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Business Regulation Saw Marked Improvement Worldwide in 2012, World Bank Finds

Friday, November 01, 2013
Sandler, Travis & Rosenberg Trade Report

An annual World Bank report finds that there was an 18% improvement worldwide in 2012 in the number of government reforms aimed at making it easier to do business. The report documents 238 business regulatory reforms by 114 governments last year, up from 201 reforms by 108 economies in 2011, and finds that the pace of reforms such as streamlining import and export processes and lowering the amount of time needed to start a business continues to accelerate following the financial crisis of 2008–09. “The economies with the most costly and complex procedures and the weakest institutions are gradually adopting some of the regulatory practices seen in the better performers,” said one official, “and this is leading to a process of catching up across many of the dimensions captured by the Doing Business indicators.”

According to the World Bank, this report analyzes regulations that apply to an economy’s businesses during their life cycle. The ten indicator sets evaluated are starting a business, dealing with construction permits, getting electricity, registering property, paying taxes, trading across borders, getting credit, protecting investors, enforcing contracts and resolving insolvency. This year’s report also features a case study on the implementation of electronic trade single windows in Singapore, Colombia and Azerbaijan.

Highlights of the report include the following.

- Singapore tops the global ranking on the ease of doing business, followed by Hong Kong, New Zealand, the U.S., Denmark, Malaysia, Korea, Georgia, Norway and the United Kingdom.

- The economies that have improved the most over the past year are (in order of improvement) Ukraine, Rwanda, Russia, the Philippines, Kosovo, Djibouti, Côte d’Ivoire, Burundi, Macedonia and Guatemala. Yet five of these – Burundi, Côte d’Ivoire, Djibouti, the Philippines and Ukraine – are still in the bottom half of the global rankings.

- Since 2005, certain economies have emerged as regional champions in regulatory reform efforts: China in East Asia and the Pacific, Colombia in Latin America and the Caribbean, Rwanda in sub-Saharan Africa, and Poland in the OECD.

- The 31 high-income economies of the OECD focused their reform efforts on easing business entry and exit and improving tax administration. Only 26 total reforms were implemented over the past year, but 336 have been recorded since 2005, led by Portugal with 24 and the Czech Republic and Poland with 22 each.

- Europe and Central Asia continued its strong pace of regulatory reform, with 19 economies implementing 65 reforms. Since 2005 all 26 of the region’s economies have recorded a total of 477 reforms, an average of 18 per country that is significantly higher than any other region. As a result, this region is now the second-most business friendly after the OECD and catching up, with scores at the same level in three of the ten areas measured by the report and close behind in another two.

- Twice as many economies in sub-Saharan Africa made at least one reform in 2012 (66%) compared to 2005 (33%). Out of the 20 economies around the world that have most improved business regulation since 2009, nine are in this region: Benin, Burundi, Côte d’Ivoire, Guinea, Guinea-Bissau, Liberia, Rwanda, Sierra Leone and Togo.

- In East Asia and the Pacific, 15 of 25 economies implemented at least one business regulatory reform over the past year (for a total of 25) and 96% have done so since 2005. Vietnam led the way with 21 reforms during that period, followed by China with 18. Laos, Timor-Leste, Malaysia, Cambodia and the Solomon Islands are making good progress narrowing the gap with global good practices.

- 75% of the eight economies in South Asia implemented at least one reform, compared to 38% a year earlier. India has recorded 17 reforms since 2005, followed by Sri Lanka with 16.

- In Latin America and the Caribbean, 17 of 32 economies enacted reforms, the highest number in four years. Since 2005 Colombia has implemented the largest number of reforms with 27, followed by Mexico with 18.

- Continued political and civil unrest has contributed to the slowing of business regulatory reform in the Middle East and North Africa, where 40% of countries implemented at least one reform over the past year and 14 total reforms were enacted. Since 2005, Egypt has paced the region with 23 reforms, followed by Saudi Arabia with 19 and Morocco with 18.

- Only three of 12 economies in the Caribbean (the Bahamas, Jamaica, and Trinidad & Tobago) implemented a total of six regulatory reforms, though 11 of the 12 have taken such action since 2005. The Dominican Republic has narrowed the gap with global good practices the most in that time.

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