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Relevance of Competition Reforms for Development in Africa

This insightful article by David Lewis from the Gordon Institute of Business Science explores the importance of competition reforms for development in Africa. It delves into the complexities of market failures, state-owned enterprises, national industrial strategies, and the impact of competition laws and policies in both micro and macroeconomic contexts. The text emphasizes the need to reconsider traditional development models in the wake of global economic shifts post-Berlin Wall era. It discusses the challenges of corruption, poor governance, and the necessity for new rules that balance market dynamics with state intervention. The relevance of competition reforms is explored in terms of macro performance, global growth trends, and the complexities of market regulation. The article also highlights the importance of measuring micro outcomes and choosing impactful reforms for sustainable development.

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Relevance of Competition Reforms for Development in Africa

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  1. Relevance of Competition Reforms for Development in Africa David Lewis Gordon Institute of Business Science

  2. 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

  3. 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

  4. 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

  5. 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

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