Adapting Competition Law and Policy for Economic Development: Asian Illustrations

Majah-Leah Ravago, James Roumasset and Arsenio Balisacan

No 202103, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: Do the needs of countries in different economic environments and at various stages of development warrant different policies? In the pursuit of economic development and consumer welfare, competition policy should curb rent-seeking and promote market efficiency without interfering with the extra-market institutions for the dynamic promotion of specialization, innovation, and investment coordination. This requires the coordination of competition policy with other economic roles of government including trade, industrial, and infrastructure policies. We investigate the impact of adoption of competition law on long-term economic growth using cross-country data from 1975-2015. Countries may choose to adopt–or not adopt–competition law depending on their circumstances, including level of economic development, institutions, and geography. Considering endogeneity and self-selection, we employ an endogenous switching regression allowing for the interdependence of economic growth and adoption of competition law. Our analysis shows that adoption increased the growth rates in adopting countries but would have decreased growth in non-adopting countries. This suggest that countries should not be pressured to prematurely adopt competition law but a limited international or regional agreement such as harmonization of policies may instead be pursued. In addition to correcting the abuses of anti-competitive behavior, competition policy should be designed to promote innovation and productivity growth and be well-coordinated with trade and domestic policies. We review these arguments focusing on Asian countries. The cases of Korea, Thailand, and the Philippines capture the characteristics of the law and authorities at various stages of maturity.

Keywords: Competition policy; antitrust; economic development; economic growth; Asia (search for similar items in EconPapers)
JEL-codes: K21 L40 L51 L52 O53 O57 (search for similar items in EconPapers)
Date: 2021-06
New Economics Papers: this item is included in nep-com, nep-isf, nep-law and nep-sea
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