To learn from past simplification efforts and deliver lasting results, governments need to move from treating the symptoms of regulatory burdens to understanding and tackling the root causes. This chapter offers policy considerations to embed simplification efforts into a broader renewal of regulatory governance, by 1) targeting simplification efforts where it matters most based on evidence and stakeholder engagement, 2) streamlining administrative procedures through risk-based, data-driven and digital approaches, and 3) future-proofing rulemaking to ensure regulations are effective, proportionate and coherent from the outset.
Smart Regulations, Strong Business
Enabling Growth and Societal Protection in a Fast‑Changing World
Abstract
Responding to the risks of excessive regulatory burdens, governments around the globe are renewing their efforts to simplify existing frameworks (see Chapter 2 and Chapter 3). However, such initiatives are not new and, in the past, have failed to fully meet expectations. Existing regulatory governance tools, designed to foster effectiveness and efficiency, are not always fully utilised and are sometimes perceived as too costly and rigid. This suggests they have not kept pace with new developments.
For regulatory simplification to succeed in today’s complex world, governments must move on from purely treating the symptoms of regulatory burdens to understanding and tackling the underlying root causes. Delivering lasting impact requires a systemic renewal of regulatory governance to meet the challenge of increasing pace, complexity and interconnectedness of novel policy issues (Chapter 1). Importantly, to ensure a cost-effective approach to simplification, it needs to be fully embedded within wider regulatory governance to 1) simplify existing rules with a focus on outcomes, 2) streamline administrative procedures to ease compliance, and 3) future-proof rulemaking for lasting impact. This chapter offers policy considerations to guide governments in addressing the underlying foundational structures, incentives and dynamics that underpin rulemaking. In doing so, the chapter aims to support a renewed, future-focused dialogue on regulatory reform.
When businesses and governments agree that the current level of regulatory burden is too high and is impacting businesses’ ability to invest and innovate, a critical first step is to “clear the clutter” by reviewing and simplifying existing regulatory frameworks. To tangibly reduce complexity and manage varying expectations related to “simplification”, governments need to deploy targeted initiatives, use evidence, and communicate clearly. In addition, more systemic and proportionate ex post evaluation can help simplify and optimise the stock of regulation before burdens become excessive.
Governments should focus their simplification efforts on priority areas where they can make the biggest difference, based on the real-life experience and insights of those subject to regulation. In identifying priorities and solutions and avoid knowledge gaps, governments need to deploy a structured and targeted approach to consultation – ensuring efforts are efficient, while guarding against the potential risk of capture and fostering transparency. Governments must secure buy-in and sustain efforts over time in order for priorities to deliver meaningful and lasting burden reduction.
To successfully manage expectations on simplification initiatives and avoid over-promising and under-delivering, policymakers need to base their decisions on reliable evidence on likely costs, benefits and trade-offs and communicate on these clearly and transparently. Governments must apply robust methodologies, supported by analytical capability, to assess and quantify the burden reduction potential of simplification measure and foster transparency on the actual outcomes of simplification measures.
To make results of time-bound simplification initiatives sustainable, there is a need to invest in ex post evaluation to keep regulatory frameworks fit for purpose in a fast-changing world. Governments need to adopt systematic yet proportionate approaches to evaluation to target the use of resources for optimal impacts.
Source: Authors’ elaboration.
4.1.1. Strategically focus simplification efforts
To maximise impact, governments need to focus their simplification efforts on priority areas where they can make the biggest difference in reducing complexity and regulatory burdens. When simplification is not sufficiently focused and targeted on strategic priorities, governments risk wasting public resources on initiatives that will make little or no material difference in lifting burdens and boosting growth potential. In a tight fiscal context, this entails a significant opportunity cost for governments as resources cannot be spent on other priorities – while failing to deliver on expectations and undermining buy-in. Engagement with those subject to regulation is critical but needs to be tailored and adjusted to also remain proportionate to the outcome that is being sought – from setting the broader priorities and focus, to identifying specific issues and developing solutions.
Start broad to identify priorities
Setting the overarching policy goals and strategic priorities for government action, whether on simplification or regulation in general, is fundamentally a political exercise. Within the boundaries set by institutional checks and balances, it is the prerogative of democratically-elected officials to determine which issues take precedence. This prioritisation should be based on a well-informed understanding of the public’s concerns. In this context, listening to those affected by regulation is critical to inform the strategic decision making that shapes simplification priorities and ensure they are grounded in the real-world experiences of the people and businesses. However, consultation efforts must be proportionate and targeted toward clear objectives, in order to avoid becoming ineffective and burdensome in themselves.
To start, broad economy-wide engagement with a variety of different types of businesses allows governments to understand where burdens are most acute to identify priority sectors or policy areas. The S4S survey carried out by the OECD is one example of such an efforts that can pave the way for targeted simplification. Broad-based engagement, as demonstrated through France’s example (Box 4.2), can also help crystalise cross-cutting “common-sense” issues where there is widespread agreement on specific irritants like needing to submit the same information multiple times and to different authorities. Such insights carry potential for “low-hanging fruits”, as targeted interventions can deliver tangible improvements, removing what can be the most impactful burdens in day-to-day life or business operations.
In France, a 2023 national consultation on simplification to make life easier for businesses solicited input through an online platform and in-person meetings with business leaders. In total, 29 000 participants submitted and voted on over 5 000 proposals to express their priorities. The most popular proposals were based on simplifying the administrative processes that businesses have to navigate when, for example, getting involved in public procurement processes, applying for aid, changing company information, transferring a business, or ceasing an activity. More user-friendly administration was also a top priority, with proposals on centralising the various government websites and portals that businesses must navigate, enabling access to dedicated advisors over telephone and virtual meetings, continuing to establish one-stop shops, and establishing a “tell us once” framework to avoid businesses needing to constantly re-submit the same information. The findings from the consultation are intended to inform the drafting of legislation to simplify existing rules and procedures.
Source: OECD S4S Surveys.
At this high-level, consultations do not need to be lengthy and extensive processes. The objective is not to exhaustively analyse every issue, nor to define solutions for every sector with all stakeholders, but rather to capture clear signals on where burdens are most widely felt. Various tools leveraged by OECD members – such as ongoing feedback mechanisms, public stocktakes, and interactive consultation platforms (Figure 4.1) – can be systematically harnessed to efficiently gather and process broad input on regulatory challenges. Keeping this initial stage proportionate avoids creating an extra layer of process – and avoids fatiguing key stakeholders as efforts then shift from diagnosis to solutions. The key to success is using insights gathered to inform next steps on the simplification journey.
Note: Data are based on 38 OECD Members and the European Union.
Source: OECD Indicators of Regulatory Policy and Governance (iREG) Survey 2024.
Target efforts, seek solutions
Building on the priorities identified through broad consultation, governments need to take the next step and engage in a more in-depth collaborative process with those directly affected to identify pain points in more detail and seek input to simplify regulatory frameworks. This stage moves the objective of engagement beyond general concerns to concrete reforms in a given sector or regulatory framework. Direct engagement with relevant key stakeholders and representative organisations allows policymakers to test and co-develop simplification proposals (see Box 4.3). This can help ensure solutions are practical and based on “common-sense”: for instance, organising administrative processes based on how businesses and citizens interact with government. For instance a “life events” or user journey approach based on key touchpoints, such as starting a business or tax and employment declarations, can make interactions with government more intuitive and efficient for users. Establishing dedicated institutional structures that act as a focal point to convene stakeholders can help translate their inputs into actionable simplification proposals. In addition to boosting impact, involving stakeholders in shaping simplification efforts also generates broader buy-in for simplification, helping to sustain momentum for reforms over time.
The Convenios para la identificación de cargas administrativas y su reducción is an annual, nation-wide stakeholder engagement mechanism in Spain that seeks to tackle unnecessary administrative burdens through formal collaborative agreements with key stakeholder organisations. Based on these agreements, stakeholder organisations bring together members and government representatives through workshops and discussion fora to identify burdens and propose specific opportunities for simplification.
Since 2008, Spain’s Central Administration has received over 2,100 burden reduction proposals through these agreements, submitted through a structured template outlining the issue, responsible entity, relevant regulations, potential solutions, and estimated benefits. Competent ministries review these annually and must respond, indicating whether proposals are accepted, implemented, under review, or rejected, along with justifications. If proposals also affect regional administrations, they are forwarded by the Central Administration to the autonomous communities for review. Stakeholders play an active role throughout the process, from identifying burdens to co-designing simplification proposals, which may lead to legal amendments, streamlined procedures, digital solutions, or improved guidance. The Directorate-General for Public Governance carries out internal monitoring.
As an example of this collaboration in practice, the Spanish Chamber of Commerce alone has signed 14 collaboration agreements over the years, covering horizontal topics such as SMEs and electronic administration, and on specific sectors, such as tourism and agri-food. These agreements have led to over 900 proposals for simplification, around 23% of which were implemented within two years. The agreement on improving administrative processing in the tourism sector, for example, led to 53 proposals that the Chamber estimates would carry EUR 433 million total in savings if implemented.
Source: OECD S4S Surveys (2025); Ministerio para la Transformación Digital y de la Función Pública (2023[28]); Ministerio para la Transformación Digital y de la Función Pública (2014[29]), Manual de Simplificación Administrativa y Reducción de Cargas para la Administración General Del Estado; (OECD, 2025[1]).
In keeping engagement efforts proportionate and targeted on those who are affected by the issue at hand, governments need to guard against the potential risk of capture and foster transparency. Businesses themselves are diverse and their views on regulatory challenges may vary depending on their size, sector of the economy or reflect differences between incumbents and (potential) market entrants and “disruptors”. Some may be better organised (and resourced) than others and benefit from existing informal access to officials and political decision makers (OECD, 2021[2]). SMEs and start-ups who tend to be disproportionately affected by fixed regulatory compliance costs – in particular administrative burdens – may find it harder to make their voice heard directly. Policymakers need to be mindful of such differences and take steps to engage “hard-to-reach” stakeholders to avoid biased simplification. In addition, they should be transparent about who was consulted, which views were conveyed and how they have been taken into account. Transparency and accountability frameworks for engagement between policymakers and stakeholders often lag behind best practice in OECD countries (Vitale and Bitetti, 2026[3]).
Sustain efforts over time
Ultimately, lasting and meaningful burden reduction is unlikely to result from a one-off effort. Simplification efforts should be seen as an ongoing endeavour, systematically working through different priorities over time to ensure reforms remain relevant. While initial efforts may focus on “low-hanging fruit” or high-profile sectors or processes, evolving economic conditions, technological developments and policy demands mean that new sources of complexity and burden will inevitably emerge. To address this, the above broad‑based engagement and feedback gathering needs to be a recurrent exercise and policymakers need to be adaptive. Switzerland provides an example of how simplification priority-setting can be embedded as an ongoing exercise: the Federal Act on Reducing Regulatory Costs for Businesses, adopted in 2023, requires the Federal Council to identify three to five priority areas each year in which they will examine opportunities for burden reduction. Doing so helps to maintain progress and ensure that simplification efforts remain in step with changing economic conditions and policy goals. Similarly, the European Commission has laid out an “annual implementation and simplification cycle” whereby each Commissioner is bound to conduct two implementation dialogues with practitioners each year to support the gradual stress-testing of the entire EU acquis over time (European Commission, 2025[4]).
4.1.2. Build buy-in and manage expectations through use of evidence and clear communication
As a high political priority across OECD countries, simplification regularly features in public statements from political leaders or election promises. To successfully manage expectations on simplification initiatives and avoid over-promising and under-delivering, policymakers need to base their decisions on reliable evidence on likely costs, benefits and trade-offs and communicate on these clearly and transparently.
Whilst listening to stakeholders and aligning simplification initiatives with their needs is important, governments must use evidence to critically assess the true scale of potential cost savings from proposed simplification measures and their impact in facilitating market entry, investment, competition and scale-up. In particular, this should take into account different types of regulatory costs that might be reduced, going beyond administrative burdens, e.g. flowing from reporting requirements and paperwork, and extend to substantive compliance costs, e.g. one-off or recurring expenses from any physical, technical, or operational adjustments to conform with content obligations of regulations, and the opportunity costs they represent. It should also consider the cumulative level of burden stemming from different regulations impacting a sector or industry at different levels of government and how they affect broader economic outcomes, like competition, market openness and firms’ capacity to innovate.
When altering or removing regulatory requirements, governments should review evidence to shed light on the any potential drawbacks, risks and trade-offs. Whilst administrative simplification is frequently presented as a technical exercise to streamline procedures, it can have wider policy implications. For instance, reducing reporting requirements may ease compliance for businesses but will also limit the information available to governments, citizens, investors and civil society organisations to assess whether policy objectives are being achieved. Nevertheless, data and information that is collected needs to be proportionate and requested only if strictly required to achieve a given policy objective. Whilst balancing these trade-offs and managing risks involves judgement, this can be supported by objective reference points for acceptable levels of risk.
Once simplification measures are agreed, transparent communication is critical to set expectations right and garner public support. Only around 40% of citizens from 30 OECD countries believe that their government clearly communicates how reforms would impact people – despite being a key driver for trust in government (OECD, 2024[5]). In today’s fast-paced media and news environment, where the role of traditional media is increasingly challenged by social media platforms, effective public communication based on evidence is essential to mitigate the risk of mis- and disinformation (OECD, 2021[6]) – especially in light of the varying expectations that “simplification” may raise. This requires decision makers to communicate clearly the intended goals of simplification measures and to be explicit about any trade-off decisions and the underlying evidence base.
Finally, managing expectations and nurturing trust also require transparency on the actual outcomes of simplification measures. Big announcements and ambitions regarding burden reduction run the risk of falling flat if they are not followed by not only effective implementation but also accountability for results. Accountability frameworks are critical for both demonstrating progress and allowing for constructive challenge of simplification efforts. Providing for monitoring arrangements and regular (public) reporting on both the progress/implementation of simplification initiatives and their real-life outcomes is essential to support this. Planning for accountability frameworks and reporting mechanisms, including needs for data collection and institutional responsibilities, needs to be baked into the inception stages of simplification initiatives to avoid commitments getting “out of sight, out of mind”.
4.1.3. Invest in efficient ex post evaluation for continuous improvement
Most recent simplification initiatives announced by governments largely constitute time-bound exercises to reduce cost and burden in specific sectors. The sustainability of these efforts lies in linking them with other systemic mechanisms to boost regulatory efficiency. In particular, evaluating regulations and their real-life impact after they have been implemented is critical for the continuous improvement of regulatory frameworks. This is especially relevant in a rapidly changing world with profound societal and economic transformations where laws and regulations can quickly become outdated and where the addition of new layers of regulation create a patchwork of overlapping and sometimes conflicting rules. Whilst targeted simplification initiatives are needed to address those areas of regulation where excessive burdens have accrued and impact business activity, ex post evaluation can help keep regulatory frameworks streamlined over time. By investigating the continued validity, effectiveness and efficiency and possible alternatives (OECD, 2020[7]), it can help address burdens before they become a major roadblock for business innovation and investment.
A cost-effective approach to evaluation that is both systematic yet proportionate is essential to overcoming the risk of “regulate and forget” and removing or streamlining outdated or overly complex regulations. The OECD Best Practice Principles on Reviewing the Stock of Regulation (2020[7]) underscore the importance of “comprehensive coverage of the regulatory stock over time”. However, evaluation exercises are resource-intensive – from gathering and analysing relevant data and other evidence, to engaging with affected parties and developing considered recommendations for policy improvement. Governments lack the capacity to evaluate every single regulation and act on its outcomes in a meaningful way. In fact, this would risk diverting scarce public sector resources from other areas of more consequential impact and risk “review fatigue” within the administration. Therefore, priority should be given to “reviewing regulations that have a) wide coverage across the economy or society, b) significant impacts on business and citizens, and for which there is c) prima facie evidence of a “problem”.
Despite being a cornerstone of good regulatory governance and recognised as a key principle in the OECD Recommendation on Regulatory Policy and Governance (2012[8]), ex post evaluation has too long been neglected by governments, leaving practices underdeveloped and far from meeting their full potential (Figure 4.2). Over the last decade, there have been improvements in a number of countries that substantially reformed their evaluation systems but the gap towards best practice remains significant across the piece. OECD data shows that governments have invested in evaluation methodologies, but are not systematically using them to improve existing regulations. In fact, only 31% of OECD countries require periodically evaluating all or major regulations, and relatedly, only just under half of OECD Members report an evaluation leading to tangible improvement (OECD, 2025[9]). As a result, governments are at risk of not knowing if laws and regulations are working in practice and leaving unnecessarily burdensome rules in the statute book.
Indicators of Regulatory Policy and Governance (iREG): Ex post evaluation of regulations
Note: The more regulatory practices as advocated in the 2012 OECD Recommendation of the Council on Regulatory Governance and Policy a country has implemented, the higher its iREG score. Data for 2014 do not include the four countries that were not in the OECD at the time (Colombia, Costa Rica, Latvia and Lithuania). For these countries, the 2014 total reflects their 2017 scores.
Source: OECD Indicators of Regulatory Policy and Governance (iREG) Survey 2014 and 2024.
Diligent planning for when and how to conduct ex post evaluations is foundational to make sure they are conducted in practice and remain proportionate. Formal (binding) requirements are needed to operationalise an effective ex post evaluation framework and set expectations (internally and externally). Embedding such requirements in the legislative/regulatory framework itself at the design stage has several benefits: it can help avert regulations getting “out of sight, out of mind” once they have been enacted; it prompts policymakers to determine relevant KPIs and other data collection requirements and assign institutional responsibilities; finally, it supports internal planning and resource allocation within the administration. A system of thresholds and/or other quantitative and qualitative criteria can act as a yardstick to objectively guide the development of review clauses. For example, Germany requires evaluation if proposals create over EUR 1 million in annual compliance costs nationally for citizens, businesses or the administration. The Slovak Republic requires reviews for laws that create total expected costs over EUR 10 000 for businesses; reviews can also be triggered if there is reason to believe that costs or benefits estimated ex ante were, respectively, underestimated or overestimated (OECD, 2025[1]). Early planning through review clauses can also help foster synergies, by bringing forward or deferring evaluations of individual regulations in related areas to bundle them into “packaged” reviews – and assess their combined impact (e.g. in a sector or policy area). Box 4.4 illustrates how New Zealand systematically identifies areas for review, carries out reviews, and then follows up to ensure findings from reviews are implemented.
New Zealand’s Ministry for Regulation operates a Regulatory Review Framework that employs a systematic approach to carrying out reviews, involving:
A “pre-review”, where the Ministry carries out pre-scoping of potential topics, engaging with regulated parties and the responsible policy ministry to gather evidence on the regulatory issue. The Ministry then assesses whether, based on the evidence, the topic meets defined selection and prioritisation criteria proposed by the Minister or based on the Ministry’s feedback or analysis. Once confirmed, the Ministry develops terms of reference for the review of the topic in consultation with relevant stakeholders and interdepartmental senior officials.
A “review delivery” phase, in which the Ministry gathers extensive evidence and applies analytical tools such as cost-benefit analysis and international benchmarking to assess how regulations are working in practice. Based on findings, the review identifies and tests options, such as retaining, amending, repealing, or replacing a regulation – with final recommendations being submitted to Cabinet.
An “implementation support” phase, in which the Ministry supports relevant policy ministries to develop an implementation plan and implement decisions made by the Cabinet on the recommendations.
A “post-review” phase, in which the Ministry tracks implementation, reports on progress, and conducts a post-implementation review to assess whether changes have delivered benefits for New Zealanders.
Under this framework, the Ministry has carried out reviews on agricultural and horticultural products, hairdressing and barbering industry, and the Early Childhood Education regulatory sector – with further additional reviews underway.
Source: (Ministry for Regulation, 2026[10]).
Formal requirements and planning for evaluation need to be flanked and supported by appropriate oversight and accountability mechanisms to minimise implementation gaps and aliment a virtuous feedback loop. Whilst the institutional settings for ex post evaluation may vary, assigning oversight responsibility to a single central unit with a government-wide purview can play an important role in ensuring that plans for ex post evaluation are in alignment with the broader framework, executed in practice and that reviews meet quality standards (OECD, 2020[7]). It can also act as a centre of expertise and offer support across the administration. Finally, ex post evaluation will only generate tangible impact if it is fully embedded in the policy cycle and informs ongoing improvement of regulatory frameworks. Transparency and effective accountability can be strong drivers to help translate policy recommendations into concrete action and avoid ex post evaluation from being just another bureaucratic burden. For instance, publishing the findings from evaluations, along with an action plan for future reform or a government response (in the case of independent / arms’-length reviews) can support this. Accountability can also be supported by an active role played by parliaments as part of their post-legislative scrutiny function.
Regulatory burdens are often most acutely felt by businesses as they engage with administrative procedures and other mechanisms to achieve and demonstrate compliance. Governments use a variety of tools to give effect to regulations and foster compliance, ranging from compliance promotion activities, reporting requirements, encouraging adoption of technical standards and conformity assessment, regulatory inspections and testing, through licensing and permitting, amongst others. All these different procedures and mechanisms can result in red tape that impact business day-to-day activities and distract from productive activities. As a result, administrative procedures and other compliance activities greatly determine whether regulations are perceived as fair and balanced or overly complex and burdensome. Smoothing regulatory pathways by properly planning and streamlining administrative processes is therefore essential to easing compliance and giving back time to business.
Those who design laws and those who implement them “on the ground” are often not the same, often creating a disconnect that leads to excessive burdens and failure to achieve intended objectives. Governments must bridge the gap between the design and implementation. This means planning at design how compliance will be ensured – be it through guidance, regulatory inspections, licensing and permitting, or other tools – as well as considering how businesses will respond in terms of expected compliance.
When implementing and enforcing regulations, governments can maximise impact and minimise frictions by adopting risk-based approaches, for instance calibrating inspections and administrative procedures on a thorough understanding of where the likelihood of non-compliance and its potential consequences would be highest. When risks are considered to be lower, authorities might resort to other tools such as notifications.
Digital technologies and data (sharing) present a revolution in terms of increased efficiency and effectiveness. The roll-out of digital reporting with the automation of data collection, validation and submission has enormous potential. Regulators can also draw on data from a variety of sources that were previously inaccessible to monitor compliance. In this landscape, integrating information across regulatory agencies is key; central government can shore up interoperability through the development of common data formats and exchange systems.
Source: Authors’ elaboration.
4.2.1. Close the gap between regulatory design and effective implementation
The individuals and institutions who design laws and those who implement them “on the ground” are often not the same. Whilst the design of regulations is typically within the purview of line ministries at the central (or federal) government (and subject to changes throughout the legislative process), their implementation is often delegated to arm’s-length bodies and independent regulatory agencies with a focus on specific sectors or policy areas. In some cases, implementation is also delegated to lower levels of government, including regional and local levels. For example, in many OECD Member countries, the day-to-day decisions for land use and construction planning approvals are handled by local authorities whilst the broader policy framework is set at the national level.
A disconnect between their design and implementation can lead to regulations that are not grounded in reality, create excessive burdens and fail to deliver. When rulemaking and implementation are siloed, policymakers in central government departments might miss critical information about the day-to-day realities of business operations. This can lead to rules that are overly rigid and misaligned with existing practices, and thereby create unnecessary burdens – for example by multiplying parallel reporting frameworks or ignoring the lack of viable adjustments to comply. For instance, fire safety rules may require clearing vegetation in dry seasons and bird habitat protections may restrict cutting vegetation during nesting season – both justified protections in their own right – but can be burdensome for farmers if agricultural practices and cycles are not considered in the regulatory design process.
Failure to plan for implementation also risks leaving those charged with enforcement (e.g. to approve airworthiness of drones, monitor levels of pollution in waters or oversee cryptocurrency transactions) overburdened through the accumulation of new responsibilities, or without the necessary skillsets, leading to delays and implementation bottlenecks (Fernández‐i‐Marín et al., 2023[11]). This can lead to a vicious circle where ineffective implementation incentivises policymakers to propose further regulation (Vannoni and Morelli, 2021[12]).A lack planning for implementation can also create uncertainty on how regulations should be implemented and increase the risk of uneven and arbitrary enforcement decisions, creating (legal) uncertainty and risk aversion. Despite these risks, only a minority of OECD members systematically plan for implementation when designing new regulations (Figure 4.3).
Note: Data are based on 39 OECD Members (including the European Union) Data for primary laws excludes the United States and Türkiye, as the survey only focuses on practices in place within the executive and in those countries primary laws are initiated by the legislature.
Source: OECD Indicators of Regulatory Policy and Governance (iREG) Survey 2024.
Planning for effective implementation should cover not only how government authorities will ensure compliance – be it through guidance, regulatory inspections, licensing and permitting, or other tools – but also how businesses will respond in terms of expected compliance. Figure 4.3 shows that OECD Members need to step up efforts in both areas. Currently, only under half of them identify and assess potential enforcement mechanisms systematically for all or major laws and regulations. Even fewer – just over one-quarter – assess levels of compliance. Developing clear but flexible implementation plans and adjusting legal drafts to align will be critical to minimise regulatory burdens and implementation failures to drive real-life impact of regulations.
4.2.2. Apply a risk lens for targeted inspections and procedures
When implementing and enforcing regulations, governments can maximise real-life impact and minimise unnecessary frictions by adopting “smart” approaches based on risk. Improving areas of regulatory enforcement like inspections or reporting requirements can bring significant efficiency gains. Time businesses spend on planning for and undergoing inspections, following lengthy and complex procedures to apply for licences and permits or to comply with expansive reporting obligations can all divert resources from productive activities. In addition, maintaining overly cumbersome procedures can be a burden on the public administration itself, hindering effective enforcement and thereby undermining the very objectives of the regulation. Adopting a risk lens for targeted inspections and procedures is therefore essential to ensure both, proportionality as well as prioritisation (OECD, 2021[13]).
A thorough understanding of where the likelihood of non-compliance and its potential consequences on public safety are highest enables policymakers and regulators to make an informed choice of appropriate implementation tools (OECD, 2021[13]). For example, opening and running a local bookshop does not pose the same risk as a major financial institution or nuclear energy facilities. In the case of lower risk activities, they may choose to promote compliance by issuing guidance, toolkits and checklists to ease compliance and avoid intrusive procedures (OECD, 2018[14]).
In sectors and business activities that involve higher risks for safety, the environment or the economy, like pharmaceutical manufacturing, chemical processing or aviation, more stringent levels of oversight might be warranted, e.g. through testing and inspections or licensing and permitting. Here, risk-based approaches can help keep the level of engagement for businesses proportionate. For instance, inspection schedules can be adapted to focus on those businesses and types of business activities that pose the greatest risk based on past observations or inspections in relation to another regulatory remit (OECD, 2025[9]), whilst keeping them sufficiently randomised to ensure a level of accountability for all. Recent experience has shown how predictive data analysis based on past inspection data can be used to detect patterns of compliance, develop risk “heatmaps” and help refine targeting of future inspections (OECD, forthcoming[15]). Similarly, where licensing and permitting is deemed necessary, risk-based approaches can help keep the volume and detail of information required in an application process or the reporting frequency to retain a licence proportionate (OECD, 2025[16]) (Figure 4.4).
Source: (OECD, 2025[16]).
However, the potential of these risk-based approaches continues to be held back by a number of practical and structural barriers. These include lack of resources, of appropriate technical capabilities and skills within individual regulatory authorities, or the unavailability of reliable data. Crucially, regulators are often incentivised towards risk minimisation rather than active management, especially if they are held responsible for the fallout from non-compliance – rather than being rewarded for positive benefits of risk-based approaches. This can be further complicated by internal resistance and a culture of risk aversion (OECD, 2021[13]), as well as political optics. More broadly, the successful implementation of risk-based approaches depends on societal risk appetite and public acceptability of “less-than-complete” protection from harms. The use of risk-based approaches can also be complicated in the wake of regulatory failures and subsequent calls for a “zero tolerance” approach. Finally, existing legal frameworks and mandates of regulators can further constrain their ability and incentives to adopt risk-based approaches.
Note: Data are based on 38 OECD Members (not applicable for the European Union).
Source: OECD Indicators of Regulatory Policy and Governance (iREG) Survey 2024.
Governments can step in to set the direction and expectations for regulators and establish the appropriate framework for risk-based and differentiated enforcement. However, currently regulators’ discretion prevails with only around one-third of OECD Members requiring the use of risk-based enforcement and inspections and just under half allowing but not actively requiring it. Similarly, only around one-third of OECD Members have adopted a policy strategy or regulation that allows for differentiated responsive enforcement (Figure 4.5). A more generalised use of risk-based approaches could support more proportionate enforcement practices and reduce unnecessary burdens.
Israel’s cross-sector risk-based reform
In response to a complex ten-month licensing process that contributed to businesses pursuing unlicensed activity and weakened enforcement, Israel implemented a Risk-based Business Licensing Reform in 2022 to modernise and strengthen risk-based oversight across approximately sectors such as food, health, environment, fire safety, worker safety, and public security.
The reform introduced differentiated licensing tracks based on risk and complexity, legally-binding processing timeframes supported by a “silence is consent” mechanism, mandatory uniform regulatory specifications, extended licence validity periods based on business risk level, and the removal of licensing requirements for certain low-risk activities. It also shifted responsibility towards business owners through sworn declarations of compliance, complemented by a tiered enforcement regime with strengthened sanctions, and improved co-ordination through one-stop service centres for complex cases.
Oversight is carried out by the Senior Business Licensing Division within the Ministry of the Interior. Israel reports that the reform has contributed to a reduction in compliance costs for businesses, estimated at around EUR 16 million annually for approximately 40 000 businesses since the 2022 amendments.
Lithuania’s deployment of wind and solar energy
In Lithuania, long-standing inefficiencies had caused significant permitting delays that constrained their ability to meet renewable energy targets under the REPowerEU plan and the European Green Deal. To support accelerated deployment of wind and solar energy, the Technical Support Project for Streamlining Renewable Energy Permitting in Lithuania aimed to reduce regulatory complexity, strengthen institutional co-ordination, and introduce risk-based and digitalised permitting processes. Following mapping of existing permitting procedures and piloting of digital and risk-based tools from 2023 to 2025, the project delivered a package of regulatory, administrative, and digital reform proposals. Stakeholder engagement with public authorities, developers, municipalities, and civil society informed the design and validation of reform proposals. Initial implementation has begun, notably through the introduction of risk-based permitting that allows low-risk projects to be processed more rapidly.
Source: OECD S4S Surveys (2025).
4.2.3. Leverage data and digital technologies to foster efficiency and effectiveness
The unprecedented advances in digital technologies and proliferation of data present a major opportunity for governments and regulators to enhance the efficiency and effectiveness of how regulations are implemented and to streamline administrative procedures. In particular, the roll-out of digital reporting and approval systems, e.g. for licenses and permits, has enormous potential to replace cumbersome manual paper-based processes, presenting significant “low hanging fruits” for simplification and burden reduction targets. The automation of data collection, validation, and submission can all save businesses time to comply with requirements, reduce the need for lengthy follow-ups and speed up decisions and approvals. Connecting regulatory reporting into existing internal systems, e.g. for payroll and accounting, can also help further streamline processes, remove the need for specialised staff (for reporting duties) and offer benefits of “real-time” reporting.
Importantly, simply incorporating digital tools into existing reporting, application, monitoring, and data-sharing processes is insufficient to meaningfully address burden. While efforts across countries to digitise public sector processes and services have generated numerous efficiencies, they tend to apply digital technologies on top of analogue processes and services – effectively reproducing existing bureaucracy and siloes in digital form. Governments that are digital by design fully redesign policies and processes end-to-end with digital capabilities in mind to simplify workflows, eliminate unnecessary steps, and better align regulatory processes with user needs (OECD, 2020[17]).
Beyond administrative processes, the use of data for regulatory monitoring and enforcement offers further opportunities to maximise compliance whilst lifting burdens. Advances in areas like (big) data analytics, AI, the Internet of Things, cloud computing, augmented reality, unmanned aerial vehicles, blockchains and open APIs, offer regulators opportunities to draw on and analyse data from a vast range of sources that were previously inaccessible or only at excessive costs to monitor compliance more effectively (OECD, 2020[18]). The emergence of new data sources and analytics, and the enhanced scope for remote and real-time monitoring of compliance, open the doors to adopt more outcome-oriented approaches to regulation, offering flexibility to business to achieve objectives and encouraging innovative solutions (OECD, 2021[19]). For example, recent work at the regional level in Italy has demonstrated how web scraping and using AI to analyse online and social media data can help detect non-compliance (OECD, forthcoming[15]). However, at present, OECD Members are still at the early stages to fully exploit the benefits of data-driven approaches, with only around one-third using them for enforcement and just over one-quarter for ongoing monitoring (Figure 4.6).
Note: Data are based on 38 OECD Members and the European Union.
Source: OECD Indicators of Regulatory Policy and Governance (iREG) Survey 2024.
Sharing data effectively across organisational boundaries within the public sector is essential to exploiting synergies and easing compliance for businesses. The premise of the “once only principle” – whereby businesses (and citizens) are only having to provide the same information once to any service provider at any level or branch of government (OECD, 2022[20]) – and the deployment of “one-stop shops” to bundle various administrative procedures to open and run a business can greatly reduce regulatory barriers and time to market (OECD, 2020[21]). By definition, realising those benefits depends on sharing data effectively across different regulatory agencies and levels of government. In addition, better integrated use of data is also key to leveraging risk-focused enforcement, discussed above (OECD, 2018[14]).
Central governments can play a critical enabling role to overcome persisting challenges inhibiting effective data and information sharing. First, they can set expectations and incentives for regulators through explicit mandates, requirements or strategies to foster a culture of sharing. Second, they can help shore up interoperability through the development of common data formats and exchange systems and work to remove (real and perceived) legal barriers whilst ensuring security and privacy protections.
Keeping rules simple from the outset and duly considering non-regulatory alternatives are effective ways to minimise unnecessary burdens and avoid excessive regulatory accumulation over time. But governments are, on the one hand, navigating major societal challenges that have become increasingly complex, interconnected, cross-border, as well as fast-paced and difficult to anticipate; on the other, there are growing calls from the public for democratic “control” exercised within national boundaries and to uphold protections in an uncertain world. To satisfy expectations for action, governments must future-proof rulemaking, making it more outcome-focused, forward-looking and coherent. In doing so, governments have a chance to strengthen trust in their problem-solving capability.
Incentives must be built in to motivate culture and behavioural shifts to move away from the use of good regulatory practices late in the decision-making process as tick-the-box exercises. Adapting and better aligning regulatory governance and its tools with the natural workflow and habits of policy and decision making can help overcome some of these barriers and shift policy design from process compliance to outcome achievement.
The pace and unpredictable nature of emerging policy issues require regulation that is both forward-looking and adaptive to remain fit for purpose. For these purposes, in addition to being forward-looking and carrying out horizon scanning, policymakers also need to embrace agile and adaptive approaches to rule making.
The interconnected nature of policy issues challenges traditional rulemaking and increases the risk of regulatory fragmentation. Within countries, there is need to connect across levels of government and enhance co-ordination across sectoral authorities. International co-ordination enables countries to pool evidence and where appropriate, harmonise approaches to streamline processes for business that operate across borders.
Finally, this report calls for actions to ensure the sustainability of current ad-hoc simplification initiatives but also go beyond them with regulatory reform that tackles the underlying root causes of regulatory burdens.
Source: Authors’ elaboration.
4.3.1. Shift culture and behaviour from a focus on process to outcomes
As discussed in Chapter 1, good regulatory practices have been introduced and adapted over the last decades to support the quality and outcomes of decision making and regulatory interventions by governments. Over a decade after adoption of the 2012 Recommendation of Regulatory Policy and Governance (OECD[8]), virtually all OECD Members have taken steps to adopt key practices like impact assessment and consultation with stakeholders and the public. However, OECD data shows their implementation remains mostly process-driven, risking “ticking the box” approaches that is heavy from a process perspective but not effective in supporting trust. They typically occur late in the policy-making process, limiting the potential to boost the quality of regulation and keep burdens low. For instance, in around half of ex ante assessments, cost-benefit analysis remains focused on a single (preferred) option, meaning that other alternatives (regulatory or not) are not thoroughly assessed and compared (Figure 4.7). In addition, over one third of OECD Members do not systematically consider non-regulatory alternatives in ex ante assessments. Similarly, engagement with stakeholders and the public remains focused at later stages of regulatory development (occurring mostly on the basis of an existing regulatory draft), missing opportunities to shed light on a variety of options as well as their impacts and practicalities.
Note: Data are based on 38 OECD Members and the European Union.
Source: OECD Indicators of Regulatory Policy and Governance (iREG) Survey 2024.
In addition to missing the opportunity of using these tools in a meaningful manner to shape policy choices, a certain regulatory reflex is often built into decision making. With policymakers under increasing pressure and scrutiny to take action rapidly, new laws and regulations may offer a performative response to challenges as they arise. Promulgating a law can also, on the surface, appear to be cheaper and quicker to implement for the government than resorting to fiscal levers where government itself might bear a more direct cost. In these instances, the principles of ex ante impact analysis or practical implementation considerations often do not come into play, instead reflecting short-termist decision making and ultimately, generating rules that do not deliver optimally (or at all) while adding to growing regulatory frameworks.
In addition to political pressures, a variety of structural factors hold back the value that regulatory governance and use of evidence have on policy outcomes. Behavioural analysis suggests that a number of barriers and biases lead to tools like RIA and stakeholder engagement being seen as too heavy and another “hoop to jump through”, adding to the process. These include time constraints, competing priorities, organisational silos, pre-existing beliefs, and frictions in producing or interpreting the evidence they generate (Drummond and Radaelli, 2024[22]). Recent country-specific work confirms those constraints, compounded by a low perceived value of RIA as a tool that makes a difference (OECD, forthcoming[23]).
Adapting and better aligning regulatory governance and its tools with the natural workflow and habits of policy and decision making can help overcome these behavioural barriers and shift policy design from process compliance to outcome achievement. Breaking RIA into chunks that start with a lighter-touch early-stage analysis of options, or incorporating policy options development into horizon‑scanning activities can help convey evidence-based advice to decision-makers before the decision (how) to regulate is made and legislative or regulatory planning is initiated (OECD, forthcoming[23]). Earlier analysis of evidence and engagement with affected parties is essential to elicit and compare different options – including non-regulatory ones – and to establish clear objectives. Throughout decision making, RIAs (or summaries thereof) could also be better used as the lynchpin of internal deliberation/co-ordination procedures as well as external consultation. This does not imply that these tools and processes can or should pre-empt policy decisions – political judgment will always be critical for prioritisation and trade-offs – but rather that they provide essential evidence to guide those inherently political choices.
Effective oversight and transparency arrangements can support a sustained shift to focusing on outcomes. Quality control mechanisms that not only check for procedural compliance but also the quality of the evidence base can act as a powerful driver for change. For example, providing for a quality check (by a body outside the ministry/department proposing the regulation) of whether alternative options have been appropriately assessed or whether the justification for intervention is described accurately can help sharpen the focus on outcomes – however, currently oversight bodies in less than half of OECD Members can challenge RIAs and ask for their revision on those grounds. Similarly, requiring policymakers to issue a public response to consultation comments, explaining how they were taken into account to shape final decisions (or not) based on expected outcomes, can provide a strong incentive to duly consider them. This too currently remains a weak spot across OECD Members with less than half of them requiring a written response to consultation comments, that could be provided for example in form of summaries.
Whilst evidence and engagement remain critical to eliciting and comparing expected outcomes from different courses of action, they must remain proportionate to the scale of the policy issue. Otherwise, they risk draining scarce resources and lead to RIA and consultation fatigue, undermining buy-in and support from officials. The use of quantitative thresholds and/or qualitative criteria to determine the depth of the analysis or adopting a modular approach to RIA can greatly enhance proportionality of the process. However, to avoid loopholes and ensure consistency it should be supported by appropriate guidance and oversight (OECD, 2020[24]).
4.3.2. Embrace a forward-looking and adaptive regulatory approach
The pace and unpredictable nature of emerging policy issues require regulation that is both forward-looking and adaptive, in order to remain fit for purpose and avoid unnecessary barriers to market entrants. Advances in areas ranging from advanced manufacturing, generative AI, digital platforms, synthetic biology, and quantum computing all open new opportunities to enhance human wellbeing and economic performance. They also bring new risks and require governments to take steps to ensure their responsible use and protect people from harm (OECD, 2025[9]). The inherent uncertainty of these developments and the pressure to react at pace to protect the public good can lead to hasty decision making and frameworks that are overly restrictive, stifle innovation and undermine the potential for productivity growth. On the other hand, regulatory frameworks that do not keep pace can expose society and environment to harm and, ultimately, undermine consumer and investor confidence.
To ensure that regulatory responses to emerging issues are timely and proportionate, allowing responsible innovation to flourish, governments need be forward-looking. OECD Members have recognised horizon-scanning techniques and strategic foresight as critical tools to get ahead of the curve, anticipate potential impacts of innovation and technology and inform regulatory responses (OECD, 2021[25]). The combined insights from desk research, review of relevant literature and scientific evidence, and engagement with experts as well as frontline regulators can help detect “weak signals” of future technology development and support scenario planning. On this basis, policymakers can identify potential regulatory implications early and develop options. Many OECD Members are adopting horizon scanning and strategic foresight to support anticipatory regulatory governance, with some of them setting up bespoke advisory bodies (OECD, 2025[9]). Whilst specific arrangements may vary, the success of horizon scanning and strategic foresight depends on building up relevant institutional capacity, applying robust prioritisation on high-impact areas and embedding it into the policy-making process (OECD, 2021[19]).
Policymakers also need to embrace agile and adaptive approaches to respond to market developments and minimise unwarranted barriers. Whilst horizon-scanning and strategic foresight can allow governments to anticipate and prepare for different scenarios, the inherently unpredictable nature of technological innovation means that policymakers will always have to grapple with residual uncertainty. It is therefore essential for policymakers to keep adapting regulatory frameworks as technology, and their applications and risks, evolve (OECD, 2021[25]). For instance, shifting the focus from prescriptive requirements to clearly defined outcomes, supported by reliable monitoring arrangements, can help build flexibility into regulatory frameworks, encouraging innovation and ensuring technology neutrality (OECD, 2021[19]). However, the success depends on governments’ abilities to effectively monitor outcomes and address non-compliance – something that is currently under doubt, as less than half of OECD countries assess expected levels of compliance when they first design regulations.
The United Kingdom’s Science and Technology Framework recognises quantum technology as one of five critical technologies. Applications of quantum technology enhance what devices, from smartphones to medical imaging, can achieve. As a rapidly evolving field, the quantum technology market is estimated to reach USD 106 billion by 2040, while carrying transformative policy implications that are still not fully understood.
The United Kingdom’s Regulatory Horizons Council undertook a review of the regulatory landscape for quantum, noting that most quantum technologies are too nascent for legally binding regulation at this stage. The council proposed a pro-innovation framework that would allow policymakers to provide some regulatory clarity for businesses and nurture responsible innovation. The framework would include establishing a mechanism for horizon scanning – defined as a desk research process looking for early warning signs of change in the policy environment – on quantum. Specifically, the scanning should focus on a one- to three-year outlook for applications of quantum technology that are at a higher level of readiness (i.e. at or beyond the technology demonstration stage). Scanning with a longer-term outlook was recommended for technology at an earlier level of readiness.
In their response to the Council’s recommendations, the Government broadly agreed with the assessment that it is too early to regulate quantum technologies at this stage and confirmed the need for ongoing horizon scanning to inform the timely introduction of policy interventions, feed into risk management, and direct commission of resources to support regulators’ preparation on quantum.
Source: UK Department for Science, Innovation & Technology, Regulating quantum technology applications: government response to the RHC (2024[26]).
Enabling greater regulatory experimentation and trialling, not only removes regulatory barriers for innovators, but also yields significant opportunities for policy learning. Tools like regulatory sandboxes allow innovators to benefit from regulatory exemptions/derogations to bring novel products and services to market under close supervision by regulators. The observations garnered through these tools are a unique source of evidence to adapt regulation in the face of real-world performance. However, to fully capitalise on this potential, the use of regulatory experimentation needs to be underpinned by a clear objective and defined scope in response to a specific issue, supported by robust legal frameworks to manage risks (and liabilities in case of harm) and govern the eligibility and selection of participating firms, as well as engagement with stakeholders and the broader public (OECD, 2025[27]). Critically, governments can only reap lasting benefits from experimentation through effective feedback loops to inform future regulatory reform.
In 2020, Canada’s Transportation of Dangerous Goods regulations required a physical paper shipping document for most dangerous goods – an outdated process that created administrative burden. While there was a policy desire to eliminate the burden, there was uncertainty as to whether electronic shipping documents could provide an equivalent level of safety.
Between 2020 and 2022, Transport Canada conducted a regulatory sandbox testing the use of electronic shipping documents, collaborating with carriers, shippers, software developers, inspectors and first responders to pilot various digital platforms that met high security and accessibility standards.
The sandbox was successful, with companies highlighting easier information-sharing and significant administrative savings – for context, a seven-company pilot saved 21 million sheets of paper. At the same time, the sandbox highlighted practical challenges such as limited connectivity in remote areas, the need for training and equipment for first responders, and the importance of ensuring reliable access to digital records during emergencies. Based on the findings, the Transportation of Dangerous Goods Regulations were modernised to allow electronic documents for rail and drone transport, minimising burden while upholding safety standards.
Source: Transport Canada, Study on the use of electronic shipping documents for the transport of dangerous goods; Transport Canada, Electronic shipping documents.
4.3.3. Enhance co-ordination across levels of government, borders and sectors
The interconnected and cross-cutting nature of novel policy challenges highlights the limitations of traditional sectoral approaches to rulemaking and increases the risk of regulatory fragmentation. For instance, the use of AI for medical diagnostics may be subject to healthcare device regulations but also raise data protection and privacy concerns that need to be managed. Similarly, Internet of Things devices and augmented reality applications that collect data and recognise individuals will have to comply with product safety regulation as well as data protection and cybersecurity regulatory frameworks. In this context, when ministries and regulators develop and implement regulation in siloes, the result can be fragmentation and multiple decision points that businesses then have to navigate – creating hurdles to bring new products to market and support innovation-led growth. On this, OECD Members have scope to improve: only around one in five consider the potential need for institutional and cross-border co-operation for implementation when they design regulation.
Across ministries, pooling evidence and resources provides a comprehensive view of the policy challenges and trade-offs (OECD, 2021[19]). Collaboration can also help pave the way for the deployment of shared regulatory approaches, such as cross-sector regulatory sandboxes and common approaches to data-driven regulation, which can lower barriers for innovators and start-ups. OECD Members have started investing in necessary institutional mechanisms to identify and tackle cross-cutting challenges (Figure 4.8). Fully capitalising on the benefits of collaboration will require these mechanisms to include economic and sector regulators and sub-national levels who are often in closest contact with business and innovators.
Note: Data are based on 38 OECD Members and the European Union.
Source: OECD Indicators of Regulatory Policy and Governance (iREG) Survey 2024.
Within countries, co-ordination and collaboration across levels of government helps to ensure that national efforts are rooted in local problems and that benefits are felt on-the-ground. France Simplification, for instance, illustrates a bottom-up approach where simplification proposals originate directly from practical experience at lower levels of government: representatives of the national government at the territorial level (préfets) can escalate barriers and burdens that cannot be addressed through existing local powers, for ministries at national level to then co-ordinate and resolve. Since 2024, this mechanism has solved over 80% of the 520 proposals submitted by préfets (Direction interministérielle de la transformation publique, 2025[28]).
A patchwork of overlapping and sometimes inconsistent rules issued at different levels of government or jurisdictions and by different institutional actors can weigh heavily on business productivity and their capacity to grow. In practice, businesses are subject to various regulatory frameworks, ranging from supra-national rules and national legislation to local by-laws as well as technical standards and guidance issued by regulatory agencies or standard-developing organisations. On top of that, businesses that are integrated into global supply chains and operate across borders are having to comply with regulations across multiple jurisdictions. Where these different rules are not well aligned, fragmentation can create a multiplier effect of regulatory burdens, as businesses are having to adapt to various different regimes and compliance costs accumulate. As shown in Chapter 2, business organisations in 70% of OECD Members do not believe that regulations are generally consistent with one another. For example, the fragmented global ESG reporting landscape is seen as a major cost driver for businesses (Business at OECD, 2025[29]), especially where reporting schedules or metrics are not aligned, impacting in particular SMEs. To strengthen coherence, considering the cumulative impact and how new rules would interact within existing frameworks at the early stages of their development is essential. In addition, mechanisms for effective vertical co-ordination across different levels of government is needed to overcome the risk of regulatory fragmentation. Further, strengthening mechanisms for granting equivalence between national regulatory frameworks and with international standards can enhance international collaboration and reduce regulatory costs and burden (Business at OECD, 2025[29]).
Whether the goal is to promote online safety and cybersecurity, protecting public health, or financial stability, policy actions in one country inevitably impact others – diverging regulatory approaches risk triggering a “race to the bottom”, regulatory arbitrage, inconsistencies, and loopholes that leave critical risks unaddressed (OECD, 2021[19]) (OECD, 2022[30]). International co-operation enables countries to share knowledge and pool evidence on emerging challenges, learn from each other and, where appropriate, harmonise rules to streamline processes for businesses operating across borders. For instance, mutual recognition of testing and certification can reduce the need for additional compliance assurance for businesses that export and information sharing between agencies can allow for speedy action, e.g. to remove dangerous goods from the market.
4.3.4. Strengthen trust through regulatory reform
Citizens doubt their governments’ ability to make the right decisions to solve complex policy challenges, impacting their level of trust in institutions. The OECD Survey on Drivers of Trust in Public Institutions (2024[5]) has shown that a relative majority of respondents in OECD countries have low or no trust in government. In this context, citizens express doubts about governments’ ability to tackle complex policy issues that involve a high degree of uncertainty and trade-offs, and are frequently global in nature. For example, less than one in four think that their government is able to balance the interest of current and future generations.
Regulation can be – alongside other policy levers like taxation and spending – an important tool to help tackle complex policy challenges. Far from being a purely technical exercise, regulatory policy – whether it is the adoption of new rules in response to emerging issues or measures to simplify existing ones to reduce complexity – inherently involves political judgement. Laws and regulations set the “rules of the game” for how our economies and societies work and, as such, are a key tool to implement the social contract. However, in implementing policies, laws and regulations entail judgement calls and trade-offs, in particular on distributional effects and what is deemed to be an acceptable level of risk. Whilst avoiding the extremes where regulation is either fully absent or excessively complex is generally seen as desirable, determining the specific “sweet spot” where public value is a matter of judgement rooted in local, societal and political preferences (as discussed in Chapter 1). Making those judgement calls has become more difficult in a world where governments are having to respond to rapid transformative change that brings with it heightened uncertainty on the one hand and growing demand for protections on the other.
Making citizens’ voice matter in these decisions is critical to bolster trust in public institutions. Citizens do not only expect governments to take the right decisions to tackle major challenges, but also to have a say in them – especially where they have far-reaching and lasting impacts across society. However, a majority of respondents in OECD countries do not believe that their political system allows people to have a say in what the government does and only slightly more than one in three think that their government would change a policy in response to a majority public opinion, undermining trust. Incidentally, improvements in stakeholder engagement across OECD countries have slowed down in recent years and, overall, systems still have room for improvement (OECD, 2025[9]). To mitigate, governments need to take steps to meaningfully engage with citizens, complementing more specialised and technical consultation with stakeholders, e.g. through inclusive and targeted engagement and deliberative processes and participation (OECD, 2025[31]).
In addition to listening to citizens and stakeholders, governments must also take the next step and demonstrate responsiveness to their concerns. Whilst being central to trust, only four in ten respondents in OECD countries believe their government communicate clearly about reforms (OECD, 2024[5]). To overcome this, investing in citizen-centred communication based on evidence and outcomes is critical (OECD, 2021[6]). This starts with communicating clearly the intended purpose and objectives of regulations and how they fit within a broader strategic agenda and government priorities. This helps not only secure buy-in and ensure they are seen as legitimate and proportionate, but also establishes a clear commitment to hold governments accountable. In doing so, governments need to be transparent and “tell the full story”, setting out the trade-offs and risks that have been taken into account based on evidence. This evidence-based communication can also more directly foster trust and address concerns expressed by citizens in OECD countries doubting that their governments use the best available evidence in policymaking (OECD, 2024[5]). Crucially, governments also need to communicate the real-world outcomes they achieve through regulation to enable effective accountability. For instance, publishing performance against measurable targets and insights from evaluations empowers citizens to scrutinise and challenge governments’ regulatory agenda.
Finally, trust between regulators and those asked to comply with regulations has to work both ways – rather than being one-sided, it is a dynamic and reciprocal relationship. To nurture this trust, governments should start from the assumption that citizens as well as businesses are, for the vast majority, inherently inclined to comply with rules, provided they are legitimate, with non-compliance most often resulting from honest mistakes or misunderstandings rather than intentional defiance. Governments therefore have an opportunity to engage in “outcome-based collaboration”, shifting from punitive, compliance-focused approaches to prioritising co-operation and shared problem-solving (Hodges, 2022[32]). By adopting outcome-based collaboration, governments can engage citizens and businesses as partners in defining the “sweet spot” for regulation and achieving public policy goals, building mutual trust and reinforcing the social contract. Such an approach not only enhances regulatory effectiveness but also strengthens the legitimacy and trustworthiness of public institutions, creating a more resilient and responsive governance framework.
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