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Policy Evaluation under Uncertainty

The Importance of “Good Governance” of Regulators

Who is responsible for designing and implementing regulations, and can that person or entity be trusted to pursue and enforce economically beneficial regulatory policy? Can we better avoid “regulatory capture” and cronyism and the strange bedfellows of “Bootleggers and Baptists?” Regulation policy experts including former OIRA Administrator Susan Dudley (such as in her 2015 Case Western Reserve Law Review article) and the OECD have some recommendations on improving regulatory process to keep it impartial, transparent (to stakeholders and the public), comprehensive (broadly applicable, without special exemptions), and free of “cronyism” or “capture” of regulators by special interests.

The OECD’s (2014) The Governance of Regulators: OECD Best Practice Principles for Regulatory Policy established “seven principles for the governance of regulators” (emphasis is added where the principles most align with CED’s objectives and role):

  1. Role clarity: An effective regulator must have clear objectives, with clear and linked functions and the mechanisms to coordinate with other relevant bodies to achieve the desired regulatory outcomes;
  2. Preventing undue influence and maintaining trust: It is important that regulatory decisions and functions are conducted with the upmost integrity to ensure that there is confidence in the regulatory regime. This is even more important for ensuring the rule of law, encouraging investment and having an enabling environment for inclusive growth built on trust;