Competition Policy for Development

This report examines two pivotal dimensions of the competitive process: the dynamics of market competition in developing economies and the role of government interventions in strengthening market competition, to provide updated policy recommendations. Chapter 1 presents stylized facts on the deterioration of market competition in developing economies, including business ownership networks and general trends of government interventions in markets. Chapter 2 presents a multi-variate approach to monitor competition using firm and industry-level indicators and to screen for opportunities to boost competition in developing economies. Chapters 3 and 4 focus on government interventions to promote competition. Chapter 3 centers on competition law with special attention to the challenges of enforcement in developing countries. Chapter 4 highlights other policy areas that affect competition and how markets work, including sectoral regulation and frameworks for the allocation of public resources across enterprises and industries. Chapter 5 concludes with a discussion of principles that can help guide the implementation of a comprehensive competition policy tailored to the needs of countries with diverse institutional and market conditions. The report provides three main contributions to understanding competition in developing economies and actions for competition to empower markets for development. First, it presents a methodology to systematically assess competition based on objective quantitative measures, screen for opportunities to boost competition at the industry level, and link competition with essential macroeconomic results: productivity and jobs. Second, it takes stock of the achievements of competition authorities in developing economies, showing that competition reforms are feasible, and points to remaining gaps in the implementation of competition laws and institutional frameworks. Third, by showing specific examples of government interventions that affect markets, the report reveals that having a competition law and a competition authority is necessary but not enough to enable merit-based competition. Furthermore, various databases have been developed to prepare this report and are now becoming public goods for researchers, practitioners, and policymakers. These databases consist of the following: competition indicators at the industry and sector levels, global business ownership networks, competition law and institutional framework indicators, anticartel enforcement, market institutions indicators, and ex-ante regulation of digital platforms