Doing Business’ Tempered Regulatory Template
Despite expert panel recommendations to change it methodology and Chinese government objections in particular to the lack of macroeconomic context, the World Bank forged ahead with the 11th edition of its flagship Doing Business reference under the same presentation format supplemented by extensive case studies to illustrate best practice. It finds that only one-quarter of 190 countries covered have basic corporate governance rules for conflict of interest and that credit bureaus and modern collateral registries are often absent. In bankruptcy, the average loan recovery rate is 35 percent, and court cases can take years. All regions are closest to the “frontier” of good performance on business startup and furthest away on insolvency handling among the ten areas ranked. In emerging markets, Europe has converged with the high-income OECD, while Sub-Sahara Africa is worst in half the categories. Asia and Latin America are in between and comparable except when it comes to paying taxes, and Middle East results are “diverse” with poor marks in credit access. Libya, Myanmar and South Sudan were added to the list this year, and face the task of updating decades-old laws from the colonial era and learning private company procedures. The authors find that big and small governments fare about equally, but that countries with larger female formal workforce participation outperform. Almost 100 economies have one-stop shops for firm registrations amounting to 3 million in 2012, and this year around 250 reforms were adopted across the universe for a post-crisis accelerated pace. Two-thirds of African authorities completed changes, versus just 40 percent for MENA “partly due to political turmoil,” according to the document. Russia and Ukraine were top improvers, as the latter simplified construction permit processing and VAT collection, and added new customs and liquidation provisions. After a decade Moscow planners unveiled a fresh municipal building regime. Rwanda and Guatemala continued their recent active records with land and utility record strides, and the Philippines expanded on-line tax filing.
The US was among half a dozen laggards with no advances the past five years, with others like Bolivia and Iraq in conflict or promoting greater state control. The “champions” by region include China, Colombia and Poland and Georgia has been a small-country leader and has just elected a business-friendly president backed by the billionaire former prime minister. The report points out those scores are positively correlated with other benchmark human development and anti-corruption indices from the UN and Transparency International. It concludes that regardless of commodity price and interest rate influences, these norms are “largely homemade” in driving competitiveness and fairness. In an aid openness ranking released simultaneously by a watchdog coalition, the World Bank itself got only a “good” behind the UK bilateral agency’s “very good,” while USAID and the Treasury were “fair.” The Bank’s IFC arm, the IMF, EBRD and the State Department were next to the bottom with “poor” as data and policies undid tracking.
