India is learning the competition lessons that Australia has forgotten

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India is embarking on a National Competition Policy aimed at making competition a central issue for all economic regulations and in areas such as government procurement. As the Times of India notes, the aim of this policy is remove laws that restrict or undermine competition, and to assist India’s development. The policy appears to be closely related to recent moves in India to reduce government corruption (see here).

One aspect of the story particularly caught my attention. The National Competition Policy aims to:

review existing policies, statutes and regulations which may restrict or undermine competition.

Sound familiar? It should! One of the models for National Competition Policy being used by India is Australia’s own version of that Policy from the 1990s. Australia’s policy, led by the then Labor government, looked to open our borders, increase trade, and reduce protectionism to benefit Australians.

India’s coverage of their National Competition Policy refers to the gains that Australia made from its Policy.

In Australia, a similar review of roughly 1700 laws to remove their anti-competitive impact, resulted in an addition of 5.5% to GDP over a 7-8 year period

The benefit to Australia from National Competition Policy can be debated. However, as protectionism raises its head in Australia –  whether in the guise of food security (in a country that is a major food exporter); attempts to reduce the purchase of services (such as aircraft maintenance) from overseas; or attempts to protect domestic manufacturers’ profits at the consumers expense by railing against private label products –  it is worth noting how one of our fastest growing neighbours is taking an economic lesson from Australia’s own recent history.

India seems to recognise our past success just as Australia is turning its back on the policies that led to that success.

2 Responses to "India is learning the competition lessons that Australia has forgotten"
  1. “as protectionism raises its head in Australia”
     
    Very true. But why? What has changed since the 90s?

  2. I suspect that the ‘change’ is the government’s willingness and ability to tackle the hard issues. With a hung parliament, popularism tends to rule in Canberra at present, and this provides the perfect stage for vested interests. The winners from protectionism are concentrated and the losers are diffuse, which means that courage and a belief in the intelligence of the electorate is needed for the government to fight the protectionist push.

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