Douglas C. Worth
Secretary General of the Business and Industry
Advisory Committee to the OECD

Only bearded men in mountain cabins want government to disappear. The rest of the population understands that yielding a certain amount of personal �overeignty�� is a fair trade for a few curbs on the effects of human frailty.

Fortunately, the rest of the population has also come to the conclusion that a market-based economy is superior to the other alternatives that have been tried over the years. Commerce is close to a natural human instinct; the market has given us the basis for a common expression or language. Frankly, we have barely begun to experience the benefits of this remarkably binding concept.

Over last few years, globalisation has been a by-word and the �pin�� has been one of a new phenomenon. Those of us in international business have found this rather puzzling, in that the market economy has been spreading to where ever it has been welcome for many years.

There is an expression that is bandied about that I find rather silly, unfettered markets. One can search high and low to find one of these.

The market is not unfettered. It is governed by a wide range of tax, labour, environmental, capital, customs, competition, etc; etc; laws, regulations, decrees, practices and other rules in every governmental jurisdiction it operates. We market players are dripping fetters. We are a veritable Christmas tree of fetters.

And, by the way, we support most of those fetters as necessary to make a market function properly.

In fact NO business person would tell you, �ust open the market to trade and investment and we don't care about the rest of the policy mosaic.��

Business people want to find sanity when they risk capital or establish distribution networks: the rule of law, property rights, intellectual property protection and lots of those other �etters��.

It's regulatory quality that we seek. More often than not, quantity has won out over quality.

And any business leader who has instituted Total Quality Management in his or her firm will tell you that it is a journey not a program. Whether a company or a government, none of us has ever got quality right. We can always do better and that means change.

But the other major requirement for a properly functioning market is competition, real competition. This is, first and foremost, one that has been opened to international trade and investment, liberalised.

The problem is that protected markets that have resisted globalisation are already distorted, uncompetitive and operating far from optimally.

�roperly functioning��, means a market that is supported by a broad reform of the policy mosaic.

In many developing countries, the problem is that the policy mosaic surrounding the market is non-existent or incomplete. Equally, in many developed countries, regulatory imperfections, to use a polite word, impede market forces, that is, the market has not really had a chance to perform.

And, guess what. Study after study and country review after country review at the OECD and elsewhere show that good economic performance and even good human development correlate closely with a less constraining, liberalised regulatory mosaic.

In a discussion paper submitted by BIAC to the June 2000 Ministerial, we postulated that the operative question for every minister should be: is my part of the regulatory mosaic enabling or inhibiting innovation? �她r�� How quickly can change occur in that part of the market that is within my purview?

Let me address the subject of change, per se.

Change is difficult, painful and often unwelcome. Equally often, people look for some ogre to blame for their fear of change. That's nothing new, but it's how globalisation is pilloried.

But, in today's global market, there is no more important given than the increasing velocity of change.

Whether you are a government official or a business person, with the global market on your mind,�夷f you are thinking of standing �at�� and ignoring the waves of innovation thundering through the economy, think again. You must embrace and exploit change.

That means a regulatory mosaic that permits, to the maximum, the market to work its magic. Metaphorically, a good soccer or football game would be ruined if the referees went from vigilant towards abuse to building fences between the players or making some of them carry bowling balls. Regulation can be attentive without being overly complex or burdensome.

Markets are forming, shifting and fading rapidly.

Competition, the essence of the marketplace and the consumers best friend, is driving human ingenuity. You have heard plenty about the rapid changing of business models brought about by the application of technological advance to the business enterprise.

e-Commerce blows the doors off market constraints, that is, those constraints that inhibit an innovative entrepreneur in a developing country from reaching the market outside his or her borders. It also empowers the consumer to reach out to global competitors.

A business person or a government official who ignores either of these openings, or worse, tries to stifle them is in trouble.

With allowances for the metaphor chosen, we are knee deep in debates about government regulation versus self-regulation, about how many referees do we need on the football field. No doubt we need a few high quality �efs��, but too much whistle-blowing, umpire time outs and penalties will ruin the quality of the performance.

Competition also brings risk. You cannot wring all of the risk out of the market, that is, ensure that there are no losers, without perverting the market. If there are no losers, you do not have a market. No risk; no reward. That is, no reward for the entrepreneur.

There is a healthy and growing recognition that honing all the edges in this way has disastrous consequences. When institutional prescriptions crowd out innovation, the price in resistance to change is incalculable. The failure can be national in scope.

For it is change, the recognition that one course of action or product is less than optimal, that another is better, that feeds the creative mind. For the market to work, there must be a right to be wrong.

Don't let the failure of a few dot com companies settle you back in your doubter's chair. Or, sound alarm bells for protective regulation. Those who failed will be back with better polished business models to innovate again and create markets that do not today exist.

E-commerce is nascent, new, unsettled and worrisome but that is because a world of innovators have barely scratched the surface of the technology that we can already see and technologies are appearing so fast that what we perceive to be a market today may be surpassed next week.

Via the �other of all coalitions�� on e-commerce called the Alliance for Global Business, the private sector has produced a Global Action Plan with assignments for government and business alike to address the market challenges that are evolving.

This action plan covers the broad spectrum of policy issues that have been on the table, dating back before the OECD-organised Turku and Ottawa Conferences. Principles were established in areas from taxation to consumer interests. Scores of sector specific and regional groups have endorsed the Plan and it has formed the foundation for the dialogue between business and OECD governments. It has also been part of the OECD and BIAC outreach to non-OECD governments.

The annex of private sector initiatives gives substance to the assertion that much of the governance on the net will occur through the market dynamic itself. This �elf-regulation�� is driven by the requirement for consumer trust and by the business opportunities created by that requirement.

In addition, the Plan delineates specific recommendations to government for action and reform, again underscoring that the business community is not suggesting that government does not have an important role in tempering the marketplace.

You can access the Plan on the BIAC website at www.biac.org/DOCS/AP2FIN.pdf

Some years ago, a newly elected Prime Minister in Canada posed a question broadly to the private sector. �hat should the government attend to in order to move the economy forward?"

The Canadian affiliate of my former company submitted an especially thoughtful paper. Among the ideas expressed, one sticks in my mind.

The paper said that a rough calculation of Canadian spending on research and development with respect to the world's total was about 2 percent�地nd with luck they might reap 2 percent of the benefits. It asserted that if the country did not want to be a technological backwater, it had to aggressively open the national door to the other 98 percent. Shortly after that, the Canada-US Free Trade Agreement was crafted and NAFTA followed.

This anecdotal lesson is compounded today by the velocity of change. Open the doors and let invention permit you to leapfrog over the errors of your more developed competitor or trading partner. Use e-commerce as the excuse you need to open the regulatory box and inspect, rearrange, modify and discard.

It's the only game on the globe.