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OECD Reviews of Regulatory Reform: Brazil 2008

Strengthening Governance for Growth

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The debate on a market-based economy has now entered a new phase in Brazil, addressing the broader context of quality regulation and the reduction of regulatory risk. The improved macroeconomic situation and the progress made by the sectoral regulatory agencies have paid off, and there is also wider social participation in the improvement of the regulatory framework with a stronger consumer engagement. But Brazil still needs to further improve its capacities for regulatory quality and increase transparency and accountability in the system to reinforce regulatory performance.

This review analyses the challenges of strengthening regulatory governance in Brazil to improve economic growth, with appropriate regulatory frameworks for core infrastructure sectors. Improved institutional capacities would also enhance support for regulatory policy across various government areas. Setting up an appropriate architecture for sectoral regulatory agencies and balancing autonomy with accountability will contribute to improved governance. Challenges include consolidating the autonomy and status of Brazilian regulatory authorities, reinforcing the strategic organisation for planning and decision making, increasing social accountability mechanisms, and improving co-ordination with competition authorities. Regulatory reform will help Brazil boost growth opportunities, and improve the quality and value of core services provided to its citizens.

Brazil requested this broad review by the OECD of its regulatory practices and reforms. The review presents a general picture of the overall frameworks to assure high quality regulation with a special focus on four core infrastructure sectors: power, private health insurance, land transport and telecommunications.

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Powers for High-quality Regulation

Regulatory authorities are distinct from other decentralised agencies, as they are granted specific powers, often through the law that establishes them. This allows authorities to issue opinions, set out rules, monitor and inspect, enforce regulations, grant licences and permits, set prices and settle disputes. The range of these powers may vary substantially among agencies in the same country, as it has to reflect the different realities of the different sectors. A one-size-fits-all approach may therefore not be adequate in that respect. Agencies can receive direct powers, but they also often have a significant advisory function, based on their expertise. These regulatory powers that are devolved to regulatory authorities need to be considered from a whole-of-government perspective, as they have to contribute to high-quality regulation. Therefore, a quality regulation perspective can serve as an analytical basis on which to assess the transparency and reliability of regulation made and enforced by the agencies.

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