The Role of Economic Analysis in Better Regulation and Policy Making

Dwie Riawelly Charisma; Mala Sondang Silitonga

doi:10.63922/ijevss.v5i04.6469

Dwie Riawelly Charisma NIPA School of Administration Jakarta, Indonesia
Mala Sondang Silitonga NIPA School of Administration Jakarta, Indonesia

DOI: https://doi.org/10.63922/ijevss.v5i04.6469

Keywords: Economic Analysis, Law, Policy Making, Regulation, Economist

Abstract

The application of Economic Analysis of Law (EAL) in policy-making is essential to enhance the effectiveness and efficiency of the policy formulation process. EAL can be applied across various policy domains and aspects. EAL principles are outlined in the Seventh Provision of Presidential Instruction No. 7 of 2017 on the Formulation, Supervision, and Control of Policy Implementation at the Level of State Ministries and Government Agencies and is further regulated through technical implementation guidelines. Economic analysis plays a crucial role in public policy-making to ensure evidence-based decisions through cost-benefit analysis and impact assessments. This study employs a qualitative descriptive approach involving a literature review of policy documents and journal articles. Essentially, Indonesia has implemented economic analysis in policy formulation through the Regulatory Impact Assessment (RIA) method, where the Economic Analysis of Law (EAL) mechanism serves to oversee economic analysis prior to the enactment of legislation. However, the implementation of EAL still requires further support and attention so that the desired policy outcomes can be achieved accurately and effectively. The application of economic analysis and evidence-based disambiguation improves the quality of regulations in terms of legal substance, legal structure, and legal culture.

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