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Against a backdrop of a once-in-a-century global health and economic crisis, the management of the global commons presents a very real challenge. The deterioration of trust in governments, experts, and evidence has made reaching consensus in policy making more difficult. At the same time, there has been increased pressure for more rapid decision making to help address real economic, environmental and social issues. We need to rethink the way governments make rules. The important need for trusted, evidence-based, internationally co-ordinated, and well-implemented and administered regulation to deliver on climate action, harness innovation and manage interconnected global risks make this all the more urgent.
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In just three years since the last Regulatory Policy Outlook, the world has drastically changed. The COVID‑19 pandemic has demonstrated to all that how a country regulates can, literally, be a matter of life or death. Beyond the health crisis, the rapid digital transition and climate change all require governments to be flexible, regulate faster and better, and co-operate globally. As the pandemic recedes, regulatory reforms are an essential government tool for stimulating innovation and productivity during the recovery.
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The COVID-19 pandemic has underscored the role of regulation and shed light on the urgent need for a transformation of the way rules are made and implemented. COVID-19 has exposed gaps in domestic and international rule-making that have cost lives and livelihoods. While regulating in times of crisis requires major adjustments to processes, in some settings shortcomings – in evidence, in impact and risk analysis, in stakeholder consultation, or in co-operation with other governments – have carried a heavy price for societies. To a certain extent, the crisis has also shown growing mistrust between parts of societies and their governments. Correcting course now is critical for addressing current and future challenges where regulations have a significant bearing on the success of the responses, including climate change and other environmental threats.
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This chapter provides a glance at the future and attempts to set a scene for regulatory policy for the next decade, one that is more agile, better reflects changing environment, including fast technological changes, and evolving government priorities but one which is still firmly set in the foundations described by the existing OECD Recommendations relating to regulatory policy.
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Rules can be significantly improved when those impacted are involved. It allows for alternatives to be found, assumptions to be tested, and helps to build trust in government action. The 2012 OECD Recommendation on Regulatory Policy and Governance recognises the importance of consulting broadly, ensuring that all relevant impacts are assessed, and that rules are periodically reviewed and open to legal challenge. The Recommendation also calls on governments of various levels to work together to achieve public goals. This chapter critically examines recent trends and progress made by OECD member countries and the European Union in attaining these agreed standards. Recent results from the globally unique Indicators of Regulatory Policy and Governance suggest that progress in reforming the way rules are made has stalled in a number of countries. Against a once-in-a-century global pandemic, there has never been a more important time to ensure that the work of governments actually improves citizens’ lives.
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This chapter analyses the institutional organisation of regulatory oversight as well as its evolution over time. It then focuses on existing oversight and quality control mechanisms for regulatory management tools, as well as on related performance assessment practices. The chapter concludes with a set of considerations on the meaning and determinants of well-performing regulatory oversight, with special attention to coordination-related functions and results-oriented approaches.
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This section outlines the key trends in International Regulatory Co‑operation (IRC) across OECD Member countries, building on the relevant 2021 OECD Survey of Regulatory Policy and Governance (iREG) questions and recent developments identified in OECD analytical and country work. It shows a steady increase in the consideration of internationally agreed instruments in domestic rulemaking. Nevertheless, overall progress on IRC is still lagging behind the increasingly needs for cross-border regulatory action. The COVID-19 pandemic and other challenges such as climate change underscored the importance for countries to co-operate rapidly and strengthen their international regulatory co-operation capacities before crisis hit, to be mobilised in time in the face of transboundary emergencies.
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The good governance of economic regulators is an important ingredient of robust and appropriate regulatory policy. Good governance supports better regulation, as well as stability and predictability in regulatory decision making. In the context of rapid changes that are reshaping network sectors such as energy, water, e-communications and transport, good governance can bring confidence that decisions are made with integrity. This chapter discusses the governance of regulators using evidence from the OECD Indicators on the Governance of Sector Regulators. It focuses on governance arrangements to safeguard independence and promote accountability in regulators across OECD and non-OECD member countries.
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Risk-focus and risk-proportionality have been increasingly used by governments and regulators when designing and delivering regulation. Risk helps improve the effectiveness and efficiency of regulation. It is crucial in the perspective of achieving public outcomes at every step of the regulatory policy cycle, while minimising burden and unintended side effects of regulation and rules. The use of risk is however unequally spread across countries and regulatory area. Also, many impediments to its utilisation exist, ranging from resistance in institutions to the over-estimation of the effectiveness of “non-risk-based” regulation. The COVID-19 crisis has shown the obstacles that regulation can pose to response needs when it is not in line with a risk-based approach, nor flexible enough. The chapter discusses how risk prioritisation, objective and data-driven risk assessment, use of new technologies to improve data sharing and analysis, and adequate flexibility/agility can dramatically improve regulatory outcomes.
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Most of the data presented in this Outlook, including the composite indicators, are the results of the 2014, 2017 and 2021 Regulatory Indicator Surveys. This Reader’s guide aims to help readers understand the scope of the data collected through these surveys and some of the limitations related to the use of indicators. Please note that this edition of the Outlook also features results of new survey questions that were designed in conjunction with the Measuring Regulatory Performance (MRP) Steering Group on ex post evaluation, reflecting the developed normative thinking from the recently published Best Practice Principles (OECD, 2020[1]). The Secretariat updated the ex post evaluation composite indicator prior to the launch of the survey in 2020. In order to maintain an accurate time series, a limited number of answers from 2014 and 2017 relating to new questions needed to be completed that formed part of the composite indicator for ex post evaluation. Questions relating to reviewing the legality of regulations were also revised.