OECD: more liberalization will increase growth

By Alex Singleton | 19 June 2005

The Financial Times reported earlier in the month on new research from the OECD which advocates more liberalization in the UK and EU:

The OECD estimated that reducing barriers to trade, foreign investment and domestic regulations to "best practice" levels could increase national income per person by 2-3.5 per cent in Europe, by 1-3 per cent in the US and by 1.25-3 per cent in all advanced members of the OECD.

Most of the gains, Mr Cotis said, would come from deregulating product markets rather than reducing formal barriers to trade. "Tariff and non-tariff barriers are now rather small, while domestic product market regulations remain often substantial, especially so in the services sector," Mr Cotis said.

The necessary reforms urged by the OECD included lowering or scrapping "competition restraining" regulations in western European domestic air, rail and road transportation, electricity and gas, and telecommunications markets. The US should concentrate on reforming electricity and rail transportation, the report said.

The OECD said that "best practice" would mean more liberal policies than exists in any OECD country at the moment.

The Mr Cotis referred to is Jean-Philippe Cotis, the Chief Economist and Head of the Economics Department at the OECD in Paris and previously Director of the Economics Department at the French Ministry of Economy, Finance and Industry.

(Hat tip to Jonathan Dingel.)