CPRC Discussion Paper Series
Competition Policy Research Center
Japan Fair Trade Commission

Diffusion and Adaptation of Competition Policy in Asia
Reiko Aoki
Commissioner, Japan Fair Trade Commission
Toshiko Igarashi
Director, International Affairs Division, Japan Fair Trade Commission
Takayuki Kai
Former Research Associate, Asian Development Bank Institute
Eri Satake
Former Research Assistant, The University of Tokyo
Tetsushi Sonobe
Dean and Chief Executive Officer, Asian Development Bank InstituteYasuyuki Sawada
Director, Center for Research and Education in Program Evaluation and Professor,
Faculty of Economics, The University of Tokyo
Shintaro Ueda
Deputy Director, Economic Analysis Office, Japan Fair Trade Commission
CPDP-95-E March 2024

1-1-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8987 JAPAN
Phone: +81-3-3581-1848 Fax: +81-3-3581-1945
URL: https://www.jftc.go.jp/en/cprc/index.html (English)
https://www.jftc.go.jp/cprc/index.html (Japanese)
E-mail: cprcsec@jftc.go.jp

The contents of this discussion paper do not represent the viewsof the Japan Fair Trade Commission, and the responsibility for
the writing is solely attributable to the authors.

Diffusion and Adaptation of Competition Policy in Asia
Reiko Aoki, Toshiko Igarashi, Takayuki Kai, Eri Satake, Tetsushi Sonobe, Yasuyuki
Sawada, and Shintaro Ueda1
March 2024
Abstract
This paper discusses issues regarding the diffusion and adaptation of competition policy inAsia. We test the hypothesis that the increase in the adoption of competition policy was
inextricably linked with the growing globalization using cross-country panel data on theenactment of competition law and the budget of competition authorities. Empirical results
show: a country tends to enact a competition law before accession to GATT/WTO; marketoriented reforms, triggered by AFC, seem to play a critical role in an adaptation of competition
policies; and governance level matters in adopting competition laws and policies. We also
discovered a robust correlation between the perceived effectiveness of competition policy
and the level of local competition based on novel survey data. The findings in this paper holdsignificant policy implication for competition policy development in Asia such as early
adaptation of competition law, role of market-oriented reforms and governance quality.

1

Reiko Aoki is Commissioner of Japan Fair Trade Commission (JFTC). Toshiko Igarashi is the Director ofInternational Affairs Division at the JFTC. Shintaro UEDA is a Deputy Director of Economic Analysis Office at the
JFTC. Views expressed here are those of the authors and do not necessarily represent that of the JFTC.

11 Introduction

After World War II, the number of competition law jurisdictions worldwide increased
slowly until the 1980s and rapidly in the 1990s to date from about 30 to more than 130 (e.g.,
Voigt 2006; Cheng 2020). Most adopters in the recent few decades were developing
countries. These observations seem natural for at least two reasons. First, it is well known in
the literature on the diffusion of innovation that the cumulative rate of adoption, whether
adoption concerns new ideas or products, is often represented by an S-shaped curve (e.g.,
Rogers 2003). Competition law and policy could be viewed as an innovation that took placein North America before World War II. Second, after the Cold War ended in December 1989,
many former-socialist economies became transition economies in the early 1990s, and civil
wars and other violent conflicts in Africa and Latin America considerably decreased in the
1990s and 2000s (Fukuyama 1992; Collier 2009). Thus, one can view that the increase in
the adoption rate of competition law and policy was a natural result of the rise in market
economies and the increased need to promote and maintain market competition.
These views are not necessarily satisfactory, however. The S-shape curve theory is
not able to explain the timings of adoption by individual countries. It explains an overalltendency but not individual cases. The end of the planned economy and the arrival of peace
are not able to explain why many peaceful and market-oriented developing economies did
not adopt competition laws and policies earlier but only around the same time as newcomers.
Even though their delays may be attributable to idiosyncratic reasons, there may also be acommon reason that has not been articulated clearly or supported by data.
This paper is an attempt to provide additional and common reasons why many
developing countries adopted competition laws and policies in the 1990s and thereafter. It
takes an Asian perspective but uses worldwide cross-country panel data. Following ADB(2020), in our definition, Asia includes some former Soviet Union countries, such as
Kazakhstan, and unitary socialist states with a market-oriented economy, such as Vietnam,
2

as well as democratic states, such as the Philippines. Competition law was adopted by
Kazakhstan in 2008, Vietnam in 2004, and the Philippines in 2015 (OECD 2016; Ravago etal. 2021). Asia also includes the People’s Republic of China (PRC) and India, the two mostpopulous developing countries in the world, which adopted a competition law in 2007 and1969, respectively. These individual country cases seem to suggest that both common andidiosyncratic factors induced adoption to occur in one to two decades in random order.
This paper reviews the history of the diffusion of competition law and policy in Asia,
where many adopters have been active participants in the global value chains and recipientsof growing foreign direct investment. It hypothesizes that their adoption was intended to get
the full benefit from the new phase of globalization characterized by a rapid increase in
offshore production. We also hypothesized that the adoption and adaptation of competition
policies have been triggered by financial crises and resulting market-oriented reforms. These
hypotheses are tested with global cross-country panel data using regression analysis which
identifies those explanatory variables that represent common reasons for adoption andadaptation, as opposed to idiosyncratic reasons. Consistent with the hypotheses, we findthat the adoption and adaptation of competition policy have been inextricably linked with
globalization in a broad sense.
The paper is organized as follows. The next section reviews the history of theenactment of competition law in Asia and advances some hypotheses. In Section 3, we
explain the empirical strategy and describes econometric models and data, followed by
Section 4 which discusses the regression results. Section 5 provides concluding remarks.

2 Historical Background and Our Hypotheses

The history of competition law in Asia began with Japan’s enactment of the Antimonopoly
Act in 1947, when Japan underwent the process of economic democratization under the US
occupation. The process included land reform and the break-up of Zaibatsu. At the time,3

Japan was the third country, only to Canada and the United States, to have comprehensivecompetition law that includes regulation on cartels, mergers and unilateral conduct.
Laws regulating anti-competitive practices have been enacted since the late 1960s
following the original introduction of the competition law in Japan. Similar laws wereintroduced in India in 1969, Pakistan in 1970, South Korea in 1975, Thailand in 1979, and Sri
Lanka in 1987. However, many of these countries that introduced competition laws between
the 1970s and 1980s often included provisions for excessive interventions in businessactivities and price controls to regulate conglomerates such as Chaebols in Korea. In someof those countries, revisions took place in the 1980s that either abolished the excessive
control and regulations or provided only the anti-monopolistic type of regulations (Honjo
2001). The next adopters of the revised laws in Asia were two of the four Asian NIES (Newly
industrialized economies), Korea which enacted the Monopoly Regulation and Fair Trade Act
in 1980 and Taipei,China which passed the Fair Trade Act in 1991. In the Pacific, Australia
and New Zealand introduced competition laws in 1974 and 1986, respectively (Figure 1).
Figure 1: Timeline of Enactment of Competition Law in Asia

Note: Southeast Asia – 9 countries with competition law, 1 with draft (Cambodia), 1 no competition law(Timor Leste); East Asia – 5 countries + H.K. with competition law, 1 no competition law (North Korea).
South Asia - 5 countries with competition law, 1 draft (Afghanistan), 1 – competition policy (Bhutan); 1
no competition law (Maldives)
Source: Ravago et al. (2021).

This sequence of adoption in Asia is consistent with the hypothesis that the diffusionof competition policy was driven by the development of a market economy and the influence4

of the United States, the pioneer of competition law. To capture the development of a market
economy, Ravago et al. (2021) uses GDP per capita together with indicators of economic
freedom and regulatory quality as explanatory variables in their regression equation
explaining whether a country has already enacted competition law. To capture the US
influence, they use an indicator of political freedom as well as that of economic freedom.
They find that the logarithm of GDP per capita has a highly significant coefficient, even though
the coefficients on the indicators of freedom and regulatory quality are statisticallyinsignificant.
From the mid-1980s, discussion and negotiation on international trade andinvestment became intense in various fora, such as the GATT Uruguay Round, for promoting
free trade. This trend culminated in the commencement of WTO in January 1995. Many Asian
countries joined WTO immediately, including Bangladesh, Brunei, Hong Kong, China, India,
Indonesia, Japan, Malaysia, Pakistan, Philippines, Republic of Korea, Singapore, Thailand,and, even though some other Asian countries joined it later, such as Cambodia, PRC,
Taipei,China, Vietnam. 2 At the same time, the importance of competition policy wasincreasingly

widelyrecognized,

asreflected

by

the

fact

that

more

than

20

countries/economies globally introduced competition laws between 1989 and 1994 as shownin (Voigt, 2006).

In our view, the increased globalization and the rapid diffusion of competition policy
did not occur independently, but they are closely related to each other. As Baldwin (2016)
argues, globalization in the 1990s and onward was not new, but it was globalization’s second
acceleration, which was caused by both the end of the Cold War and the rapid developmentof information and communication technology. These two causes drastically expanded thescale of international trade and capital flow while reducing the cost of communication

2

See, for example, https://www.meti.go.jp/shingikai/sankoshin/tsusho_boeki/fukosei_boeki/pdf/2017_04_02.pdf

5

drastically, thereby reducing drastically the cost or difficulty of offshore production in the formof foreign direct investment or global value chains, or both. Baldwin (2016) christened thesechanges the “Second Unbundling.”
Although Baldwin (2016) does not mention it, the Second Unbundling has essential
and obvious implications for the need for competition law and policy. Consider a number of
producers or vendors in a developing country assembling final products or producing
intermediate inputs for a global buyer headquartered in a developed country. The global value
chain will fail to grow if developing-country producers are merged by a small number oftycoons into highly concentrated markets, which means higher prices and also makes cartels
easier to execute. The government of the developed country might have incentives to put
pressure on the developing country government to introduce a competition policy and toprovide technical assistance to the latter for the development of competition policy including
the enactment of competition law. In East and Southeast Asia, regional value chains playequally important roles in economic growth as global value chains. Thus, similar concerns
about disruption due to market concentration in procurement markets are likely to exist within
this region. In other words, there could be pressure from other developing countries as well
as developed countries. Moreover, developing countries might have another incentive to
introduce a competition policy because they are interested in protecting domestic consumers
from monopolization of domestic markets by foreign firms.
As is well known, increased globalization was associated with the proliferation offree trade agreements (FTAs) and economic partnership agreements (EPAs). Consistent withthe above arguments, both FTAs and EPAs, whether bilateral or multilateral, havecompetition chapters to deal with anti-competitive activities in accordance with relevant laws
to promote trade and investment, which would facilitate competition legislations andcompetition institution building.
As we can see from Figure 2, the first wave of Asian FTAs that surged in the 1990s
was mostly traditional ones with only border policies. They primarily focused on trade in6goods and centered on tariffs and other border measures that directly affected market access.
The continued reduction of trade barriers in some parts of Asia through the GATT/WTO and
FTAs made particularly East Asia and Southeast Asia even more attractive to foreign
investment. In the last decade, the newly- agreed FTAs basically contained multiple behindthe-border policies including competition policies and other regulatory frameworks. This trend
seems to be accelerated especially after PRC’s accession to the WTO in 2001. According to
WTO’s Working Group on the Interaction between Trade and Competition Policy (WGTCP),WTO has been influencing adoption of competition laws of its members. Chronologically,
WGTCP has been established after the Ministerial Conference in Singapore of 1996. Under
the Doha Ministerial Declaration in 2001, WGTCP has focused on competition issues such
as: Core principles, including transparency, non-discrimination and procedural fairness;
provisions on hardcore cartels; modalities for voluntary cooperation; and support for
progressive reinforcement of competition institutions in developing countries throughcapacity building (WTO 2023).

7

Figure 2: Content of Free Trade Agreements in Asia, 1992-20153

Source: ADB 2020.

Moreover, the competition chapters in FTAs and EPAs also have provisions on
international cooperation, sometimes including cooperation for capacity building andtechnical assistance concerning competition law and policies. Table 1 lists thebilateral/multilateral trade agreements concluded by Japan that had a competition chapter.

3

Border policies cover tariff reductions in manufacturing and agriculture, anti-dumping, countervailing measures,
Agreement on Trade-Related Investment Measures, Agreement on Trade-Related Aspects of Intellectual
Property Rights, customs, export taxes, sanitary and phytosanitary measures, technical barriers to trade, and the
movement of capital. Behind-the-border policies cover state enterprises, state aid, competition policy, intellectual
property rights, investment, public procurement, and the General Agreement on Trade in Services. The
categorization of border and behind-the-border policies is based on the methodology of Hofmann, C., A. Osnago,
and M. Ruta. 2017. Horizontal Depth: A New Database on the Content of Preferential Trade Agreements. Policy
Research Working Paper. No. WPS 7981. Washington, DC: World Bank. Data source of this figure is: World
Bank. Content of Deep Trade Agreements. https://datacatalog.worldbank.org/dataset/content-deep-tradeagreements (accessed 4 June 2019).

8

Table 1: Trade Agreements with Competition Chapter Concluded by JapanCountry / Region

Signature Date

Effective Date

1

Singapore

2002.1

2002.112

Mexico2004.92005.4

3

Malaysia

2005.122006.7

4

Philippine

2006.92008.125

Chile

2007.32007.96

Thailand2007.42007.11

7

Indonesia

2007.82008.7

8

ASEAN

2008.42008.7

9

Vietnam2008.122009.10

10

Switzerland

2009.2

2009.911

India

2011.2

2011.812Peru

2011.52012.3

13

Australia

2014.72015.1

14

Mongolia

2015.2

2016.615

TPP11

2016.22018.32018.316

European Union

2018.72019.2

17

United Kingdom

2020.102021.118

RCEP

2020.112022.1

Sources: The JFTC Homepage and the Japan Ministry and Foreign Affairs Homepage

Although not shown in Table 1, Japan started technical assistance to thecompetition agencies of developing economies in the 1990s. For example, the Japan Fair
Trade Commission (JFTC) began a Group Training Course in 1994, focusing on competition
law and policy, enforcement techniques etc., for developing countries worldwide. As of
FY2022, JFTC also provides bilateral technical assistance for Vietnam, Mongolia, Malaysia,
and Thailand through the framework provided by Japan International Cooperation Agency
9

(JICA)4 and technical assistance under the Japan-ASEAN Integration Fund (JAIF).5
At both regional and global levels, multilateral international cooperation to promotecompetition policy in developing countries began in the 1990s. The Asia Pacific Economic
Cooperation (APEC) discussed at the 1994 Ministerial Meeting to promote understanding ofcompetition issues and study how competition law and policy influence the trade andinvestment flow in the region. Its workshop on competition policy started in 1995. The
Competition Policy and Deregulation Group (CPDG) was organized in 1996 under the APEC
Committee on Trade and Investment. CPDG was moved to the Economic Committee (EC)in 2007 and renamed as the Competition Policy and Law Group (CPLG).6 Similarly, othercompetition agencies of developed countries, OECD, and UNCTAD considerably provided
technical assistance for introducing competition laws and policies to developing countries.
In response, many developing countries in the region enacted competition laws andestablished competition agencies, as shown in Figure 1. While some ASEAN countries had
specific competition-related regulations (e.g. the Philippines), the introduction of competition
law and institutions has yet to prevail in the mid-1990s. In 1997, however, the Financial Crisis
hit Asian economies, particularly severely Indonesia, Korea, Malaysia, and Thailand. In
response, these badly affected economies tried to stabilize their economies using varying
approaches. Indonesia, Korea, and Thailand opted for IMF programs supported by bilateraland multilateral partners including ADB, which were tied to conditions such as raising interest
rates and cutting government spending. Malaysia, in contrast, under the leadership of Prime
Minister Mahathir Mohamad, decided not to go to the IMF for help and instead resorted tocapital controls and a pegged exchange rate (ADB 2020). Under the IMF program, Indonesia
and Thailand were required to undertake economic reforms which resulted in the introduction

4

See JFTC Annual Report FY2022 (https://www.jftc.go.jp/en/about_jftc/annual_reports/2022.html)
See https://jaif.asean.org/project-brief/technical-assistance-for-asean-competition-authorities-to-strengthencompetition-law-enforcement-in-asean-region-second-phase/6
For details, see the homepage of the Japan Ministry of Foreign Affairs and that of CPLG:
https://www.mofa.go.jp/mofaj/gaiko/apec/soshiki/cplg.html
https://www.apec.org/Groups/Economic-Committee/Competition-Policy-and-Law-Group510

of competition laws in 1999.7 Particularly for Indonesia, to receive emergency support during
the financial crisis, the country exchanged a signed letter with the IMF to hasten theenactment of the competition law. That letter must have played a significant role for Indonesia
in introducing the competition law: Indeed, the Letter of Intent (LoI) between the Indonesian
Government and the International Monetary Fund (IMF) and Memorandum of Economic andFinancial Policies by the Indonesian Government dated July 29, 1998 stated that the
government will present the Bill on Business Competition by no later than the end of
December 1998 (Maarif 2001). Particularly, the LoI played a major role in accelerating theformulation of the Draft of Business Competition Law, which was enacted as Law No. 5 of1999 concerning the Monopolistic Practices Prohibition and Unfair Business Competition(Maarif 2001). In sum, the 1997 economic crisis gave a new life to the development ofbusiness competition law in Indonesia (Maarif 2001).
Korea has encountered the financial crisis in 1997 and 98 triggered by substantial
depreciation of its currency at the end of 1997 after which the government opted for IMF
programs supported by bilateral and multilateral partners including the Asian Development
Bank (ADB). Under pressure from the IMF, the government amended the Monopoly
Regulations and Fair Trade Act (MRFTA) in 1998 and 99 to facilitate economic and corporate
restructuring and set robust competition environment (Jung and Chang 2006).
This possible channel of enacting the competition law, triggered by an economiccrisis, may be seen as a “natural experiment” caused by the unexpected crisis. While theconduct of macroeconomic policy has been heterogeneous across different economies ofAsia, there was little doubt that by and large, governments in the region were able tosuccessfully manage their economies even during several difficult decades (Stiglitz 1996).
For example, despite the advent of the Latin American debt crisis in the 1980s and European
currency crises in the 1990s, the frequency of economic crises in Asia has been under control

7

While Indonesia established independent competition authority quite soon, Thailand had long been under the
influence of the trade ministry and did not establish independent competition authority (TCC) until recently. Such
differences may have an influence on the activeness of competition law regulation and enforcement.

11

until the Asian Financial Crisis (AFC) in the late 1990s. Hence, as we can see from Figure 3,
AFC can indeed be regarded as an unusual event in the history of Asia and the World.
The AFC precipitated a series of comprehensive reforms within the region,
characterized by the adoption and adaptation of competition policies. Consequently, while
competition policy found its place within bilateral trade agreements, a substantial proportionof these accords primarily pertained to intraregional dynamics, exemplifying the internal
impetus within Asia to cultivate more efficacious markets. It is noteworthy that this momentum
was not invariably instigated by external coercion emanating from developed economies. For
instance, Japan's trade agreements, as elucidated in Table 1, remained predominantly
oriented towards the Asian sphere until the advent of the Trans-Pacific Partnership (TPP) 11
in 2016 and the agreement with the European Union (EU) in 2018. Therefore, the nexus
between the AFC and the trajectory of trade agreements is indelibly interwoven, illustrating
the profound influence of the former on the evolution of the latter.

Figure 3: Frequency of Economic Crises in Asia and the World

Source: Reinhart and Reinhart 2015.

12

In the 2000s, the PRC and India as well as a few ASEAN economies such as
Vietnam and Singapore enacted competition laws and established competition authorities,
as mentioned earlier. In 2007, ASEAN agreed to establish the ASEAN Community until 2015
and adopted the ASEAN Economic Community Blueprint to create a level playing field, which
made the member countries commit themselves to introducing national competition policy
and law (CPL) by 2015. This spurred the enactment of competition law in Malaysia (2010),
the Philippines (2015), Brunei (2015), Myanmar (2015), Lao PDR (2015), and finally in
Cambodia (2021). In addition, Thailand and Vietnam made revisions to their law to enhancetheir effectiveness in 2017 and 2018, respectively.
Major international fora for helping these new competition law jurisdictions include
OECD (Annual Global Forum on Competition started in October 2001), ICN (International
Competition Network, established in October 2001), UNCTAD (Expert Meeting on
Competition Policy held in Geneva in 1997 and Intergovernmental Group of Experts on
Competition Law and Policy held annually since 1998).8 UNCTAD had a voluntary peer
review with Indonesia in 2009, Mongolia in 2012, Pakistan in 2013, the Philippines in 2014,
and Bangladesh in 2022. In August 2007, the ASEAN Economic Ministers endorsed theestablishment of the ASEAN Experts Group on Competition (AEGC) as a regional forum to
discuss and cooperate on competition policy and law (CPL). There has been technicalassistance by AEGC in cooperation with the support of various development partners,
especially Australia, New Zealand, Germany, and Japan through the AANZFTA Economic
Cooperation Support Programme -Competition Law Implementation Programme since 2010,
ASEAN-German Competition Policy and Law in ASEAN Programme since 2010, andTechnical Assistance for ASEAN Competition Authorities to strengthen Competition Law
Enforcement in ASEAN since 2016. ASEAN also works with multilateral organizations suchas the OECD and UNCTAD to promote competition policy in the region.
At the regional level, an annual meeting called the East Asia Top Level Official’s

8For details, see https://unctad.org/meetings-search?f%5b0%5d=product%3A1453

13

Meeting (EATOP) was initiated by the JFTC in collaboration with the Asian Development
Bank Institute (ADBI) in 2004. OECD/Korea Policy Centre, Competition Programme started
in May 2004 and has worked with competition authorities in the Asia-Pacific region to develop
and implement effective competition laws and policies. In these fora, information andexperience on competition policy were shared and exchanged among regional stakeholders.
More recently, cooperation memorandums/arrangements including technicalassistance provisions are concluded between competition agencies. Table 2 lists the interagency cooperation memorandums/arrangements concluded by JFTC. Similarly, ASEAN
Competition Action Plan (ACAP) 2016-2025 was drafted recently to strengthen further
competition law and policy as well as promote regional cooperation.99

See https://www.asean-competition.org/about-aegc-asean-competition-action-plan-acap-2016-2025

14

Table 2: Inter-Agency Cooperation Memorandums/Arrangements including Technical
Assistance Provisions Concluded by JFTCCountry /RegionCounterpart Agency

Signature
Date

Philippines

Department of Justice of the Republic of thePhilippines

2013.8Viet Nam

Competition Authority of the Socialist
Republic of Vietnam

2013.8BrazilAdministrative Council for Economic
Defense (CADE)

2014.4

Republic of
Korea

Korea Fair Trade Commission

2014.7Australia

Australian Competition and Consumer
Commission

2015.4

Kenya

Competition Authority of Kenya

2016.6

Mongolia

Authority for Fair Competition and Consumer
Protection2017.3

CanadaCompetition Bureau

2017.5Singapore

Competition Commission of Singapore

2017.6

China

State Administration of Market Regulation

2019.6

India

Competition Commission of India

2021.8Source: JFTC Website.

In view of the proliferation of FTAs and EPAs along with Globalization’s Second
Unbundling, together with their competition chapter and technical assistance provision, it
seems natural to hypothesize that the increase in the adoption of competition policy was
inextricably linked with the growing globalization in the 1990s and subsequent period.

15

3 Empirical Strategy and Data

In this section, we describe the empirical procedure to test our hypotheses: The
observed increases in the adoption of competition policy especially among emerging
countries have been closely linked with the growing globalization and the economic crises
during the recent period. The first hypothesis considers Asian countries that have obtained
their membership of GATT/WTO, embracing the global trade liberalization regime since theinitiation of GATT and WTO, respectively, in 1948 and 1995. We test the impact of
GATT/WTO accession on the adoption of competition policy. The second hypothesis places
its focus on the role of post-financial crisis policy reforms in introducing competition laws andpolicies. In testing these two hypotheses, we also investigate the role of domestic
governance in adopting competition policy. We also analyze both the adoption of competition
law and the adaptation of competition policies.

3.1 Econometric Models

As the empirical framework, we postulate the following regression model:(1)

Dit = Zit β + uit,

where Dit is an indicator variable that takes one if a country i adopts or adapts a competition
law at time t, and zero otherwise, Zit is a set of covariates including country and year fixed
effects, and uit is a well-behaved error term.
In examining the adoption of competition policies, the dependent variable, Dit, isquantified by two variables: First, “Law” which is an indicator variable that takes one whena competition law was in place for that given country-year, and zero otherwise; and second,“Fine” that takes one if the competition law provides for fines violating the law, and zero16

otherwise. In other words, the former variable captures the statutory status whereas the latter
captures its ability to impose effective sanctions. As for the adaptation of competition policies,
we employ the “Budget Size” of each country’s competition agency as a dependent variable.
There are three main independent variables: The first one is “WTOit” which takes
one if country i is a member of GATT/WTO in year t, and zero otherwise. We also include
three-year leads and lags of the WTO variable so that we can capture preparation and time
lag in adopting competition policies. Second, we include an indicator variable, “CRISISit,”
which takes one if a country is hit by, at least, one of the six crises, i.e., a banking crisis, anexchange rate crisis, a stock market crisis, an excessive sovereign debt growth, and a default
of debt repayments. For our analysis, we employ six data sources of economic crisis as
described in the following section. Third, as part of determinants of adoption and adaptationof competition law, Zit, we include aggregated governance level of each country, “WGIit,.”

3.2 Data

As for data, we construct cross-country panel data sets, combining multiple data
sources. First, on overall competition law characteristics, we employ Comparative
Competition Law (CCL) data which covers the years from 1850 to 2010 originally from which
we use a subset after 1945, depending on the country. The data is amended by Ravago etal. (2021), covering the period between 1947 and 2018 for Asia.
The governance variables are taken from the Worldwide Governance Indicators(WGI) project database which reports aggregate and individual governance indicators forover 200 countries and territories over the period 1996–2021 for six dimensions ofgovernance: Voice and Accountability, Political Stability and Absence of Violence/Terrorism,
Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption.
These aggregate indicators combine the views of a large number of enterprise, citizen andexpert survey respondents in industrial and developing countries. They are based on over17

30 individual data sources produced by a variety of survey institutes, think tanks, nongovernmental organizations, international organizations, and private sector firms (Kaufmann,
Kraay, and Mastruzzi, 2010). We constructed our governance variable, “WGIit,” by taking asimple average of governance sub-indicators.
Data on economic crises have been taken from the Global Crises Data. These
include cross-country panel data on banking crises, exchange rate crises, stock market
crises, sovereign debt growth and default. For our analysis, we employ six data sources of
economic crisis. First, an indicator variable on the banking crisis variable which takes one if
the following event arises: (i) bank runs that lead to the closure, merging, or takeover by the
public sector of one or more financial institutions; or (ii) if there are no runs, the closure,merging, takeover, or large-scale government assistance of an important financial institution(or group of institutions) that marks the start of a string of similar outcomes for other financial
institutions. Second, an indicator variable of systemic crises which takes one when either (i)a country’s banking system exhibits significant losses resulting in a share of nonperforming
loans (NPLs) above 20 percent or bank closures of at least 20 percent of banking systemassets or (ii) fiscal restructuring costs of the banking sector are sufficiently high, exceeding 5
percent of GDP. Third, external debt crises involve outright default on the payment of debt
obligations incurred under foreign legal jurisdiction, including nonpayment, repudiation, ordebt restructuring into terms less favorable to the lender than in the original contract. Fourth,a currency crisis is defined as a situation where annual depreciations exceed the thresholdof 15 percent per annum. Fifth, an inflation crisis is defined using a threshold of 20 percent
per annum. Sixth, hyperinflations are defined as episodes where the annual inflation rate
exceeds 500 percent. Based on these six sources of different crises, a crisis is defined as asituation where at least one out of the six crises happens.
Table A1 in Appendix shows definitions and summary statistics of the variables usedin this study. The working sample for the analysis of competition law and fine with or without
the economic crisis and governance variables is an unbalanced panel of 189 countries over18

the span of 1950 to 2020 (Table B1, Appendix B). As for the regression analysis of budget
size of competition agencies, we need to confine our unbalanced panel data set to that of
43 countries covering the period from 2005 to 2020 (Table B2, Appendix B).

4 Empirical Results

Table 3 shows the estimation results of empirical equation (1) for the adoption ofcompetition law in which we include leads and lags of crisis and WTO/GATT accession as
the main independent variables. A few important empirical findings emerge. First, theestimated coefficient on the three-year lead of the GATT/WTO variable, WTOit+3, is positiveand statistically significant both for “Law” (i.e., an indicator variable for a competition law)and “Fine” (i.e., the competition law specifying fines for violating the law) in all the
specifications. This means that three years before accession to GATT/WTO, a country has ahigher probability of enacting and implementing competition law. We believe this strongly
supports our hypothesis of the globalization and competition policy nexus. Second, per capita
GDP has positive and significant coefficients on most of the specifications, indicating that
economic development, usually accompanying structural transformation to nonfarm sectors,
induces a country to adopt competition law. Indeed, the share of the service sector in GDP
has positive and statistically significant coefficients in specifications (3) and (9), suggestingthat the expansion of services in each economy facilitates adoption of competition polices.
In Table 4, we report estimation results of the encompassing specification for the
adoption of competition law with leads and lags of crisis and WTO/GATT accession. First,
the lead WTO variable continued to be positive and statistically significant, supporting the
hypothesis of the institutional globalization leading to the enactment of competition law.
Second, we observe that the contemporaneous and three-year lag of the CRISIS variable isstatistically significant in Specification (1), (2), and (3). This is consistent with our hypothesisthat a financial crisis may induce the crisis-hit country to adopt competition law as part of19

post-crisis, market-oriented economic reform, although its robustness may not necessarily
be warranted because in the specifications (4), (5), and (6), with country fixed effects, its
statistical significance disappears. Third, as for the average governance indices, “WGI,” thequality of contemporaneous governance plays a key role in adopting competition law. In
contrast, its two and three years lag variables have a negative and statistically significant
coefficient. This may represent substitutability between de jure regulation of fair competitionand de facto governance levels suggesting that having good governance may delay adoptionof a statutory framework. Finally, as before, per capita GDP has positive and significant
coefficients, respectively, in Specifications (2) and (5). These results imply that economic andmarket development might have incentivized a country to adopt competition law.

20

Table 3: Effect of Participation in GATT/WTO on Competition Policy
(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

(12)

Law

Law

Law

Law

Law

Law

Fine

Fine

Fine

Fine

Fine

Fine

WTOit+1

0.0375**0.02920.0327*0.00933

0.009130.00957

0.02850.02870.03030.02220.02140.0218(0.0181)(0.0184)(0.0183)(0.0195)(0.0194)(0.0194)(0.0192)(0.0187)(0.0187)(0.0194)(0.0193)(0.0193)

WTOit+2

0.0970***0.0649***0.0599***0.000215

0.001420.002480.0336**0.0307*0.02440.008170.009620.00900(0.0208)(0.0201)(0.0195)(0.0190)(0.0189)(0.0189)(0.0157)(0.0157)(0.0153)(0.0158)(0.0157)(0.0157)

0.103***

0.121***

0.0831***0.104***

0.106***

0.103***

0.146***

0.135***

0.103***

0.0670**0.0734**0.0699**(0.0327)(0.0291)(0.0293)(0.0306)(0.0297)(0.0297)(0.0323)(0.0302)(0.0297)(0.0316)(0.0310)(0.0308)0.0250*0.0244*0.0289**0.01720.01790.01810.01220.01170.01530.002960.004140.00370(0.0133)(0.0133)(0.0127)(0.0143)(0.0143)(0.0144)(0.0137)(0.0137)(0.0136)(0.0151)(0.0151)(0.0154)0.00551

0.003940.000252-0.00368-0.00320-0.00349

0.01640.01480.01050.005200.00584

0.00503(0.00818)(0.00808)(0.00838)(0.00888)(0.00886)(0.00894)(0.0107)(0.0107)(0.0111)(0.0112)(0.0112)(0.0113)0.0247***0.0182**0.0165*-0.00399-0.00317-0.00227

0.0220**0.0173*0.0164*-0.00231-0.00136-6.74e-05(0.00918)(0.00923)(0.00893)(0.00898)(0.00894)(0.00903)(0.00875)(0.00892)(0.00867)(0.00868)(0.00869)(0.00865)

0.123***

0.0753***0.0742***-0.0394*-0.0382*-0.0378*

0.113***

0.0795***0.0781***-0.00448-0.00498-0.00303(0.0214)(0.0239)(0.0239)

VARIABLES

WTOit+3
WTOit
WTOit-1
WTOit-2
WTOit-3(0.0217)
Population(0.0222)(0.0210)(0.0213)(0.0214)(0.0247)(0.0240)(0.0239)(0.0242)0.00140***0.00124***0.000601***

0.000608***0.00135***0.00121***0.000694***0.000711***(0.000327)(0.000272)(0.000189)(0.000193)(0.000386)(0.000331)(0.000241)(0.000237)

Services GDP share
Industrial GDP share

0.00378**-0.00201(0.00167)(0.00158)(0.00151)(0.00153)-1.60e-05-0.00134-0.000817-0.00248*(0.00172)
Per capita GDP(0.00168)

0.00775***

Country FE-0.000549(0.00143)

0.000620(0.00188)
Constant

0.00315**(0.00148)

0.00662***(0.00142)

0.00189(0.00207)(0.00121)0.167***

0.08390.0729-0.201***-0.200***-0.214***0.152***

0.0959*0.0901*-0.191***-0.185***-0.204***(0.0386)(0.0566)(0.0530)(0.0335)(0.0395)(0.0432)(0.0371)(0.0549)(0.0512)(0.0333)(0.0375)(0.0424)

NO

NO

NO

YES

YES

YES

NO

NO

NO

YES

YES

YES
YES

Year FE

NO

NO

NO

YES

YES

YES

NO

NO

NO

YES

YES

No of Countries

189

189

189

189

189

189

189

189

189

189

189

189

Observations

9,604

9,604

9,604

9,604

9,604

9,604

8,750

8,750

8,750

8,750

8,750

8,750

Number of id countrycode

189

189

189

189

189

189

189

189

189

189

189

189

Note: Country-level cluster robust standard errors are shown in parentheses. *** p<0.01, ** p<0.05, * p<0.1, We also included the following variables: dummy
dummy variable for missing services GDP share, and dummy variable for missing industrial GDP share

21

variable formissing population variable;

Table 4: Encompassing Regression of Competition Law

VARIABLES
WTOit+1
WTOit+2
WTOit+3
WTOit
WTOit-1
WTOit-2
WTOit-3
CRISISit+1
CRISISit+2
CRISISit+3
CRISISit
CRISISit-1
CRISISit-2
CRISISit-3
WGIit+1
WGIit+2
WGIit+3
WGIit
WGIit-1
WGIit-2
WGIit-3
Population

(1)

(2)

(3)

(4)

(5)

(6)

Law

Law

Law

Law

Law

Law

0.02940.02650.02870.01420.01280.0141(0.0185)(0.0181)(0.0183)(0.0198)(0.0198)(0.0198)

0.0450**0.0351*0.0351*0.002990.004180.00485(0.0184)(0.0183)(0.0180)(0.0183)(0.0185)(0.0183)

0.0974***0.103***

0.0824***0.0886***

0.0953***0.0901***(0.0287)(0.0275)(0.0275)(0.0297)(0.0295)(0.0292)-0.00570

6.86e-05

0.00358

0.01600.01750.0171(0.0155)(0.0148)(0.0143)(0.0149)(0.0149)(0.0150)

0.0455***0.0364***0.0341***-0.00372-0.00343-0.00361(0.0118)(0.0110)(0.0112)(0.00901)(0.00908)(0.00908)-0.0634***-0.0513***-0.0491***-0.00577-0.00461-0.00378(0.0150)(0.0144)(0.0136)(0.00934)(0.00937)(0.00946)

0.0649***0.0423**0.0498**-0.0383*-0.0392*-0.0368*(0.0209)(0.0209)(0.0204)(0.0210)(0.0206)(0.0209)-0.00227-0.00285-0.00399-0.000298-0.000911-0.000281(0.00659)(0.00625)(0.00632)(0.00647)(0.00646)(0.00652)

0.002170.000154-0.00247-0.00373-0.00399-0.00375(0.00843)(0.00810)(0.00813)(0.00789)(0.00781)(0.00792)-0.0214-0.0217-0.0234-0.00940-0.0105-0.0100(0.0154)(0.0150)(0.0147)(0.0141)(0.0141)(0.0140)0.0185***0.0154**0.0123**0.00362

0.00275

0.00279(0.00660)(0.00630)(0.00615)(0.00599)(0.00594)(0.00596)

0.002840.001930.000309-0.00331-0.00465-0.00434(0.00862)(0.00820)(0.00824)(0.00718)(0.00716)(0.00714)

0.0217**0.0187**0.0162*0.006160.005140.00546(0.00885)(0.00866)(0.00857)(0.00847)(0.00835)(0.00836)

0.0286**0.0270*0.0243*0.01100.009610.00965(0.0139)(0.0139)(0.0139)(0.0140)(0.0140)(0.0140)0.00659-0.00339-0.00178-0.0160*-0.0181*-0.0154*(0.00981)(0.00984)(0.00985)(0.00912)(0.00928)(0.00933)-0.00195-0.0158-0.00970-0.00679-0.0135-0.00660(0.0167)(0.0166)(0.0166)(0.0165)(0.0159)(0.0159)-0.00741-0.0134-0.01180.01200.006220.0114(0.0158)(0.0153)(0.0157)(0.0160)(0.0154)(0.0155)

0.02740.02250.02030.0179**0.0162*0.0175*(0.0219)(0.0185)(0.0188)(0.00896)(0.00905)(0.00921)

0.00592

0.002290.00356

0.007150.005130.00696(0.00758)(0.00764)(0.00748)(0.00797)(0.00809)(0.00800)-0.0325**-0.0416***-0.0278**-0.0395***-0.0419***-0.0379***(0.0134)(0.0137)(0.0134)(0.0125)(0.0127)(0.0124)-0.0353***-0.0423***-0.0285**-0.0375***-0.0392***-0.0359***(0.0129)(0.0131)(0.0128)(0.0118)(0.0119)(0.0116)0.000925***0.000889***0.000552***0.000561***(0.000186)(0.000176)(0.000176)(0.000184)

22

Services GDP share
Industrial GDP share
Per capita GDP
Constant

Country FE

0.00176-0.00111(0.00157)(0.00158)-0.000549-0.00149(0.00169)(0.00172)

0.00596***0.00254**(0.00191)(0.00115)0.171***

0.117**

0.107**-0.223***-0.223***-0.232***(0.0362)(0.0489)(0.0480)(0.0355)(0.0406)(0.0441)

NO

NO

NO

YES

YES

YES
YES

Year FE

NO

NO

NO

YES

YES

No of Countries

189

189

189

189

189

189

Observations

9,604

9,604

9,604

9,604

9,604

9,604

Number of id countrycode

189

189

189

189

189

189

Note: Country-level cluster robust standard errors are shown in parentheses. *** p<0.01, **p<0.05, * p<0.1, We also included the following variables: dummy variable for missing
population variable; dummy variable for missing services GDP share, and dummy variable
for missing industrial GDP share.

4.1 Adaptation and Enforcement of Competition Policies
Enacting competition law and including fines for violating the law may not guarantee
actual implementation and enforcement, or in short, “adaptation,” of competition law. To
investigate the adaptation of competition policies, we employ the “Budget Size” of eachcountry’s competition agency as a dependent variable. The data has been collected by aunique survey of competition agencies and authorities in Asia conducted by the authors. As
before, we included three main independent variables, “WTOit,” “CRISISit,” and “WGIit.”
According to the empirical results shown in Table 5, none of the estimated coefficients is
statistically significant. Yet, when we use conventional variance and covariance matrices, it
is notable that the two- and three-year lagged CRISIS variables, as well as thecontemporaneous WGI variable have positive and significant coefficients (Table C1,Appendix C). These results suggest that the role of market-oriented reforms, induced byeconomic crises, and the overall quality of governance play a crucial role in facilitating theadaptation of competition policies.

23

Table 5. Effect on Budget Size of Competition Agencies

VARIABLES
WTOit+1
WTOit+2
WTOit+3
WTOit
WTOit-1
WTOit-2
WTOit-3
CRISISit+1
CRISISit+2
CRISISit+3
CRISISit
CRISISit-1
CRISISit-2
CRISISit-3
WGIit+1
WGIit+2
WGIit+3
WGIit
WGIit-1
WGIit-2
WGIit-3
Population(1)
BudgetSize(2)BudgetSize(3)BudgetSize(4)BudgetSize(5)BudgetSize(6)BudgetSize-0.537-0.514-0.542-0.191-0.168-0.232(0.569)(0.544)(0.572)(0.282)(0.262)(0.299)

0.705

0.890

0.844

-0.0122

0.385

0.432

(0.707)(0.895)(0.850)(0.383)(0.478)(0.510)

0.185

0.119

0.237

0.485

0.189

0.185

(0.287)(0.246)(0.336)(0.656)(0.383)(0.385)0.131

0.07370.192-0.195-0.309-0.310(0.139)(0.0999)(0.198)(0.283)(0.409)(0.418)-0.752-0.787-0.629-0.626-0.606-0.532(0.745)(0.782)(0.622)(0.608)(0.589)(0.520)

0.635

0.629

0.504

1.267

1.213

1.115

(0.643)(0.643)(0.519)(1.284)(1.255)(1.169)-0.378-0.4970.154-1.671-1.641-1.072(0.422)(0.543)(0.202)(1.778)(1.718)(1.186)0.08350.110

0.0999

0.200

0.234

0.222

(0.0984)(0.130)(0.121)(0.259)(0.301)(0.295)-0.0799-0.0931-0.0728-0.0979-0.135-0.148(0.0965)(0.112)(0.0966)(0.141)(0.193)(0.208)-0.0656-0.137-0.0635-0.195-0.258-0.235(0.0942)(0.161)(0.0973)(0.219)(0.280)(0.261)0.03310.01540.0638

0.299

0.284

0.314

(0.0561)(0.0512)(0.0748)(0.313)(0.302)(0.333)-0.368-0.382-0.340-0.369-0.396-0.397(0.377)(0.392)(0.350)(0.399)(0.428)(0.427)-0.426-0.413-0.440-0.701-0.719-0.702(0.426)(0.415)(0.444)(0.709)(0.734)(0.719)

0.616

0.668

0.630

0.906

1.033

1.052

(0.631)(0.682)(0.644)(0.959)(1.057)(1.073)

4.353

4.487

4.367

5.555

5.611

5.501

(4.401)(4.537)(4.412)(5.789)(5.805)(5.690)-3.497-3.369-3.462-3.425-2.944-2.956(3.444)(3.309)(3.405)(3.432)(3.026)(3.042)0.06480.04770.0516

0.618

0.498

0.529

(0.151)(0.140)(0.144)(0.702)(0.546)(0.572)

0.102

0.134

0.221

0.404

0.123

0.264

(0.396)(0.455)(0.502)(0.845)(0.744)(0.791)-3.512-3.406-3.446-3.687-3.884-3.809(3.459)(3.366)(3.423)(3.808)(3.996)(3.948)

1.771

1.955

1.767

1.317

1.485

1.381

(1.735)(1.932)(1.750)(1.474)(1.583)(1.484)

1.326

1.616

1.376

2.299

2.875

2.791

(1.356)(1.664)(1.431)(2.388)(2.947)(2.879)0.02010.0163

0.103

0.101

(0.0283)(0.0245)(0.117)(0.114)24

Services GDP share
Industrial GDP share
Per capita GDP
Constant-0.181-0.119(0.191)(0.144)-0.188-0.162(0.197)(0.173)-0.0249-0.0261(0.0281)(0.0351)0.01960.288-2.4300.297-0.843-4.442(0.138)(0.542)(3.160)(0.433)(1.276)(6.752)

Country FE

NO

NO

NO

YES

YES

YES

Year FE

NO

NO

NO

YES

YES

YES

No of Countries

43

43

43

43

43

43

Observations

430

430

430

430

430

430

Number of id countrycode

43

43

43

43

43

43

Note: Country-level cluster robust standard errors are shown in parentheses. *** p<0.01, **p<0.05, * p<0.1, We also included the following variables: dummy variable for missing
population variable; dummy variable for missing services GDP share, and dummy variable
for missing industrial GDP share.

To approach the issue of adaptation from an alternative perspective, we have leveraged
data from the World Economic Forum's Global Competitiveness Report for the years 20172018, focusing on the examination of competition policy enforcement. Within this dataset, awindow spanning from 2009 to 2014 offers insights into market competition dynamics.
Specifically, we have extracted two key variables: The first variable is the effectiveness of the“competition policy” variable which is based on a question, "In your country, how effective areanti-monopoly policies at ensuring fair competition?” with answer choices ranging from 1=not
effective at all to 7=extremely effectively. The second variable is a composite index of “local
competition” combining two variables of (1) intensity of local competition based on a question,"In your country, how intense is competition on the local markets?” with answer choices
ranging from 1= not intense at all to 7= extremely intense and (2) extent of market dominancebased on a question, "In your country, how do you characterize corporate activity?” withanswer choices ranging from 1= dominated by a few business groups to 7= spread among
many firms.
Figure 4 presents the outcomes of our estimation results obtained through a semi25

parametric regression model of Robinson (1988). This model investigates the relationshipbetween the 'local competition' variable and the effectiveness of competition policy. Notably,
our analysis reveals a robust positive correlation between these two variables across theentire spectrum of their values. This finding underscores the notion that effective competition
policies exert a favorable influence on market competition dynamics. It is our contention that
this empirical observation lends support to the proposition that the efficacy of both de jureand de facto competition policies, both in terms of adoption and adaptation, can significantly
contribute to the enhancement of overall market competition."

Figure 4: Effectiveness of Competition Policy and Market Competition26

5 Conclusions
This paper has discussed issues regarding the diffusion and adaptation of competition
policy in Asia. To this aim, we postulated and empirically tested a hypothesis that the increasein the adoption of competition policy was inextricably linked with the growing globalization
during the period. Growing globalization “included” the Asian Financial Crisis (AFC) leading
to market reforms in the region which was complementary to the development of trade.
As a background, we noted that competition law jurisdictions have proliferated overthe last four decades in which the majority of the new adopters are developing countries.
Particularly the adopters in Asia first emerged as producers, exporters, and service providers
under the proliferation of free trade agreements and economic partnership agreements,
many of which explicitly or implicitly required the signatory countries to have competition
policies.
We tested the hypothesis using cross-country panel data on the enactment ofcompetition law and the budget of competition authorities. Empirical results using global data
show that before accession to GATT/WTO, a country has a tendency to enact a competition
law. In an adaptation of competition policies, market-oriented reforms, triggered by AFC,seem to play a critical role. Both years leading to accession and years after crisis variables
are significant. We also found that governance level matters in adopting competition laws
and policies, using variables that measure perceived government effectiveness andcorruption eradication.
Based on novel survey data, we also discovered a robust correlation between theperceived effectiveness of competition policy and the level of local competition. This supports
our argument that both the adoption (de jure) and implementation (de facto) of competition
policies work together to foster competitive markets.
The findings in this paper hold significant policy implications for competition policy
development in Asia:27

1. Early Adoption of Competition Laws: The observation that countries tend to enact
competition laws before joining international trade organizations like GATT/WTO implies
that nations should prioritize the establishment of competition regulations as part of theireconomic reform and development strategies. Early adoption can contribute to creatingcompetitive market environments, which, in turn, can enhance trade and economic
growth.

2. Role of Market-Oriented Reforms: Market-oriented reforms, particularly in response tofinancial crises, have a substantial impact on the adaptation of competition policies.
Policymakers should recognize the potential of these reforms to facilitate competition
policy implementation. In times of economic crisis, efforts to align economic policies withmarket-oriented reforms can lead to more effective competition policy enforcement.

3. Governance Quality Matters: The importance of governance quality, as measured bygovernment effectiveness and anti-corruption efforts, in competition law adoption
underscores the need for good governance. Policymakers should focus on improving
governance quality to create an environment conducive to fair competition. Transparent,
accountable, and effective government institutions are essential for enforcing competition
policies.

4. Importance of Effective Implementation: The correlation between the perceived
effectiveness of competition policies and the level of local competition highlights thesignificance of not only adopting but effectively implementing these policies.
Policymakers should consider that policy adoption (de jure) alone is insufficient; equal
emphasis should be placed on practical enforcement (de facto) to foster competitivemarkets.

28

5. Globalization and Trade Agreements: The link between competition policy proliferationand compliance with trade agreements underlines the role of international agreements.
Policymakers should recognize that international trade deals often include competition
policy requirements. Engaging with such agreements can promote competition policy
harmonization and create a conducive environment for cross-border business.

In summary, this paper suggests that governments in Asia should prioritize early
adoption of competition laws, leverage market-oriented reforms, improve governance quality,and ensure effective policy implementation. Recognizing the interplay between policy
adoption and implementation can enhance competitive market dynamics in the context ofglobalization and financial crises. Compliance with international trade agreements thatinvolve competition policy provisions is also a strategic move. These policy implications are
critical, especially for developing countries, to sustain economic growth and development
because the existence of effective competition laws and competition agencies seems to beclosely related to the overall productivity enhancements of national economies with better
governance (Voigt, 2009).

29

References
ADB. 2020. Asia’s Journey to Prosperity: Policy, Market, and Technology Over 50 Years,
Asian Development Bank.
Baldwin, R. 2016. The Great Convergence: Information Technology and the New
Globalization, Belknap Press.
Cheng, T. K. 2020. Competition Law in Developing Countries, Oxford University Press.
Collier, P. 2009. Wars, Guns and Votes: Democracy in Dangerous Places, Harper.
Fukuyama, F. 1992. The End of the History and the Last Man, Free Press.
Jung, Y. and S. W. Chang. 2006. Korea's Competition Law and Policies in Perspective
Symposium on Competition Law and Policy in Developing Countries. Northwestern
Journal of International Law and Business 16(3): 687-728.
Kaufmann, D., A. Kraay, and M. Mastruzzi. 2010. The Worldwide Governance Indicators:
Methodology and Analytical Issues. World Bank Policy Research Working Paper No. 5430.
Maarif, S. 2001. Competition Law and Policy in Indonesia. A report prepared for the ASEAN
Competition Law Project. Jakarta, 28 March 2001.
OECD.

2016.

Competition

Law

and

Policyin

Kazakhstan: A

Peer

Review.

https://www.oecd.org/daf/competition/OECD2016_Kazakhstan_Peer_Review_ENG.pdf
Ravago, M-L., J. Roumasset, and A.Balisacan. 2021. Adapting competition law and policy
for economic development: Asian illustration. University of Hawai`I Manoa Department of
Economics Working Paper No. 21-01.
Reinhart, C. and V. Reinhart. 2015. Financial Crises, Development, and Growth: A Long-term
Perspective. World Bank Economic Review 29(1): 1-24.
Robinson, P. 1988. Root- N-Consistent Semiparametric Regression. Econometrica 56(4):931-54.
Rogers, E. M. 2003. Diffusion of Innovations (5th ed.), Free Press.
Voigt, Stefan, 2006. The Economic Effects of Competition Policy: Cross-Country Evidence
Using

Four

New

Indicators(September
302006).

Available

at

SSRN:

https://ssrn.com/abstract=925794 or http://dx.doi.org/10.2139/ssrn.925794
Voigt, S. 2009. The effects of competition policy on development – Cross-country evidence
using four new indicators. Journal of Developing Studies 45(8): 1225-48.
WTO.

2023.

Interaction

between

Trade

and

Competition

Policy.

https://www.wto.org/english/tratop_e/comp_e/comp_e.htm (accessed 23 September 2023).

31

Appendix A
Table A1: Summary Statistics of Variables Used
(1)

(2)

(3)

(4)

(5)

VARIABLESDESCRIPTIONS

N

mean

sd

min

max

year

Calendar year

13,258

1,985

20.34

1,950

2,020

10,210

0.436

0.496

0

1

8,990

0.345

0.475

0

1

remedies_fines

This variable is a dummy variable coded as
1 when a competition law was in place forthat given country-year
This variable indicates whether the law
provides for fines as a remedy for violating
the law

pop

Population (in millions)

9,719

33.05

119.9

0.0403

1,434

gee

Government Effectiveness

3,828-0.0405

0.982-2.4472.437

rqe

Regulatory Quality

3,827-0.04100.978-2.6452.261

rle

Rule of Law

3,884-0.06880.987-2.606

2.130

cce

3,837

-0.0687

0.999-1.8692.470

wgi_ave

Control of Corruption
Mean of for governance index (gee, rqe,
rle, cce)

3,827-0.0574

0.958-2.381

2.185

services_to_gdp

Services, value added (% of GDP)

7,065

50.12

12.63

4.792

98.62

industry_to_gdp

Industry (including construction), value
added (% of GDP)

7,521

26.96

12.50

2.365

90.51

9,719

12.43

18.48

0.245

283.5

13,258

0.502

0.500

0

1

13,258

0.126

0.331

0

1

537

2.068

15.60

0.000175

139

competition_law_in_place

gdppc

gatt_wto_contcrisisbudget_bn

Per capita GDP ($thousand)This variable is a dummy variable coded as
1 when a country has access to theGeneral Agreement on Tariffs and Trade(GATT) or the World Trade Organization(WTO)
This variable is a dummy variable coded as
1 when a country experiences any of thefollowing crises: Banking Crisis, Systemic
Crisis, Inflation Crisis, or Currency Crisis
Budget of the Fair Trade Commission($billion)

32

Appendix B
Table B1: Coverage of Countries and Years for Tables 3 and 4
country code

country

From

Till

country code

country

From

Till

country code

country

From

Till

AFG

Afghanistan

1950

2010

GMB

Gambia

1965

2020

NIC

Nicaragua

1950

2020

AGO

Angola

1975

2010

GNB

Guinea-Bissau

1974

2010

NLD

Netherlands

1950

2020

ALB

Albania

1950

2020

GNQ

Equatorial Guinea

1968

2010

NOR

Norway

1950

2020

AND

Andorra

1990

2010

GRC

Greece

1950

2020

NPL

Nepal

1950

2020

ARE

United Arab Emirates

1971

2010

GRD

Grenada

1968

2010

NRU

Nauru

1999

2010

ARG

Argentina

1950

2020

GTM

Guatemala

1950

2020

NZL

New Zealand

1950

2020

ARM

Armenia

1991

2020

GUY

Guyana

1965

2020

OMN

Oman

1971

2010

ATG

Antigua & Barbuda

1965

2010

HND

Honduras

1950

2020

PAK

Pakistan

1950

2020

AUS

Australia

1950

2020

HRV

Croatia

1992

2020

PAN

Panama

1950

2020

AUT

Austria

1950

2020

HTI

Haiti

1950

2010

PER

Peru

1950

2020

AZE

Azerbaijan

1991

2020

HUN

Hungary

1950

2020

PHL

Philippines

1950

2020

BDI

Burundi

1962

2020

IDN

Indonesia

1950

2020

PLW

Palau

1994

2010

BEL

Belgium

1950

2020

IND

India

1950

2020

PNG

Papua New Guinea

1950

2020

BEN

Benin

1959

2020

IRL

Ireland

1950

2020

POL

Poland

1950

2020

BFA

Burkina Faso

1959

2020

IRN

Iran

1950

2020

PRK

North Korea

1950

2010

BGD

Bangladesh

1971

2010

IRQ

Iraq

1950

2010

PRT

Portugal

1950

2020

BGR

Bulgaria

1950

2020

ISL

Iceland

1950

2020

PRY

Paraguay

1950

2010

BHR

Bahrain

1971

2010

ISR

Israel

1950

2020

QAT

Qatar

1971

2020

BHS

Bahamas

1973

2010

ITA

Italy

1950

2020

ROU

Romania

1950

2020

BIH

Bosnia and Herzegovina

1992

2020

JAM

Jamaica

1962

2020

RUS

Russia

1950

2020

BLR

Belarus

1991

2020

JOR

Jordan

1950

2020

RWA

Rwanda

1962

2010

BLZ

Belize

1973

2010

JPN

Japan

1950

2020

SAU

Saudi Arabia

1950

2020

BOL

Bolivia

1950

2020

KAZ

Kazakhstan

1991

2020

SDN

Sudan

1956

2010

BRA

Brazil

1950

2020

KEN

Kenya

1963

2020

SEN

Senegal

1959

2020

BRB

Barbados

1965

2020

KGZ

Kyrgyzstan

1990

2020

SGP

Singapore

1965

2020

BRN

Brunei

1984

2010

KHM

Cambodia

1953

2010

SLB

Solomon Islands

1978

2010

BTN

Bhutan

1950

2010

KIR

Kiribati

1979

2010

SLE

Sierra Leone

1961

2010

BWA

Botswana

1966

2010

KNA

St. Kitts and Nevis

1968

2010

SLV

El Salvador

1950

2020

CAF

Central African Republic

1959

2020

KOR

South Korea

1950

2020

SMR

San Marino

1991

2010

CAN

Canada

1950

2020

KSV

Kosovo

2004

2020

SOM

Somalia

1960

2010

CHE

Switzerland

1950

2020

KWT

Kuwait

1953

2020

STP

Sao Tome and Principe

1975

2010

CHL

Chile

1950

2020

LAO

Laos

1953

2020

SUR

Suriname

1975

2010

CHN

China

1950

2020

LBN

Lebanon

1950

2010

SVK

Slovakia

1992

2020

CIV

Ivory Coast

1959

2020

LBR

Liberia

1950

2010

SVN

Slovenia

1992

2020

CMR

Cameroon

1960

2020

LBY

Libya

1951

2010

SWE

Sweden

1950

2020

COD

Democratic Republic of the Congo

1960

2010

LCA

St. Lucia

1968

2010

SYC

Seychelles

1976

2010

COG

Congo

1959

2010

LIE

Liechtenstein

1972

2010

SYR

Syria

1950

2020

COL

Colombia

1950

2020

LKA

Sri Lanka

1950

2020

TCD

Chad

1959

2010

COM

Comoros

1975

2010

LSO

Lesotho

1966

2010

TGO

Togo

1960

2010

CRI

Costa Rica

1950

2020

LTU

Lithuania

1991

2020

THA

Thailand

1950

2020

CUB

Cuba

1950

2010

LUX

Luxembourg

1950

2020

TJK

Tajikistan

1991

2020

CYP

Cyprus

1960

2020

LVA

Latvia

1991

2020

TKM

Turkmenistan

1991

2010

CZE

Czech Republic

1992

2020

MAR

Morocco

1956

2020

TON

Tonga

1975

2010

33

DEU

Germany

1990

2020

MCO

Monaco

1963

2010

TTO

Trinidad and Tobago

1962

2020

DJI

Djibouti

1977

2020

MDA

Moldova

1991

2020

TUN

Tunisia

1950

2020

DMA

Dominica

1968

2010

MDG

Madagascar

1960

2020

TUR

Turkey

1950

2020

DNK

Denmark

1950

2020

MDV

Maldives

1965

2010

TUV

Tuvalu

1979

2010

DOM

Dominican Republic

1950

2020

MEX

Mexico

1950

2020

TWN

Taiwan

1950

2020

DZA

Algeria

1962

2020

MHL

Marshall Islands

1991

2010

TZA

Tanzania

1961

2020

ECU

Ecuador

1950

2010

MKD

Macedonia

1993

2020

UGA

Uganda

1962

2010

EGY

Egypt

1950

2020

MLI

Mali

1959

2020

UKR

Ukraine

1991

2020

ERI

Eritrea

1993

2010

MLT

Malta

1964

2020

URY

Uruguay

1950

2020

ESP

Spain

1950

2020

MMR

Myanmar

1950

2010

USA

United States of America

1950

2020

EST

Estonia

1991

2020

MNE

Montenegro

2006

2020

UZB

Uzbekistan

1991

2020

ETH

Ethiopia

1950

2020

MNG

Mongolia

1950

2020

VCT

St. Vincent and the Grenadines

1968

2010

FIN

Finland

1950

2020

MOZ

Mozambique

1975

2010

VEN

Venezuela

1950

2020

FJI

Fiji

1970

2020

MRT

Mauritania

1959

2010

VNM

Vietnam

1954

2020

FRA

France

1950

2020

MUS

Mauritius

1968

2020

VUT

Vanuatu

1981

2010

GAB

Gabon

1959

2020

MWI

Malawi

1964

2020

WSM

Samoa

1975

2010

GBR

United Kingdom

1950

2020

MYS

Malaysia

1957

2020

YEM

Yemen

1990

2010

GEO

Georgia

1991

2020

NAM

Namibia

1990

2020

ZAF

South Africa

1950

2020

GHA

Ghana

1957

2010

NER

Niger

1959

2010

ZMB

Zambia

1964

2020

GIN

Guinea

1958

2010

NGA

Nigeria

1960

2010

ZWE

Zimbabwe

1950

2020

34

Table B2: Coverage of Countries and Years for Tables 5Country code

country

From

Till

Country code

country

From

Till

ARG

Argentina

2005

2008

JPN

Japan

2005

2020

AUS

Australia

2005

2020

KOR

South Korea

2005

2020

AUT

Austria

2005

2020

LTU

Lithuania

2009

2020

BEL

Belgium

2005

2020

LVA

Latvia

2014

2020

BRA

Brazil

2005

2020

MEX

Mexico

2005

2020

CAN

Canada

2005

2020

NLD

Netherlands

2005

2020

CHE

Switzerland

2005

2020

NOR

Norway

2005

2020

CHL

Chile

2008

2020

NZL

New Zealand

2005

2020

COL

Colombia

2015

2020

PAK

Pakistan

2010

2016

CZE

Czech Republic

2006

2020

PHL

Philippines

2016

2020

DEU

Germany

2005

2020

POL

Poland

2005

2020

DNK

Denmark

2005

2017

PRT

Portugal

2005

2020

ESP

Spain

2005

2020

ROU

Romania

2015

2020

FIN

Finland

2005

2018

RUS

Russia

2005

2020

FRA

France

2005

2020

SGP

Singapore

2015

2020

GRC

Greece

2005

2020

SVK

Slovakia

2006

2011

HUN

Hungary

2006

2014

SWE

Sweden

2005

2019

IDN

Indonesia

2012

2020

TUR

Turkey

2011

2020

IND

India

2014

2019

TWN

Taiwan

2010

2020

IRL

Ireland

2005

2018

VNM

Vietnam

2010

2020

ISR

Israel

2005

2020

ZAF

South Africa

2005

2020

ITA

Italy

2005

2020

35

Appendix C
Table C1: Effect on Budget Size of Competition Agencies

VARIABLES
WTOit+1(1)
BudgetSize(2)BudgetSize(3)BudgetSize(4)BudgetSize(5)BudgetSize(6)BudgetSize-0.537-0.514-0.542-0.191-0.168-0.232(3.016)(3.015)(3.097)(2.908)(2.890)(2.890)

0.705

0.890

0.844

-0.0122

0.385

0.432

(2.490)(2.493)(2.558)(2.417)(2.406)(2.407)

0.185

0.119

0.237

0.485

0.189

0.185

(1.098)(1.098)(1.130)(1.089)(1.095)(1.095)0.131

0.07370.192-0.195-0.309-0.310(3.025)(3.023)(3.106)(2.918)(2.901)(2.902)-0.752-0.787-0.629-0.626-0.606-0.532(3.042)(3.040)(3.127)(2.931)(2.912)(2.917)

0.635

0.629

0.504

1.267

1.213

1.115

(3.043)(3.040)(3.126)(2.934)(2.915)(2.918)-0.378-0.4970.154-1.671-1.641-1.072(2.479)(2.479)(2.584)(2.401)(2.394)(2.432)CRISISit+1

0.08350.110

0.0999

0.200

0.234

0.222

(0.332)(0.332)(0.342)(0.379)(0.378)(0.379)CRISISit+2-0.0799-0.0931-0.0728-0.0979-0.135-0.148(0.355)(0.355)(0.365)(0.399)(0.397)(0.399)-0.0656-0.137-0.0635-0.195-0.258-0.235(0.347)(0.356)(0.358)(0.402)(0.400)(0.402)0.03310.01540.0638

0.299

0.284

0.314

(0.309)(0.310)(0.319)(0.354)(0.353)(0.353)-0.368-0.382-0.340-0.369-0.396-0.397

WTOit+2
WTOit+3
WTOit
WTOit-1
WTOit-2
WTOit-3

CRISISit+3
CRISISit
CRISISit-1(0.306)(0.307)(0.319)(0.355)(0.354)(0.353)CRISISit-2-0.426-0.413-0.440-0.701*-0.719**-0.702*(0.318)(0.318)(0.328)(0.364)(0.363)(0.362)CRISISit-3

0.616**

0.668**

0.630*

0.906**

1.033***

1.052***(0.312)(0.314)(0.322)(0.360)(0.362)(0.362)4.353

4.487*

4.367

5.555**

5.611**

5.501**(2.674)(2.673)(2.746)(2.592)(2.576)(2.576)-3.497-3.369-3.462-3.425-2.944-2.956(2.305)(2.312)(2.368)(2.272)(2.283)(2.280)0.06480.04770.0516

0.618

0.498

0.529

(0.686)(0.693)(0.708)(0.681)(0.681)(0.678)

0.102

0.134

0.221

0.404

0.123

0.264

(2.524)(2.526)(2.597)(2.450)(2.437)(2.442)-3.512-3.406-3.446-3.687-3.884-3.809(2.450)(2.460)(2.519)(2.367)(2.366)(2.364)

1.771

1.955

1.767

1.317

1.485

1.381

(2.412)(2.415)(2.477)(2.346)(2.344)(2.332)

1.326

1.616

1.376

2.299

2.875

2.791

(1.907)(1.912)(1.960)(1.890)(1.894)(1.897)0.0201*0.0163*0.103**

0.101**(0.0105)(0.00965)(0.0435)(0.0434)

WGIit+1
WGIit+2
WGIit+3
WGIit
WGIit-1
WGIit-2
WGIit-3
Population
Services GDP share (%?)

36

-0.181-0.119(0.163)(0.177)

Industrial GDP share-0.188-0.162(0.155)Per capita GDP(0.158)-0.0249-0.0261(0.0338)
Constant(0.0394)

0.01960.288-2.4300.297-0.843-4.442(14.09)(13.93)(15.48)(2.020)(2.202)(3.807)

Country FE

NO

NO

NO

YES

YES

YES

Year FE

NO

NO

NO

YES

YES

YES

No of Countries

43

43

43

43

43

43

Observations

430

430

430

430

430

430

Number of id_countrycode

43

43

43

43

43

43

Note: Conventional, plain standard errors are shown in parentheses. *** p<0.01, ** p<0.05, * p<0.1, We also included the following
variables: dummy variable for missing population variable; dummy variable for missing services GDP share, and dummy variable formissing industrial GDP share.

37