Relevance of Competition Reforms for Development in Africa

David LewisGordon Institute of Business Science

Underdeveloped Markets

• Development economics emphasised market failures Infant industries/trade protection State owned enterprises National industrial strategies Suppression of agricultural markets

• Competition law and policy 1st World (USA) preoccupation 1st World ‘luxury’ How to ‘substitute’ for markets, not promote markets

Development Model Reconsidered

Corruption and inefficiency Poor governance Low development returns Collapse of Berlin Wall

GAVE RISE TO

Domestic market liberalisation - privatisation/ deregulation International trade liberalisation – reduced tariff barriers/exports Democratic governance New ‘rules of game’ required But still strong support for state – Asian NIC’s, China CLP sometimes imposed; sometimes embraced

Relevance of Competition Reforms

MACRO PERFORMANCE Strong global growth performance But growing in-country and between-country inequality Many major setbacks – financial and economic crises And important ‘exceptions’ – eg. access to agricultural markets Which limit reforms – Doha Round

BUT MARKETS RULE, THOUGH CONTINUED REGARD FOR STRONG STATE ROLE, SO...

Relevance of CP axiomatic – boundaries between state and market, regulation

Relevance of CL axiomatic – maintain open markets in face of economically strengthened elites

Micro Performance

Usually very difficult to measure micro outcomes But constituency for CLP depends on visible outcomes – ‘it’s context, stupid’ Select reforms and enforcement that are winnable and impactful

Telecommunications – powerful new technologies, great diffusion Basic commodities – pro-poor Local markets – pro-poor Public procurement – pro-taxpayer and treasury

Design imaginative, impactful remedies Don’t only focus on enforcement

Mergers – reputation for strength and competence Advocacy

Public anti-competitive conduct Performance of regulators and SOEs