Regulation and Investment: A Brief Note on the ECTA Scorecard and Investment 2007

We continue to find a strong relationship between the effectiveness of the regulatory environment and investment. Countries which score highest in the ECTA Regulatory Scorecard, tend to enjoy higher levels of investment.

Since the first ECTA Regulatory Scorecard was first published in 2002, we have consistently found a strong relationship between the results of the Scorecard and investment levels as published by the OECD in their bi-annual “Communications Outlook”. We published a detailed analysis in November 2007 using investment data and the ECTA Regulatory Scorecard results from 2005. In this brief note, we use the most recent investment data published by the OECD in Communications Outlook 2009, which reports investment for 2007 and previous years, together with the Scorecard for 2007 and earlier years. We conclude that there continues to be a strong and positive relationship between regulation of electronic communications market and investment. Firms appear to be looking for economies which are open to effective competition and where they are unlikely to encounter entry barriers as a result of poorly applied regulation allowing SMP operators to behave strategically. These findings are consistent with the analysis of previous versions of the Scorecard and its relationship with investment.