First practiced in the major developed economies in the early 1980s, the deregulation trend spread across the world in the 1990s with the end of the Cold War. As a result, government power has been limited decisively in favour of the international marketplace. What were formerly state-owned enterprises and public services are now increasingly privately operated.
Deregulation is a central principle of monetarism, which has become the world's pre-eminent monetary and financial philosophy. Monetarism is based on the idea that economic growth depends on open markets and private investment, meaning that tariffs constitute barriers to competition. The removal of tariffs and other barriers on an international scale, that is to say
global deregulation, allows for the free play of market forces. Total deregulation theoretically produces a situation not unlike global free trade.
(adapted from Dicken, P.,
Global Shift: Reshaping the Global Economic Map in the 21st Century, 4th ed., New York: Guilford Press, 2003, p. 165)
The eventual existence of a completely deregulated global economy is far from being a reality. To varying degrees, virtually all industrialized countries have implemented deregulation policies, however, "no economic activity can exist without some form of regulation and therefore, deregulation cannot take place without the creation of new regulations to replace the old. In effect, what is often termed as
de-regulation is nothing more than
re-regulation." (Tsogas, p. 16) The debate remains as to whether these new regulations will prove effective.
(Tsogas, G.,
Labor Regulation in a Global Economy, Armonk: M.E. Sharpe, 2001, p. 16)
Case Study: Telecommunications
The telecommunications sector is a good example of deregulation at the international level:
"The WTO basic telecommunications negotiations ended successfully in February 1997. The negotiations were aimed at promoting
world-wide deregulation and introducing competition in basic telecommunications services such as telephony, reducing charges and diversifying services. During these negotiations, Japan announced guidelines for wide-ranging liberalization by abolishing provisions limiting foreign investment in Telecommunications carriers except for NTT and KDD, including radio station licenses. Finally an agreement was reached by the 69 participating countries, including many developing nations. In the
future, each nation will promote liberalization based on this agreement, giving further impetus to competition."
(adapted from World Trade Organization,
The WTO Negotiations on Basic Telecommunications, visited 2011-03-21)
Debate
"
Global deregulation of current and capital account is often touted as successful means to reduce poverty and inequality. On the face of it, though, the evidence does not support this claim. Rising intra-country inequality is widespread, income inequality between countries grows, the absolute number of people living in poverty increases, and poverty rate reductions are geographically isolated. Critics of
global deregulation have charged that more deregulated trade flows result in a worse income distribution and unregulated capital flows in more macro economic instabilities that are especially harmful to the poor."
(Weller, C. and A. Hersh,
The Long and Short of it: Global Liberalization , Poverty and Inequality, Center For European Integration Studies, 2002, visited 2009-07-13)
