OECD Regulatory Policy Outlook 2025

Governments are grappling with complex systemic shifts, involving further and accelerated digital and environmental transitions. They also find themselves fighting the effects of ongoing geopolitical tensions and increasing international fragmentation with an erosion of trust in government institutions.

Together, these factors make for a landscape of uncertainty and complexity that demands innovative and resilient governance. They create an urgent need for governments to upgrade their capacity and tools for action as they are called on to manage and mitigate risks and harm, while enabling technological progress that can help solve contemporary challenges.

Reshaping the way governments regulate is critical to these tasks, especially given current fiscal constraints. If designed and used well, regulations have the potential to improve outcomes in many areas. Rules govern many facets of our lives as private citizens and consumers, as business owners or employees, or as government officials and political leaders. The right rules keep us safe by minimising risks and allow us to prosper by supporting innovation and growth. Wrong rules, or their faulty implementation, can make policies fail, stop people from accessing services, or undermine safety, in the worst case with tragic consequences. Poorly designed, or burdensome rules undermine the potential of societies to thrive. Many governments are currently prioritising smarter, simpler and more streamlined regulations.

It is therefore critical to enhance the capacity of governments to regulate efficiently and effectively. The results of the OECD Trust Survey provide a compass to map out the road ahead: only four in ten people (41%) find it likely that their national government would adequately regulate new technologies; 35% lack confidence that their country will reduce greenhouse gas emissions to meet climate goals; 41% do not believe governments can adequately balance the needs of different generations, and less that one in three (31%) think that government would adopt the opinions expressed in a public consultation (OECD, 2024[1]).

Given the magnitude of the challenges at hand, now is the time to get regulation right and to step up regulatory reform. This report examines how regulations and regulatory policy can support governments to effectively protect people, the planet, and to foster prosperity.

Expectations on today’s democratic governments are high. The effects of the environmental changes are impacting human safety and food production. New technologies and their applications are projected to hold significant potential for society, but are also expected by some to pose existential risks to humanity. In addition to tackling these global transformations, fraught with uncertainty and trade-offs, governments are tasked with continuing to deliver essential public services to their citizens and serve their administrative needs. If people feel that governments are failing to step up to these challenges and meet their needs, this will further erode trust. This section explores how we can get regulation right by using the right evidence, engaging meaningfully, assessing impacts and burdens, and building effective and joined-up institutions.

The right rules will reflect current policy priorities and trade-offs. Gathering evidence and communicating on the decision-making process will need to be done transparently. These efforts will also support successful policies and rules: evidence-based rules are more likely to achieve their objectives – for instance, providing information addressing people’s concerns about emission reduction effectiveness, inequality, and household’s gains and losses, can increase support for climate policies (Dechezleprêtre et al., 2022[2]).

Reforming regulatory governance will help ensure that rules and their implementation align to the reality of today’s fast-paced world. Current regulatory frameworks often lag behind technological progress, and struggle with issues like overlapping jurisdictions, legal fragmentation, and outdated rules. Reviewing rules and developing adaptive, agile and outcome-based regulations enables natural evolution as technologies continue to progress, individual behaviours change, and new scientific evidence emerges. For instance, legacy rules and processes can delay the roll-out of technologies that support environmental goals. On the flipside, fit-for-purpose and risk-based environmental regulations or licensing and permitting practices can help regulators manage trade-offs and enable more effective policies.

Given the pace of change, governments and regulators themselves are continually trailing technological and scientific progress and urgently need to strengthen their capacities for horizon scanning and regulatory foresight. This will build knowledge to better anticipate emerging and future challenges and avoid harms playing out due to regulatory vacuums or institutional inertia, or having burdensome legacy regulations. In addition to increasing institutional foresight capacity, regulators on the frontline will need equipping with sufficient powers and resources to act on their insights. At times when the last resort of sanctions is reached, these may pale in comparison to the size and cross-border nature of regulated entities, calling into question the very efficacy of enforcement regimes.

Speaking with those that will be affected by rules, whether bearing their cost through implementation or reaping their benefits through mitigated harms, will make for better and more effective rules. Engagement will need to take place early enough in the process for meaningful contributions. Consultation must include a variety of stakeholders, with sufficient safeguards to limit undue influence and make sure that societal goals are upheld in the face of influence groups. For example, this can help ensure that objectives and interventions support innovation and growth while also bolstering protections, avoiding a perceived logic of “innovation at all costs”. Speaking with stakeholders across the board also remains a central component of anticipatory approaches, when considering the effects of ongoing and future innovation for society and the economy.

The OECD Trust Survey shows that high trust dividends lie in government’s engagement with people. The good news is that almost all OECD Members have requirements in place to carry out consultations in the development of both primary laws and subordinate regulations (see Chapter 2: Regulating for People). Centralised portals and minimum consultation periods have improved access to rule-making. Some governments have made strides in adopting more inclusive consultation strategies through various means such as sign language interpreters, Braille, translated materials, and allowing for submissions via audio or video recordings along with more traditional methods.

However, wide-ranging consultations are not yet clearly visible to all citizens and do not seem consistent enough to have marked the institutions of representative democracy towards a more inclusive picture. For example, governments tend to selectively consult stakeholders, potentially excluding some affected groups. More needs to be done across the board to continue making stakeholder engagement a meaningful process. This includes better planning and more accessible information about upcoming consultations. Earlier engagement needs mainstreaming to explore different options as potential solutions, before the way forward has been defined. And once defined, feedback loops that inform those who have taken the time to provide contributions must be strengthened. These efforts are needed to continue building trust in the integrity and usefulness of engagement and outreach.

Governments have a range of tools at their disposal, regulation being one of them, along with various other approaches including market-based instruments and industry-led self- or co-regulatory regimes, to achieve their goals. Impact assessments enable policy makers to consider policy problems, their magnitude, and provide options to solve them. RIAs can help governments reduce knowledge gaps by engaging with stakeholders who can provide a wealth of information about the real-life consequences of regulatory decisions. Combined with information from regulators responsible for monitoring and enforcing rules, they can create a more complete picture on which to base decisions. Impact assessments are universally required across the OECD, although the scope widely varies. Currently, impact assessment is systematically used by over 80% of OECD Members.

Once put in place, rules need to be maintained to continue to deliver positive societal outcomes. Impact assessment processes do not guarantee that rules will work as intended, nor do they ensure that rules will remain appropriate over time. However, they do create an objective baseline against which policy decisions can be later evaluated.

As new rules are progressively added, they form a complex web. If the rules are badly designed and implemented, without meaningful consultation or introducing disproportionate burdens, they will miss the mark. There may be a backlash against the policy objectives they support and ultimately, against the democratic governments pursuing these policy goals. Ex post evaluations enable governments to look at the entire regulatory system to establish whether rules are delivering on their objectives and continually improve service delivery. Systematic requirements to undertake ex post evaluations exist in less than one‑third of OECD Members.

While administrative burden reduction programmes are relevant, extensive work shows that they are most impactful when undertaken as part of efforts to manage the overall regulatory stock (OECD, 2020[3]). Governments can utilise simplification approaches as an initial step, supported by e.g., journey mapping, digitalisation, and one‑stop shops – without jeopardising the achievement of regulatory objectives. Moreover, reducing unnecessary administrative requirements helps support growth and competitiveness through increased consumer choice, more product/service innovation, and enhanced employment and investment.

Regulatory institutions have existed for decades, creating a complex web of actors responsible for various sectors and policy issues. The challenge is that their mandates, functions and powers are often static while economies are flexible and transforming, with major shifts fundamentally challenging these institutional, sectoral and jurisdictional arrangements. For instance, effects of environmental changes can, simultaneously, impact access to water, food safety, energy concerns, and crisis response – each traditionally overseen by individual institutions that now must see the problem and enact solutions collectively. Failure to recognise and act on these interlinkages can leave institutions ill-equipped to address the contemporary regulatory challenges facing governments, possibly contributing to low confidence in governments.

In this regard, there needs to be investments in future-ready regulatory institutions that can support regulatory regimes and deliver regulatory outcomes that match the high expectations of society. Fostering joined-up actions across governments is one key frontier of investments, solving cross-cutting policy issues with concerted, co-ordinated and co-operative policy responses. The Indicators of Regulatory Policy and Governance survey data shows that approximately 40% of OECD Members state that their ministries and regulatory agencies co-ordinate to identify and address issues where different bodies have shared responsibilities related to innovation (OECD, Unpublished[4]). These include formal co‑ordination mechanisms between groups of regulators and less formal use of knowledge hubs, knowledge sharing and expert groups. Improved domestic co-ordination has also led to common practices beyond national borders, which is especially germane for both the green and digital transitions where countries need to work together to yield joint positive outcomes.

Co-ordination is not enough – governments need to invest in building strong institutional capacity to effectively manage digital technologies. For instance, this concerns the institutional preparedness of regulatory agencies to deliver on their important roles in supervising and enforcing digital regulation – especially considering the pace of technological change and the increasing complexity of new technology products. This requires that governments develop capacities to regulate into national strategies, adapting institutional frameworks related to mandates, powers and legal systems to align new regulatory structures with evolving sector needs, and establishing central oversight, co-ordination and advice to overcome silos.

It also requires a clear focus on building the skills and expertise of regulators to have technical expertise match the outputs of regulated sectors and needs of society. However, a survey of regulators on staffing and funding arrangements highlights that more than have difficulty hiring well-qualified staff, especially in the digital domain (OECD, 2022[5]). A possible solution may be in pooling resources and investing in technical guidance, tools and training to better equip government agencies.

The pace of change requires agility at all stages of the policy making cycle. Digital technologies and their development bring opportunities for regulators to gather evidence in novel ways and inform decisions and actions in response to real life evolutions. This report brings a wide array of examples from across the world on how governments and regulators are embracing data driven and digitally enabled tools for more accurate and effective design and delivery of regulations. In particular, new tools allow for analysing vast amounts of data, enabling more effective monitoring and enforcement of regulations. For example, the use of AI, web scrapers, and real-time data systems can identify non-compliance, optimise resource allocation, and streamline processes. The effectiveness of these tools will hinge on data quality and the thoughtful implementation of technology to avoid biases and ensure transparency, security, and trust in regulatory systems.

Good regulatory design and implementation are crucial levers to unleashing progress and tackling today’s challenges. Better regulatory practices support innovation while fostering growth; enable people to help shape, support, and trust rules; and help policy makers manage trade-offs in a transparent manner.

Despite these tangible benefits, progress in adopting good regulatory practices has been stagnating. For the past decade, the OECD has monitored the implementation of the agreed standards members need to adopt. And while the use of fundamental tools of better regulation such as impact assessment has become more generalised and the transparency of rule-making has improved, this has not taken place across the board. Moreover, the use of good practices is often embedded in a box-checking approach with insufficient focus on outcomes.

As argued in this report, going forward it will no longer suffice to continue as business as usual on the road towards adopting good regulatory practices. These practices themselves need to adapt to remain relevant and support governments achieve their goals of a leaner, simplified, more efficient and effective regulatory environment that helps unlock societal prosperity:

• Setting priorities and getting the right rules in place hinges on applying strong regulatory design principles.

• Engaging with affected parties is key to transparent rule-making and generating buy-in and trust of rules. At the same time, avoiding regulating to protect rent-seeking behaviour is key to ensuring that rules continue to deliver positive outcomes for the entire community and not just a select few.

• Basing decisions on evidence is integral to successful rules. As new rules are made, and as time passes, rules need refreshing to ensure they do not overlap, leave gaps, and remain sufficiently flexible to cover emerging risks.

• Elevating regulatory quality requires strong governance arrangements to successfully deliver on the green and digital transitions. Improved co-ordination, domestically and internationally, is key to creating a robust framework that minimises overlaps and can quickly respond to governance gaps if they emerge.

• Systematically applying rule-making processes enables greater regulatory flexibility to combat emerging and future risks. Governments are also better placed to facilitate an innovative environment while advancing objectives to protect people from potential harms.

Reforming regulatory governance will require renewed effort from all parties. It needs the political commitment to do things better, be open to change, and acknowledge uncertainty. It will require policy makers to engage earlier and with a broader range of stakeholders, design human-centred rules, and better consider how they will be monitored and enforced. It also needs clear mandates and appropriately resourced regulators to help foster compliance and adopt risk-based enforcement approaches. The OECD has a repository to assist countries to elevate their regulatory governance from improving impact assessment and ex post evaluation, along with proportionate compliance and enforcement strategies, to strengthened institutional arrangements for key network regulators. This report identifies priorities avenues for reforming regulatory policy for people, planet and the future.

[2] Dechezleprêtre, A. et al. (2022), “Fighting climate change: International attitudes toward climate policies”, OECD Economics Department Working Papers, No. 1714, OECD Publishing, Paris, https://doi.org/10.1787/3406f29a-en.

[1] OECD (2024), OECD Survey on Drivers of Trust in Public Institutions – 2024 Results: Building Trust in a Complex Policy Environment, OECD Publishing, Paris, https://doi.org/10.1787/9a20554b-en.

[5] OECD (2022), Equipping Agile and Autonomous Regulators, The Governance of Regulators, OECD Publishing, Paris, https://doi.org/10.1787/7dcb34c8-en.

[3] OECD (2020), Reviewing the Stock of Regulation, OECD Best Practice Principles for Regulatory Policy, OECD Publishing, Paris, https://doi.org/10.1787/1a8f33bc-en.

[4] OECD (Unpublished), Indicators of Regulatory Policy and Governance Survey.