The daily effects of regulations can be felt everywhere: providing a safe working place for citizens, helping to protect the environment and setting requirements for businesses. However, ill-designed or badly administered regulations can present risks to citizens, exacerbate environmental outcomes and reduce business investment. Worse still, inappropriately designed rules may not achieve their objectives and lead to a lack of trust in institutions and in governments more generally.
Governments across the OECD have widely adopted regulatory policies to ensure the quality of their regulations (OECD 2018). Regulatory policy refers to the set of rules, procedures and institutions introduced by governments for the express purpose of developing, administering and reviewing regulations. Central elements of regulatory policy are the use of evidence and stakeholder engagement to improve these three stages.
Countries in Latin America and the Caribbean (LAC) are increasingly paying attention to the quality of their regulations. Since 2015, a number of OECD and non-OECD LAC countries have introduced or reformed their legal bases so as to better promote regulatory quality. Argentina, Colombia, Costa Rica, the Dominican Republic, Ecuador, El Salvador and Peru all have adopted new policy documents that spell out the principles of their regulatory policy. Chile introduced new measures to improve regulatory quality while Mexico strengthened its existing legal framework for regulatory policy by adopting a new General Law of Better Regulation and by establishing the obligation for public authorities at all levels of government to adopt regulatory improvement policies. Furthermore, all surveyed OECD and non-OECD countries in the region except Brazil, Chile and Peru have assigned responsibility for regulatory reform to a specific minister or high-level official to ensure continued political support.
The scope of regulatory policies is, however, still limited in many LAC countries. The reduction of administrative burdens and the simplification of regulations have been strong rationales for governments to adopt regulatory policies and to invest in capacities to improve the quality of regulations. This can be observed for example in Argentina, the Dominican Republic and Peru. Few countries have gone beyond this focus and adopted a broader approach to regulatory quality, covering how regulations are developed, enforced, and evaluated. Mexico remains an exception in the region concerning the depth and extent of requirements to use regulatory policy tools.
The institutional framework for regulatory policy in LAC countries, despite recent reforms, requires further development. Investing in appropriate functions and sufficient capacity for regulatory oversight is essential to ensure the consistent application of regulatory policy in practice. Along with recent regulatory reform efforts, countries such as Argentina, Ecuador and El Salvador reformed their institutional settings or established new bodies responsible for the promotion of regulatory policies. The functions of these bodies vary from the coordination of regulatory policy across the administration, to overseeing administrative simplification programmes or ensuring the legal quality of regulations. Nevertheless, effective oversight mechanisms, such as the possibility to scrutinise the quality of regulatory impact assessment (RIA) or to review whether consultation comments are taken into account by regulators, exist less frequently in LAC countries compared to OECD countries in general. Their establishment remains a key challenge across the region.
