Tobacco Business and Regulation in the Developing Markets

Abstract

This paper compares BAT's business environment in Kenya and Uganda in light of the World Health Organization's (WHO) tobacco control initiative. It also illustrates the use of tobacco tax by Sub-Saharan African countries to address tobacco related conundrums. The comparison revealed elements of government ambivalence towards tobacco business and a possible recourse to tobacco tax to mollify global pressure against big tobacco. The paper uses the partial correlations between tobacco tax and basic economic development indicators across Sub-Saharan Africa and previous World Bank data as indicative of tobacco tax efficacy in controlling consumption in the region. It suggests that Sub-Saharan Africa may find regionally designed tax-based policy guidelines a palatable strategic alternative to global firms (such as BAT) that face a hostile global business environment. A united policy front that fits within the region's institutions can reduce complexity and create efficiencies through lower administrative costs across the region. Such action will make the region relatively more attractive (than it is currently) to foreign investors.     

Consequences of the IPPC’s BAT Requirements for Emissions and Abatement Costs: A DEA Analysis on Norwegian Data

The Integrated Pollution and Prevention Control (IPPC) directive from the European Union implies that regulatory emission caps shall be set in accordance with each industry’s Best Available Techniques (BAT). The directive, which represents a harmonization of environmental regulations towards a BAT principle, is currently being implemented in all the EU member states and the states associated with the European Economic Area. The aim of this paper is to examine the effect of this implementation on emission reductions and costs, using data from Norwegian manufacturing industries. Data Envelopment Analysis (DEA) is used to construct a frontier of all efficient installations. The frontier is based on all installations within an industry that use the Best Practice Technique (BPT). We estimate the changes in emissions due to the implementation of IPPC as the difference between an installation’s actual emissions and the emissions that would occur if it operated on the frontier. The method reveals a strong potential for emission reductions. Further, estimates of short-run abatement costs indicate that considerable emission reductions can be achieved with low or no costs, but that the implementation of a strict BAT principle for all installations involves substantial costs. To the extent that the abatement costs of an installation would be excessive, IPPC includes some limited modifications of the strict BAT principle. It seems important that these modifications are fully utilized by authorities to achieve the most cost efficient implementation of the directive.