitor

  13. RESULTS:COMPETITION REGULATION • Ought to enable entry and diversity • Ought to ensure discipline and fair-play • Has exemptions that ‘kill’ competitive neutrality

  14. REGIONAL INTEGRATION • Botswana member of SACU; WTO; UNCTAD etc • Some laws restrict capacity to innovate/grow/diversify

  15. CONCLUSIONS • Laws too restrictive for ‘things’ that allow diversification • Diversification efforts too ‘govt-centric’ • Credibility needs consideration

  16. SOLUTIONS SET? • Separate political influence from economic decision making • Set up mechanisms to restrict the discretion of regulators • Build more robust acocuntability • Take government out of business/increase competition

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