Method for Economic Assessment of Regulatory Impact (Ria) in Albania. Avdantages and Disadvantages of Economic and Inference Methods

Mimoza Zeneli
2014 Journal of Educational and Social Research  
The World Bank in its paper Governance Matters III (2003), refers to the Rule of Law as "the extent to which agents have confidence in and abide by the rules of society." The indicators measured by the World Bank attempt to measure the success of a society in developing an environment in which fair and predictable rules form the basis for economic and social interactions. However, by the early twenty-first century it became clear the importance of the quality of laws and regulations for
more » ... ent. Then, "regulatory quality" started to be considered one of the pillars of good governance by most authors. In the World Bank papers published in 2003 and 2006, six indicators were considered to measure the level of governance of 199 countries: (1) Voice and Accountability; (2) Political Stability and Absence of Violence; (3) Government Effectiveness; (4) Regulatory Quality; (5) Rule of Law and (6) Control of Corruption. Regulatory Impact Assessment (RIA) is a tool which informs decision making in the public sector. It involves an analysis of the benefits, cost and risks of proposed actions by government. By providing information on the likely consequences of introducing a new law, RIA helps improve the effectiveness of government policy. Once the political decision has been taken to pursue a particular objective, RIA can be used to develop alternative policy options and to select the measure that will meet the objective in the most effective and efficient manner. The choice of preferred option will be based on a comparison of the expected positive (benefits) and negative (costs) impacts of each option. Referring above I would like to suggest same economic and inferential method that can be used from Albanian policy maker showing the advantages and disadvantages of using of methods in case of Albania. 352 Inferences Methods Beside of above mention methods we judged that an alternative method of economic evaluation that can be used is one of inferential method, "Difference to Differences" or "Before and After" methods. This two methods are based on the comparisons of effects of regulation because of regulation implementation. Differences to Difference methods . Operation of the method is shown in the graph. This method consists in selecting a key variable which is able to express the success of the intervention. 6 The graph below present an example that tell how the inferencial method operate . Since the work by Ashenfelter and Card (1985), the use of difference-in-differences methods has become very widespread. The simplest set up is one where outcomes are observed for two groups for two time periods. One of the groups is exposed to a treatment in the second period but not in the first period. The second group is not exposed to the treatment during either period. In the case where the same units within a group are observed in each time period, the average gain in the second (control) group is substracted from the average gain in the first (treatment) group. This removes biases in second period comparisons between the treatment and control
doi:10.5901/jesr.2014.v4n2p348 fatcat:3nv352i5afgx3l5jxwqox6ghsm