The Role of Antitrust Policy in Economic Development

By Paolo Lorenzo Tejano, Economist, Philippine Competition Commission

Antitrust policy is viewed by many as a complex matter, often seemingly out of touch with the issues of poverty and development. What many fail to realize is the importance it holds in bringing forth economic development through institution building.

For developing countries like the Philippines, a constant problem has been the inability to achieve proper reform due to widespread corruption. This hurdle, which many view as now embedded in the Filipino culture, has been without doubt the primary reason for the lack of growth and development in our country. Although perceived by many as something inherent to government, people must understand that corruption exists as a result of weak institutions, whether it be in the public or private sectors. Thus, it is this issue of corruption in the private sector which antitrust policy seeks to address.

The Philippines has taken a step forward with regard to this cause with the passage of the Philippine Competition Act in 2015 and subsequent formation of the country’s antitrust body in 2016. The Philippine Competition Commission aims to promote market competition among firms in order to grow strong and healthy industries in the country. Apart from mere regulation, antitrust policy is essential for development because it aims to foster a culture of fair business practices. By eliminating corruption in the private sector, the country lays the groundwork for strong institutions to thrive in a fair but competitive environment. Market competition pushes firms towards a path of continuous improvement of their products and services, rather than being content with agreements that game the system for profits and limit innovation. Creating this healthy environment for the private sector will help encourage investments and job creation, which eventually leads to more opportunities for development.

Although the focus of antitrust policy is in the private sector, this will prove to be key in the fight to end corruption in government as well. Promoting an economy based on the principles of fairness and honest practices will eventually make it more and more difficult for government to take advantage of the private sector. There will be less and less people willing to cheat the system, making corrupt practices more difficult to sustain. Government is inexorably linked to those which it governs, and as such, building strong institutions in the private sector will also have profound effects on the manner in which government operates.

Although the results of this endeavor may not be immediately felt, the nature of our world demands that our efforts to improve society be relentless. We must start somewhere, and private sector reform certainly seems like a good place to do so. Strong institutions are built over time, and it is in small steps like antitrust policy and reform that the dream of true and inclusive economic development can seem more and more like a reality.

Photo credit

Advertisements