focus on regulatory measures that affect the economy at large and can therefore be considered as **comprehensive** measures of regulatory restrictiveness. Their advantages notwithstanding, PMR indicators are not designed to capture **informal** regulatory practices nor the effective **enforcement** of regulations, since they are only concerned with formal compliance with a number of criteria.

12. Data were collected for Romania for the purpose of the present exercise, covering four of the six “sections” of the OECD product market regulation database.<sup>1</sup> The first section deals with general regulatory policy issues, concerning public ownership; market access and competition issues; market structure and vertical relationships in utilities and other network industries. The second section covers regulatory and administrative policies, such as processes and capacities in the public administration. The third section covers regulation in transportation industries, focusing on market access, business conduct, and market structure in road freight, railways and passenger air travel. The final section covers regulation in retail distribution, focusing on the regulatory environment, industry behavior and prices. Information from Doing Business 2006 was used for a fifth section of the PMR - administrative burdens on startups.

**Figure 1. The PMR indicator system**

<!-- Start of picture text --> Product market regulation<br>Inward-oriented policies (0.59)<br>Outward-oriented policies (0.41)<br>State control (0.49) entrepreneurship Barriers to (0.51) Barriers to trade and investment (1.0)<br>Public ownership (0.56) business operation Involvement in (0.44) administrative opacity Regulatory and burdens on startups (0.30)Administrative competition Barriers to (0.22) Explicit barriers to trade Other barriers (0.30)<br>(0.48) and investment (0.70)<br>enterprise sector Scope of public (0.30) Price controls (0.45) Licenses and permits Administrative burdens for corporation (0.36) barriers (0.45)Foreign ownership<br>system (0.55)<br>Size of public<br>Direct control over enterprise sector business (0.30) Use of command & control regulation (0.55) simplification of rules Communication and and procedures (0.45) sole proprietor firms (0.30)Administrative burdens for Antitrust exemptions Legal barriers (0.30) procedures (0.24)Discriminatory Regulatory barriers (1.0)<br>enterprises(0.40) 2 Sector specific administrative burdens (0.34) (0.70) Tariffs (0.31)<br>{regulation data} {regulation data} {regulation data} {regulation data} {regulation data} {regulation data} {regulation data}<br>Economic regulation<br>Administrative regulation<br><!-- End of picture text -->

- 1.The numbers in brackets indicate the weight given to each lower level indicator in the calculation of the higher level indicator immediately above it. The weights were derived by applying principal components analysis to the set of indicators in each of the main regulatory domains (state control, barriers to entrepreneurship, barriers to trade and investment, economic regulation and administrative regulation). The same approach was used to derive the weights used to calculate the indicators of inward and outward-oriented policies and the overall PMR indicator. The principal components analysis was based on the original 1998 data.

2. Two indicators from the 1998 version of the PMR indicators ('Special voting rights' and 'Control of public enterprise by legislative bodies') have been combined into this indicator.

Source: Conway et al. (2005) 13. The structure of the PMR system is shown in Figure 1. The system is composed of 16 basic or ‘low-level’ indicators, each capturing a specific aspect of the regulatory 1 The OECD questionnaire adapted for Romania is provided in Annex 2. For a comprehensive reference see www. **oecd** .org/eco/pmr.

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