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Market-oriented economies are becoming increasingly popular around the world, and this new interest in markets has given rise to economic policies that recast the role of the state. Although policy analysts generally agree that the state will continue to play an important role in regulating specific economic activities, many issues related to the form and extent of regulation are open to debate.

In this pioneering study, Robert W. Hahn uses the latest available data to examine the internationalization of regulation and regulatory reform. In developed countries, the question is often how best to reform an existing regulatory structure; in developing countries, how to design a regulatory structure almost from scratch. Hahn shows that technological impacts on the economic benefits and costs of regulation and a deeper understanding of the social effects of the regulatory institution are driving policymakers to question the familiar and to propose daring changes.

Hahn argues that the forces of globalization, increases in average wealth, and our growing understanding of regulatory impacts will dramatically alter the nature of regulation in the years ahead. We shall probably see more economic deregulation and more social regulation. The increase in economic deregulation is likely to be good for the average citizen, while the changes in social regulation will have both advantages and disadvantages. Over time, regulation will become more effective as human beings develop regulatory institutions that are better suited to their economic and social needs.

Robert W. Hahn is a resident scholar at AEI and director of the AEI-Brookings Joint Center for Regulatory studies.