Reforns and optimal regulatory design in MENA contries : lesson from the telecommuications industry

Abstract EN

In the past few years some MENA countries, Morocco, Egypt, Lebanon, Jordan, and Mauritania, have decided to reform their telecommunications industries.

The results, although positive, differ significantly among these countries.

This paper examines the way the reforms have been applied and analyzes the factors that may explain the differences in results.

It shows that countries that have set up independent regulatory agencies and mechanisms that effectively resolve the problems of information asymmetry, market contestability, enforcement, credibility and skills, are better equipped than others which have ill-conceived versions of these mechanisms.

The latter group of countries cannot reap the full benefits of reforms, while private companies realize high returns.

Our findings suggest that privatization by itself does not generate benefits.

However, privatization or other types of reforms combined with the existence of a separate regulatory authority increases telecommunications penetration ratios, the industry's connection capacity and reduces the price of local and international calls.

The creation of a competitive environment and regulatory capacity structure rather than privatization as such are two important factors to take into account when policy makers consider reforms in their regulatory policies which aim to promote growth.

Policies that encourage privatization and the granting of exclusivity periods to privatized incumbents are not necessarily optimal from a social point of view.