Relaxing regulation would hinder Ireland’s recovery, ESRI report warns
In one of a number of reports issued yesterday, the Economic and Social Research Institute called for more “robust” enforcement of competition and regulatory policy, adding that policymakers must resist the impulse to give in to demands to shelter some parts of the economy from market forces — demands that typically arise during troubled times, the ESRI said.
“Such policies are likely to delay recovery, while offering only transitory benefits,” according to a report.
“Hard times — occasioned by a deep and long recession resulting in high unemployment, slow growth and austerity budgets — generate much economic insecurity.
“Enterprises and workers appeal for shelter from market forces, to protect jobs and income,” noted report author, Paul Gorecki, research professor at the ESRI.
“Relaxing competition and regulatory policy is a tempting response.
“Restricting the number of enterprises, for example, that can open business in a particular activity can take the pressure off existing enterprises,” Dr Gorecki added.
The ESRI research paper said that a relaxation of regulatory policy would be an economically costly method of providing some economic security, which “would provide only short-term benefits”.
The result of such an action, according to the ESRI, would be higher prices in the non-traded sector, which would eventually feed through to the traded sector and damage Ireland’s competitiveness and its ability to export goods.
“Ultimately, this would slow economic recovery and the rate of growth in employment,” Dr Gorecki said.
“Competition and regulatory policy do, however, contain provisions that permit otherwise restrictive arrangements, providing that the benefits exceed the costs,” he added.
However, the ESRI also said that regulatory processes in Ireland have still to fully reflect international best practice.
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