by Shanker Singham
For decades, the architects of the global economic system have operated under a persistent, structural illusion. We have built vast institutional frameworks—from the multilateral treaties of the World Trade Organization (WTO) to the domestic enforcement mechanisms of national competition authorities—with the sincere belief that we were systematically eliminating the barriers to global wealth creation. We have rightly celebrated the drastic reduction of applied tariffs and non-tariff border barriers, the rigorous prosecution of private cartels, and the disciplining of the anti-competitive conduct of monopolies. Yet, despite these monumental efforts, global productivity stagnates, and the trajectory of global GDP per capita routinely falls short of its potential. This has been especially true in the last twenty-five years.
The reason for this persistent shortfall lies in a massive, systemic blind spot. We have meticulously policed the borders and aggressively scrutinized the boardroom, but we have granted a near-total free pass to the most powerful and disruptive economic actor of all: the state.
We now confront the reality that the primary threat to global prosperity is no longer the traditional tariff or the private cartel or monopoly, but the proliferation of anticompetitive market distortions (ACMDs). As I detailed in International Trade, Regulation and the Global Economy: The Impact of Anti-Competitive Market Distortions (Routledge, Abingdon, 2025), ACMDs represent a vast, ungoverned space in global economic governance. They are the myriad ways in which government action—through anticompetitive regulation, distortive subsidies, the actions of state-owned enterprises, and the erosion of property rights—distorts the natural competitive process, misallocates capital, and acts as a suffocating regulatory tax on productive enterprises.
THE TWIN BLIND SPOTS: TRADE LAW AND ANTITRUST
To understand how ACMDs became an ungoverned space, we must examine the historical limitations of our two primary relevant economic disciplines: international trade law and domestic competition policy.
Historically, international trade negotiations have been fundamentally mercantilist exercises, focused heavily on border measures. The General Agreement on Tariffs and Trade (GATT) and subsequently the WTO used this mercantilist impulse to lower tariffs, eliminate overt quotas, and deal with other discriminatory practices. However, as these explicit barriers fell, protectionism simply mutated. It moved behind the border. Governments learned that they could achieve the same protectionist outcomes— shielding favoured domestic incumbents from foreign competition—not through tariffs, but through regulatory barriers, opaque licensing regimes, and massive domestic subsidy programmes.
Modern trade agreements have attempted to reach behind the border, but they have largely failed to discipline government action that distorts markets in fundamentally anticompetitive ways. Trade negotiators often lack the granular economic tools to quantify the exact distortive impact of a domestic regulation, resulting in chapters on “technical barriers to trade” or “good regulatory practices” that are conceptually sound but practically unenforceable. The relatively recent introduction of competition policy disciplines has been largely hortatory in nature and has not dealt with the hard problem of what happens if a domestic competition agency is itself implementing policy in anticompetitive ways. Trade law has been limited by its focus on discrimination, although even in trade law, the most advanced reading of the trade cases in the area of domestic taxation makes it clear that equality of competitive opportunity is the standard, not the aim and effect of the law itself (S. A. Singham and A. F. Abbott, Trade, Competition and Domestic Regulatory Policy: Trade Liberalisation, Competitive Markets and Property Rights Protection, Routledge, Abingdon, 2023, chap. 6, The General Agreement on Tariffs and Trade: A Temporary Fix but a Constitutional Foundation, pp. 130–187, at 140–146). Meanwhile, domestic competition policy officials are rarely brought in by trade agencies to guide them through the intricacies of what constitutes sound competition policy enforcement and what is outside the bounds of what might be construed as reasonable implementation and enforcement.
Simultaneously, domestic competition agencies have been structurally constrained from addressing the problem. Institutions like the Competition and Markets Authority (CMA) in the United Kingdom or the Department of Justice (DOJ) or Federal Trade Commission (FTC) in the United States are principally designed to address private restraints on competition, such as collusion, exclusionary conduct, and abuses of market power by firms. Government-created monopolies and other state-sanctioned restraints, by contrast, have often sat outside the core reach of antitrust enforcement, including in the United States through doctrines such as state action immunity. This is so notwithstanding the repeated guidance of the Organisation for Economic Co-operation and Development (OECD), an intergovernmental body that develops policy standards and analytical tools for market-oriented reform, and the International Competition Network (ICN), the principal informal global network of competition authorities, both of which have emphasized competition advocacy and competition assessment as central functions of competition agencies when reviewing existing or proposed laws and regulations for unnecessary restraints on competition (OECD, Competition Assessment Toolkit, OECD, Paris, 2011; see for example the ICN, Advocacy Toolkit, Part I: Advocacy Process and Tools, ICN, Bonn, 2022 (available at ADVOCACY TOOLKIT , which summarizes the ICN’s work on this topic from 2002 to 2022). The United States’ April 9, 2025, Executive Order on Reducing Anti-Competitive Regulatory Barriers is a recent example of a government adopting an approach consistent with that OECD framework, by directing agencies to identify regulations that create monopolies, impose unnecessary barriers to entry, limit competition, or otherwise distort the operation of the free market (Exec. Order No. 14267, Reducing Anti-Competitive Regulatory Barriers, 90 Fed. Reg. 15629 (Apr. 9, 2025)).
Competition agencies are adept at calculating the consumer harm caused by a private merger, but they are entirely disarmed when a government department enacts a regulation that effectively cartelizes an entire industry. Consequently, the state is permitted to engage in market-distorting behaviours that would result in severe civil or even criminal penalties if attempted by a private corporation.
THE ANATOMY AND MECHANICS OF AN ACMD
An ACMD is not simply a “bad policy”; it is a specific, quantifiable disruption of the competitive process. When a government grants a preferential subsidy to a state-owned enterprise or designs an environmental regulation that coincidentally only incumbent firms can afford to meet, it drains wealth out of the domestic economy and harms its trading partners into the bargain.
To properly govern this space, we must shift our analytical framework to understand how wealth is actually created. This requires moving beyond static, classical models and embracing a more dynamic, probabilistic understanding of trade and regulation. As modelled in my work, the wealth creation potential of an economy—its ability to close its distance to frontier (DTF)—can be understood through a structural equation mapping the kinetic forces of growth against the potential barriers erected by the state.
The wealth creation ability of an economy is driven by three foundational pillars, each weighted by its econometric impact on growth: property rights (PR), domestic competition (DC), and international competition (IC).
Our econometric model, discussed in International Trade, Regulation and the Global Economy: The Impact of Anti-Competitive Market Distortions, is based on 130-country panel data over a 13-year period between 2010 and 2023 (see especially chaps. 3–4). An improvement of one point in these three pillar scores does not operate equally in terms of GDP per capita growth. The coefficients for the pillars are set out below.
ECONOMETRIC IMPACT OF INSTITUTIONAL PILLARS ON GDP PER CAPITA
The table below illustrates the impact of a one-point increase in each of these pillars on GDP per capita.
It is noteworthy that the domestic competition pillar carries the highest coefficient (0.0803). This is not an accident. Domestic competition is the crucible in which firms are forced to innovate, optimize, and allocate capital efficiently. When governments introduce ACMDs—whether through energy price caps, planning delays, or targeted bailouts—they directly degrade this DC score. They insulate inefficient firms from the consequences of their inefficiency. Yet despite this, finance and economic ministries have focused much more on trade policy and Washington-consensus-based models of growth while completely neglecting competition policy (and to a lesser extent, property rights), despite the fact that these two pillars contribute far more to economic growth than conventional trade liberalization alone, important though that is.
ACMDs act as a drag on the system, specifically limiting the probability and intensity of voluntary exchange. They also have negative impacts on the strength of institutions, human capital, and the commercialization of natural resources—three controls our ACMD model uses.
The tragic consequence of this ungoverned space is that billions of dollars in potential global GDP per capita are left unrealized. Capital that should flow toward the most innovative and productive uses is instead trapped, diverted by state action into politically favoured but economically stagnant black holes.
So how do we solve this problem and create a normative framework that enables our economic systems to create wealth for our people?
TOWARDS A NEW GLOBAL ARCHITECTURE
The intellectual challenge of this decade is to design an architecture capable of bringing the rule of law to this ungoverned space. At this time, we cannot rely on the slow, consensus-driven mechanisms of the WTO to solve a problem that many of its largest member states are actively exploiting. We need a new paradigm.
A unified theory of ACMDs: Achieving competitive neutrality
The foundational goal of the new architecture must be to reduce ACMDs and so deliver competitive neutrality. The rules of the game must apply equally to all market participants, regardless of their ownership structure or national origin. State-owned enterprises and privately held firms must compete on the merits of their products and services, not on the strength of their sovereign backing. Domestic competition agencies must be empowered—and politically insulated—to audit and challenge government regulations that inherently distort competitive neutrality. We must bridge the gap between antitrust enforcement, trade and regulatory review, ensuring sectoral regulators have competition mandates. We can build on competition policy’s focus on consumer welfare and trade policy’s focus on equality of competitive opportunity as the basis for a competitive neutrality doctrine across both policy spaces. This will lead to an increase in productive, allocative, and dynamic efficiency—the three efficiencies needed for wealth creation and GDP per capita growth.
Plurilateral coalitions of the willing
Because multilateral consensus on state intervention is currently impossible, progress will require “coalitions of the willing.” Like-minded nations committed to free and competitive markets must forge plurilateral agreements specifically designed to identify, quantify, and penalize ACMDs. These agreements must go beyond traditional tariff schedules and embed the principles of the DC, IC, and PR pillars directly into binding treaty text. If a nation wishes to enjoy the benefits of frictionless trade within the coalition, it must commit to dismantling its domestic potential barriers across all three pillars.
Quantifying the regulatory tax
We cannot govern what we cannot measure. A critical component of this new architecture is the widespread adoption of models capable of translating opaque regulatory barriers into hard economic costs. By utilizing the framework of the ACMD economic model, policymakers and trade negotiators can finally assign a specific “regulatory tax” equivalent to domestic ACMDs. If a foreign subsidy or a domestic licensing regime degrades the DC pillar by a calculable percentage, trade partners can accurately size their compensatory measures or prioritize their negotiating capital.
CONCLUSION
The ultimate goal of international economics is not merely an academic pursuit, but the elevation of the human condition. Every percentage point of GDP per capita lost to an anti-competitive market distortion represents a delay in human progress, a stifling of innovation, and a denial of opportunity. We have spent half a century tearing down the walls at our borders. It is now time to dismantle the invisible barriers within them. Only by confronting the distortive power of the state and establishing a robust global architecture to discipline ACMDs can we finally unleash the wealth-creating forces required to push the global economy to its true frontier.
Reprinted with permission from Concurrences
Citation: Shanker Singham, How to manage anti-competitive market distortions in the global economy, 1 April 2026, Concurrences Nº 4-2026, Art. N° 133027, www.concurrences.com