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Competition Policy in Emerging Economies

Apr 2005
Working Paper
04-010
By  Bruce Owen
Well over one hundred countries now have antitrust (laws promoting competition), and the majority of these are poor countries. Antitrust generally came to these nations as part of a package of market-oriented reforms after the final collapse of the Soviet economic model in the last decades of the twentieth century. Antitrust law in poor countries adopts the language of Western models, but frequently reflects little understanding of the economic objectives of modern Western antitrust enforcement policy. The effectiveness of such laws relies almost entirely on the presence of well-trained enforcement bureaucracies, which, if they exist at all, typically are understaffed and subject to severe political constraints. Moreover, few poor countries have a legal system capable of establishing a set of reliable expectations as to the legal status of particular economic transactions, practices, or property claims. The absence of the rule of law as a reliable institution is a significant impediment to economic development—one that greatly transcends mere antitrust concerns. Nevertheless, there are means by which antitrust enforcers in poor countries can work around this problem, largely by relying on administrative law isolated from the general legal system, and by serving as advocates for institutional reform within the government.