Regulatory Impact Assessment: Improving Regulatory Quality Worldwide - Essay Sample

Introduction

Most developed nations consider the Regulatory Impact Assessment (RIA) tool as the best instrument in improving the quality of regulatory decision making. RIA is utilized within member countries for the Organisation of Economic Cooperation and Development. Currently, countries around the globe continue to implement new RIA procedures in their regulatory government systems (Kirkpatrick, 2004). RIA is an essential tool in the designing of regulations that are cost-efficient. This essay focuses on describing the six steps and decisions that have to be made in designing and carrying out a Regulatory Impact Assessment from scratch, for a proposed regulation that is deemed of high impact.

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Definition of a Regulatory Problem

The first step is the definition of a regulatory problem. The most significant objective of any RIA should be the improvement of the quality of any regulation. Problems in rules fall into three categories, including; regulatory inefficiencies, market failure, and new objectives and policy targets. A well-designed RIA contains a few interconnected elements; hence, the best RIAs are those that have distinct features that are designed and implemented to be mutually supportive. Globally, RIA s has been defined as a core instrument in the designing of public policy. RIAs increase regulators' accountability and complement the existing regulatory and decision-making frameworks.

Identification of Distinct Regulatory Options

During this step, the need for a regulatory intervention gets to be translated into substantial policy options. Regulatory responses depend on agency capacity and legal obligations. For instance, in the United States, the Executive Order Act, and the Administrative Procedure Act, individual agencies must conduct an initial cost-benefit analysis for the identification of significant changes in the economy. Within this step, the objectives of the public must be defined.

Define Impact Indicators

The impact indicators must be relevant. Any achievement of objectives cannot be done without a specific variable. Institutional indicators such as system changes are prone to changes such as an introduction of an ombudsman function and the new processes (Blind, 2008). Too many indicators may complicate the assessment process by clouding the view of the market with too much data. Thus it is advisable to deal with several chosen indicators only.

Collection of Data

Accurate data is essential in predicting the changes likely to be experienced in the market. However, it is difficult to gather a handful of information due to various challenges that come along with it. It is essential to join with other market participants, which will allow getting as much information as possible from different sources. Within this step, it is crucial to have in mind the ex-post and the ex-ante. Ex-ante assessments benefit from timing as the data needs can be defined with indicators and collection intended before the intervention to establish a baseline. Ex post-assessments may be challenged by a lack of available data in case the assessment was not foreseen; thus, no preventions held (Blind, 2008).

Attributing Regulatory Impact

This step helps identify how the effects of the change in the market for a specific regulation can be isolated from the changes in the market. The clear attribution of the observed changes to precise elements of the regulatory framework is even more important if the ultimate objective of the impact assessment is to draw general lessons that can be used in other places (Blind, 2008). For instance, if we compare the value of the indicators before the regulatory change with its benefits at different points in time after the move, we will be assuming that the market would not have changed had it not been for the regulatory changes. Thus, this is not a realistic scenario. It is easy to measure the organizational impact if there is a specific regulatory change with a profound effect on the sector. For instance, the regulatory impact would be easily measured if there was an introduction of a new law or the removal of a severe bottleneck for the sector to experience developments.

The above attribution is the use of two primary methods of attributing regulatory impacts, which include the difference-in-difference approach and the concept of structural breaks. Structural breaks can be used if one can claim with confidence that the most significant change during the observation was the change in regulatory treatment. This is because the quantitative indicators need time series and qualitative information about systems and processes for at least a few years before the introduction of the regulatory change. Whenever a sudden change in trend occurs in the defined indicators around the time when the treatment occurs can then be attributed to treatment. The difference in difference approach is a superior methodology to the concept of structural breaks through the establishment of a control group as it is better to deal with other changes occurring at the same time (Kirkpatrick, 2007). The control group is ideally similar to the treatment group as it can deal with different changes happening.

Informing the Policymaking Process

In this final step, the regulators should use the results as feedback to inform decision-making. The data and the conclusion provide concrete evidence to determine the appropriate course of action and continue to move forward towards meeting the objectives (Blind, 2008). For instance, this may include amending the regulation, seeking deeper understanding as well as stimulating new reforms. This step allows the core progress indicators for the main objectives of the more likely intervention.

Conclusion

In conducting the RIA, an individual should never forget the objective principle as well as the transparency principle. Any RIA designing and implementation must involve critical steps, which include identifying the regulatory problem, identifying precise regulatory options, defining indicators, collecting data, attributing organizational impact, and inform the policymaking process.

References

Blind, K. (2008). Regulatory foresight: methodologies and selected applications. Technological Forecasting and Social Change, 75(4), 496-516.

Kirkpatrick, C. H., & Parker, D. (Eds.). (2007). Regulatory impact assessment: towards better regulation?. Edward Elgar Publishing.

Kirkpatrick, C., & Parker, D. (2004). Regulatory impact assessment-an overview.

Kirkpatrick, C., & Parker, D. (2004). Regulatory impact assessment and regulatory governance in developing countries. Public Administration and Development: The International Journal of Management Research and Practice, 24(4), 333-344.

Renda, A. (2015). Regulatory Impact Assessment and regulatory policy. Regulatory Policy in Perspective: A Reader's Companion to the OECD Regulatory Policy Outlook 2015, 35-114.

US Department of Health and Human Services. (2016). Guidelines for regulatory impact analysis. US Department of Health and Human Services.