The aim of this chapter is to provide a literature survey for policy makers in developing countries for three interrelated topics: privatisation, regulation and domestic competition policies (CPs). Its main focus is to critically assess the background theory, review practice and provide guidance on implementation.
The following section deals with domestic CPs in theory and practice, while the next two sections deal with privatisation and regulation and provide guidance for implementation on privatisation-regulation, and on domestic CPs. The final section has concluding remarks.
Domestic CPs refer to the stance governments adopt towards the role of competition between firms in economic development and the measures they take to implement their objectives.
Competition policies usually attempt to influence the degree of competition in industries, such as, the food or textile industry. In this context they are part and parcel of a more general category, that of supply-side and industrial policies (IPs).
The term 'industrial policy' refers to a set of measures taken by a government aiming at influencing a country's industrial performance towards a desired objective. 1 As all government measures and policies affect industry one way or the other, boundaries between competition-IP and other policies, such as even technology policy, regional policy, structural policy, competitiveness policy and macroeconomic policy are not always clear. The nearer we can get to a demarcation line is arguably by referring to government's own perception of what they aim CP and IP to be plus an underlying body of theoretical knowledge hopefully informing such perceptions. The government's objective is assumed to be the improvement of the welfare of its citizens. This happens when resources are allocated efficiently