OECD calls for smarter regulation to boost competitiveness and innovation

The Organisation for Economic Co-operation and Development (OECD) has published a report on regulatory simplification, warning that excessive and fragmented rules can undermine competitiveness, investment, and innovation. The report, titled ‘Smart Regulations, Strong Business’, was approved and declassified by the OECD Regulatory Policy Committee on 18 May.

The report draws on the OECD’s Simplifying for Success surveys, conducted between July and September 2025 among governments and business organisations across OECD Members, accession countries, and the European Union. Responses were received from 34 jurisdictions, with the analysis also drawing on OECD regulatory governance data and discussions from a 2025 high-level symposium.

The OECD emphasises that regulation remains essential for market functioning, public health and safety, and transparent government processes. However, the report argues that the accumulation of rules and administrative requirements has created increasingly complex systems that are more difficult for businesses to navigate, comply with and adapt to.

Survey findings show that government respondents in 72% of participating countries and business organisations in 90% of countries consider current levels of regulation and bureaucracy to be excessive. More than three-quarters of business organisations also said full compliance is too costly, while many linked the regulatory environment to negative effects on competitiveness, investment, and innovation.

The report says regulatory burdens often stem from reporting, record-keeping, permitting, inspections, and fragmented rules, rather than solely from substantive policy goals. The OECD recommends targeting areas where regulatory burdens are greatest, streamlining administrative procedures through risk-based and digital approaches, and making rulemaking more future-ready through evidence-based policymaking, stakeholder engagement and stronger coordination.

Why does it matter?

Governments around the world are seeking ways to improve competitiveness and stimulate innovation while maintaining high standards of consumer protection, safety and market oversight. As regulatory frameworks expand, concerns have grown about the cumulative costs of compliance and administrative complexity for businesses.

The OECD’s findings contribute to broader debates on regulatory reform, highlighting the importance of balancing effective regulation with efficiency. The report also reflects growing interest in digital tools, risk-based approaches and evidence-driven policymaking as ways to reduce unnecessary burdens without weakening regulatory objectives.

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