Reforming Inspections

Abstract

Government inspections of firms are important for enforcing regulations to protect public health, safety, and the environment and to carry out economic functions such as tax collection and banking regulation. But most inspection regimes in developing countries impose excessive costs on firms while failing dismally to prevent accidents or mitigate losses from disasters. There is a strong interest in models of reform that will reduce the burden of government inspections while improving standards. This paper offers solutions that do both.