The concept of regulatory reform is broad and somewhat vague and sometimes has been advanced by ideological proponents of either harsh or lax changes that, in reality, would be wildly inefficient. Notwithstanding these proposals, the core idea of regulatory reform at least among scholars of business policy is to improve the efficiency of policies that intervene in decisions about market entry, production methods, product attributes, and transactions arrangements between suppliers and customers. Reform can mean deregulation, privatization com- bined with the creation of a regulatory authority, or more targeted and focused regulation sometimes of products that thus far have escaped regulation that makes greater use of economic incentives, economic policy analysis, and policy coordination among agencies. The debate about regulatory reform is neither empty nor sterile. Most nations have significantly changed some major regulatory poli- cies and are considering further reforms.
Regulatory reform is politi- cally salient for two main reasons.
First, regulatory policies impose significant costs, and reform can reduce these costs without sacrific- ing regulatory objectives. As a result of the growing importance of the international effects of domestic regulation, regulatory policy has become an issue in inter- national negotiations about trade and investment policies. The elevation of regulatory policy to an issue of international eco- nomic policy is controversial. Some charge that internationalizing reg- ulatory reform is an attempt by zealots to impose stringent regulation on nations that neither need nor want it. The primary objective of this chapter is to examine the relationship between regulatory reform and international economic integration.