The viability of business activities depends on the market opportunities present, but it is also influenced by legislation, regulations and the administrative requirements governments impose in implementing public policies. The regulatory framework designed by governments is a major factor in the competitiveness of businesses. Recent years have seen efforts to gain a greater understanding of the impact of regulation as a government tool. They have also seen efforts to ensure that that tool is not poorly designed or outdated when it comes to market intervention to protect public interests.

This chapter outlines the methodology for the Red Tape Assessment which is adapted from the Standard Cost Model. This is an accounting methodology used to build up a proxy for the costs of administrative burden (principally information obligations) imposed by regulation based on the time that it takes “a normally efficient business”. This is then applied across the population of the business sector to which it applies. The outcomes can then be compared across countries to identify the relative burdens and opportunities for simplifying and reducing the administrative burdens in each country.

The Red Tape Assessment analysed a set of administrative procedures in the road freight sector as a case study for cross-country comparisons of the administrative costs within a specific sector. Eleven participating countries were required to carry out their own analysis over the period of November 2005-March 2007. The analysis is based on the validated data sheets received from those countries. While many methodological issues are raised, the RTA has enabled a comparative assessment of the administrative requirements imposed in each jurisdiction which provides a basis for identifying good practices which have resulted in fewer administrative burdens.

The following is an academic paper prepared by Professor Werner Jann on the organisation and objectives of the Red Tape Assessment project. The paper looks at the difficulties of drawing comparisons among data collected from different jurisdictions, with distinct information obligations, regulatory requirements, populations and wage levels. The paper points out a number of the valuable lessons from organising the project despite methodological difficulties, which would be useful to maximise the policy value from future studies of this kind.

The following is an academic paper prepared by Professor Nils Henrik Moerch von der Fehr on the validity of the Red Tape Assessment methodology. It examines of administrative costs and the methods of measurement, including the strengths and weaknesses. In particular, the degree to which the systemic sample bias of the Standard Cost Model methodology affect its interpretation when transposed to an entire industry sector and ways in which this may be ameliorated.