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RIA in Practice: The International Narrative
Dr. Malathy KnightResearch Associate, Verite Research
March 26th, 2015
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• RIA: “What” and “Why”
• Unpacking the international narrative on RIA
• RIA in developing countries: issues and
challenges
• Getting to workable solutions
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Road map
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• What is a “developing” country in this context?- Financial resources- Technical capacity (linked to some extent to financial
resources)- “Governance” per se not necessarily a part of this mix; BUT
under-developed institutional structures/processes can be a result of financial resource constraints
• No one-size fits all solutions/international “good” practice rather than “best” practice
• First-best solutions NOT possible in public policy/identify “workable” solutions: country/sector
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Some caveats
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• Systematic, structured, evidence-based, consultative analysis of the prospective impacts of a proposed policy measure against possible alternatives (ex-ante)
• “..RIA’s most important contribution to the quality of decisions is not the precision of the calculations used, but the action of analyzing – questioning, understanding real-world impacts and exploring assumptions..” (OECD, 2002)
• NOT an end in itself; process matters (demonstration effects)
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RIA: “what” and “why”
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• Sub-set of regulatory policy: effectiveness, transparency/accountability, proportionality, consistency, legitimacy – facilitating better governance structures and processes
• Two inter-linked elements: RIA process and RIA document
RIA: “what” and “why”
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RIA: “what” and “why”
Fits policy cycle
Consistent analytical method
Iterative process
Public consultation
Stakeholder buy-in &
engagement
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RIA: policy context
Policy Space
Policy identification
Policy formulation
Policy implementation
Policy evaluation
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RIA: policy context
Setting agenda
Drafting rule/
regulation
Implementation
Monitoring
EnforcementEx-post
evaluation
Ex-ante appraisal
Final impact assessment
Implementation
Monitoring
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RIA: incidence OECD (formal)
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• Africa: e.g. Botswana, Egypt, Ghana, Nigeria, Tanzania (pilot projects to implement RIA); Uganda (RIA training, 2000-2003); Kenya (RIA proposals, 2007); South Africa (approved by Cabinet,2007/RIA Guidelines available from 2012)
• Latin America: e.g. Brazil, Chile, Columbia, Costa Rica, Ecuador (trying to introduce a more systematic use of RIA)
RIA: emerging/developing economies
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• Europe & Central Asia: e.g. Bulgaria (think-tank initiative IME (1998-2002); Moldova (2008); Montenegro (RIA manual, 2011); Serbia (2004); Ukraine (2004); Uzbekistan (adoption of government decree on RIA, 2014)
• Asia: e.g. Cambodia, Lao PDR, Malaysia, Mongolia, Philippines, Vietnam (piloting RIA); Indonesia (via ADB project in Min of Trade,2002 & TAF training for LG)
• SOUTH ASIA?
RIA: emerging/developing economies
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• Developing countries: empirical evidence sparse, patchy
• Why?-Other regulatory policy options for regulatory review?-Done but not documented (or informal)?-Done but not sustainably embedded (e.g. add-on to satisfy donor conditionality/not in sync with policy cycle, etc. )?
• GAP in research
RIA: unpacking the international narrative
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• Knowledge gaps on RIA/alternatives to regulatory review in emerging/developing economies (based on review of existing literature)
• Important research questions digging deeper into what has/has not worked and why (political-economy and socio-cultural context); extent/limits of policy transfer/reinventing the wheel; specific stakeholder-level impact of regulatory review; positive & normative usefulness of RIA, etc.
• Case for meaningful in-depth research program: recall CUTS 7-Up Project on competition policy and law (empirical research, wide stakeholder consultation process, policy buy-in)
RIA: unpacking the international narrative
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• Expected outcome (assumption): RIA driver of regulatory quality/better regulatory structures & processes for society as a whole
• These findings need to be tested/fine-tuned with more empirical research in emerging/developing economies
RIA: issues and challenges
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RIA: issues and challenges
Process• Cohesive, systematic regulatory policy (within which RIA is
to be embedded); clear regulatory policy objectives/principles/expected outcomes
• Policy buy-in Political (highest levels of government) Administrative (bureaucrats) – sync with principal-agent dynamics Technocrats – often most resistant/ideology-driven interests Civil society (private sector, consumers, etc.) – regulatory capture,
rent-seeking, policy embedding/sustainability
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RIA: issues and challenges
Process• Institutional arrangements One apex organization tasked with overseeing the different
stages (and sectors) of RIA; coordinating roles/responsibilities of the various technical and administrative actors in the process; quality-control; training; advocacy; and, problem-shooting
Best placed in an entity close to core Executive body of government
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RIA: issues and challenges
Process• Skills and financial resources Technical know-how (nuts and bolts of RIA method) “Knowledge” (political-economic, socio-cultural costs/benefits and
outcomes) – country expertise over donor information transfer Adequate remuneration: “you pay peanuts, you get monkeys”!!
• Access to information (e.g. RTI Bill in #LK) – transparency, accountability, credibility, legitimacy – broader stakeholder buy-in
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RIA: issues and challenges
Methodology• Asking the right questions Scope: primary or secondary legislation? Scope: all regulations across the board or major ones (define major?)?• Choice of methodology Least-cost analysis Cost-effectiveness analysis Cost-benefit analysis Multi-criteria analysis• Some sticky issues Monetizing non-market impacts (revealed preference? ability to pay
versus willingness to pay? bounded rationality?) Mixing RIA in to long-term policy goals (e.g. quality of life)
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RIA: peeling off the layers- #LK story
• Introspective: looking back at mistakes (2004-2005)
• What: “..process used to assess the likely consequences of proposed regulation, and the actual consequences of existing regulation, to assist those engaged in planning, approving and implementing improvements to regulatory systems..”
• Why: Objectives of a social market economy; market failure; effective,
workable regulatory policy/institutional structures and processes Embedded objectives of good governance: transparency,
accountability, consistency, participation
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RIA: peeling off the layers- #LK story
• How:
Incremental approach to implementation: short-term (setting up RIA Unit, drawing up RIA Guidelines, RIA pilots, etc.); medium-long term (expand scope to require at least a partial RIA for all new regulation; enshrine RIA in an Act of Parliament)
RIA Unit – focal point for RIA process; located within President’s Office/Cabinet Office/Ministry of Finance; “lean” entity (outsourcing); sunset entity?; facilitate training
Scope: Central, Provincial and Local Government legislation; screen regulations w.r.t impacts (identify key stakeholders affected/numbers, identify positive/negative impacts on each key stakeholder group, score low-medium-high, when one/more impacts rated “high” or two/more impacts rated “medium” do an RIA
Public consultation
Pilot RIAs to be done for demonstration effects/learning: suggested price control on “specified goods” by CAA; CPP-based telco tariffs; price control formula on pharmaceuticals; Private Health Services Bill; Cess on vehicle imports; and, Amendments to VAT
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RIA: peeling off the layers- #LK story
• What we did: Concept paper (rather than a White Paper/Action Plan)
Formed an informal working group (IPS, AG’s Dept, NGO, Private Sector, Media)
Resulted from 2-day RIA “concept/practice” advocacy workshop in #LK (funded by CRC) – attended by policy makers/other key stakeholders (significant press coverage on #LK regulatory challenges)
Set out “good” practices Developed consultatively (interim version published for comments in
media, roundtable discussion on interim version) Presented to Minister of Finance
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RIA: peeling off the layers- #LK story
• Outcome: not implemented • Why? No policy buy-in (policy rhetoric vs. policy action) Conceptual/technical knowhow (local & international) : No cohesive regulatory policy to begin with (story of CP) Not sufficiently linked to formal policy making body from inception
(assumed that IPS link to Ministry of Finance necessary/sufficient condition; should have had Ministry reps in Working Group)
Resistance from regulators (should have brought regulator representatives into the Working Group)
Perceived as an “academic” group (despite composition of Working Group)
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RIA in practice: key takeaways
• Is RIA useful? Depends….(caveats, policy context); need for more empirical foundation in developing economies
• Developing country narrative: very much work-in-progress (“helicopter” view…)
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RIA in practice: key takeaways
• Solid understanding of policy context (political-economy, socio-cultural) and dynamics of policy cycle: e.g. is there a cohesive regulatory policy structure/processes (regulatory “culture”)?; is there a “political” window of opportunity?; principal-agent dynamics/diverging incentives of politicians and bureaucrats; other regulatory review practices (formal/informal)
• Solid understanding of stakeholder interests/vested interests: e.g. sector-specific public policy dynamics; rent-seeking opportunities that will be affected by RIA; civil society “voice” /champions of reform process/culture of right to information/transparency (general governance culture)
• Financial and technical resource/capacity constraints (RIA Light – World Bank, 2009) : incremental approach? small/core trained technical group? external funding at the inception? extent/limits of reinventing the wheel?
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RIA in practice: some possible discussion questions
• Ex-post RIA (for existing legislation)? Goes with incremental approach/ data and information relatively easier to access/ demonstration effects from regulation IN EFFECT (versus potential)?
• RIA by law or government policy? (possibly frequent challenges in courts versus policy changes with political changes?)
• Does RIA have to be a specific/separate document or can RIA language be embedded in existing/forthcoming legislation (#LK PUSCL language that provisions have to be considered in terms of costs/benefits to main stakeholders)?
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Thank you