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Adapting Competition Law and Policy for Economic Development with Asian Illustrations

Author

Listed:
  • Majah-Leah V. Ravago

    (Department of Economics, Ateneo de Manila University)

  • James A. Roumasset

    (Economics Department, University of Hawaii)

  • Arsenio M. Balisacan

    (Philippine Competition Commission)

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.

Suggested Citation

  • Majah-Leah V. Ravago & James A. Roumasset & Arsenio M. Balisacan, 2021. "Adapting Competition Law and Policy for Economic Development with Asian Illustrations," Department of Economics, Ateneo de Manila University, Working Paper Series 202103, Department of Economics, Ateneo de Manila University.
    • Handle: RePEc:agy:dpaper:202103
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    File URL: https://www.ateneo.edu/sites/default/files/2022-06/ADMU%20WP%202021-03.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Competition policy; antitrust; economic development; economic growth; Asia;
    All these keywords.

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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