By engaging with those that bear the costs or enjoy the benefits of regulations, such as businesses, consumers and other stakeholders, regulators can gain information from those “on the ground”, broadening the evidence base and thus improving the quality of regulations.
Latin American and Caribbean (LAC) countries are committed to involving stakeholders in developing subordinate regulations. However, results from the OECD Indicators of Regulatory Policy and Governance (iREG) show that the development of effective systems to consult stakeholders lacks behind OECD countries. For instance, all LAC countries have legal requirements for stakeholder engagement for subordinate regulations. However, although improvements have been made, these requirements are often not systematically reflected in practice.
It is important to engage with stakeholders at various stages of the rulemaking process, including before a decision to regulate is taken, when their input serves to identify the magnitude of policy problems and possible solutions. This also strengthens their sense of ownership, as they know the purpose of regulations and are more likely to comply. Most LAC countries conduct early consultations only for some regulations, showing, this is not yet a common practice in the region.
Conversely, all LAC countries consult on draft regulations, which is key to identify unintended effects and practical problems, and to provide quality checks on these proposals. Yet, contrary to the majority of OECD countries, in most LAC countries this is limited to sectorial or ad-hoc consultations or stakeholder engagement on regulations that affect specific groups of the population. Exceptionally, Colombia, Costa Rica and Mexico have more systematic consultation systems in place.
The effectiveness of these consultations depends in part on the availability of the means to provide feedback. LAC countries increasingly consult on line, and in all countries at least some regulators have websites to receive feedback on draft regulations.
LAC countries would benefit from further improving the transparency of their consultation processes. Received comments should be considered to identify better policy options and improve regulations. Stakeholders should also be informed how their contributions are used, for the process to be perceived as fair. This increases trust in the rulemaking process and acceptance of regulations (Lind and Arndt, 2016). LAC countries still lack effective mechanisms to incorporate and take advantage of these contributions. Only in four countries are regulators required to consider them for final regulations. Likewise, only in Brazil and Colombia are regulators required to respond to these comments. Nevertheless, in Costa Rica, Mexico and Peru, even when there is no legal requirement to do so, some regulators respond to comments.
Finally, LAC countries can ensure systematic stakeholder engagement by improving co-ordination and oversight mechanisms. They could also benefit from assessing the performance of their stakeholder engagement processes to identify areas of improvement, a practice that is very rare in the region.
