Measuring Regulatory Quality

Rules are essential for economic growth, social welfare and environmental protection. But rules can also be costly in both economic and social terms. Governments may for example want to ensure public money is well-spent by allocating rent allowances only to those in need – but what if the system for determining eligibility is costlier than offering the allowance to everyone, or has the perverse effect of reducing the supply of housing? What business will be keen to invest and expand in a region or country if the paperwork involved eats up the first six months’ profit?

The answer is not to give up on rules, but rather to develop a more efficient and less costly regulatory system. Regulatory management systems can help governments prepare better new rules and improve existing rules. Indeed, improving regulatory management and regulatory reform are among the best ways that governments can promote economic development, investment and trade, but it requires a continuous process.

Through a series of surveys, the OECD has developed Indicators of Regulatory Management Systems to analyse the regulatory practices of OECD countries over time. This helps identify management strategies that work, and can help in designing and building a framework to ensure good-quality national regulations. These indicators offer broad insights on trends in regulatory reform over recent years and can help countries craft and revise their regulatory systems to make them more efficient and cost-effective.

Regulations need to be part of a system that works, one that strives to eliminate individual rules that contradict or duplicate each other. Making regulatory systems more efficient is complex and widespread – it can include cutting red tape for business, making policy more evidence-based, promoting the functioning of markets and improving the public’s understanding of the law. But governments can learn a lot about what has worked – and what has not – in other OECD countries. This Policy Brief offers a snapshot of some key results, with some examples.