Participation, Government Legitimacy, and Regulatory Compliance in Emerging Economies: A Firm-Level Field Experiment in Vietnam

Participation, Government Legitimacy, and Regulatory Compliance in Emerging Economies: A Firm-Level Field Experiment in Vietnam

by Edmund Malesky,  Duke University, College Park and Markus Taussig, University of Toronto

Tragic industrial accidents commonly headline the news in developing countries. Most of these incidents are preventable, caused by willful avoidance of existing safety regulations. While many advocates call for stronger enforcement of rules, the limited capacity and knowledge of bureaucrats bedevil such efforts. Moreover, regulations are poorly designed and poorly paid officials frequently look the other way in exchange for bribes, undermining trust that regulatory systems truly serve the public interest. What then can developing country governments do to make businesses more likely to perceive critical labor, consumer, and environmental regulations as legitimate, and non-compliance as socially unacceptable?
We hypothesized that broader involvement of businesses in the regulatory design process is important and tested this supposition through a field experiment in transitioning Vietnam. Specifically, we evaluated the effects of a government initiative to consult a broad cross-section of businesses on the draft version of a new chemical safety regulation. The results are encouraging. Being consulted enhanced: 1) views of the government’s regulatory authority; 2) willingness to allow government-affiliated auditors to examine business operations; and 3) compliance with regulatory requirements. In sum, our study indicates that consulted businesses are more likely to see regulation as appropriate and to abide by it.

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American Political Science Review 21 December 2018, pp. 1-22

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