Countries Show Dramatic Business Reform
FrontLines - December-January 2009-10
By Melissa Giaimo
Top 10 Business Reformers*
Overall Ranking
(out of 183 countries) |
| | 2010 | 2009 |
|---|
| Rwanda | 67 | 143 |
|---|
| Kyrgyz Republic | 41 | 80 |
|---|
|
Macedonia, FYR | 32 | 69 |
|---|
|
Belarus | 58 | 82 |
|---|
|
United Arab Emirates | 33 | 47 |
|---|
|
Moldova | 94 | 108 |
|---|
|
Colombia | 37 | 49 |
|---|
|
Tajikistan | 152 | 164 |
|---|
|
Egypt, Arab. Rep. | 106 | 116 |
|---|
|
Liberia | 149 | 159 |
|---|
Source: World Bank
*Indicates greatest improvement over previous year’s ranking in Doing Business report. |
In many countries, obtaining
construction permits or
exporting goods—essentials for
any entrepreneur—can mean
never-ending lines, bribes, and
red tape. But in a year of record
reforms in business regulation,
USAID’s efforts appear to be
paying off across the globe.
The World Bank’s 2010
“Doing Business” report
rated the Kyrgyz Republic,
Tajikistan, Colombia, Egypt,
Macedonia, Moldova, Liberia,
and Rwanda—eight nations
where USAID maintains partnerships—
among the top 10
business regulation reformers
between June 2008 and May
2009. More than 50 USAID
offices worldwide are targeting
business environment reform.
“It’s a quiet revolution of
the approach to administrative
or regulatory governance,” said
Cory O’Hara, an enterprise
development specialist with USAID. “You’d be hard-pressed
to find another sector where
you’ve seen such dramatic
change in the last four years,
and frankly, that’s so well documented.”
The “Doing Business” report,
released in September, has been
a catalyst for unprecedented rates
of business regulation reform
across the globe. The 2010 report
recorded 287 reforms in 131 economies, 20 percent more than the previous year, and the most reforms since the report began tracking in 2004.
The Middle East and North Africa region has been particularly active with 90 percent of countries enacting business regulation reforms.
“The president made a commitment to enhance engagement with Muslim majority countries, and what we’re seeing is that in a lot of those countries there is a renewed commitment to undertaking business climate reforms,” O’Hara said. “We see our support for their reform agenda to be an integral part to the success of promoting entrepreneurship and employment in that region.”
Increased attention on business reform in the Middle East and North Africa region is marking a transition away from USAID’s focus on the business climate in Eastern Europe, where the majority of countries have demonstrated significant progress over the past decade.
Although most reforms focus on reducing red tape, in Colombia USAID helped expand government oversight by promoting regulation to protect consumers and investors.
Of the top 10 business regulation reformers, Colombia made reforms in the most categories—eight out of 10. And of those eight reforms, USAID was involved in half—starting a business, getting credit, protecting investors, and trading across borders.
Now ranked 37 out of 183 countries, Colombia is the number one reformed country in South America, and one of the top performers in the Latin America and the Caribbean region. In 2007, Colombia ranked 79.
“We have to be careful in analyzing the results of the report,” said Francisco Gonzalez, director of USAID’s Colombia Office of Economic Growth. “We cannot say Colombia is ahead in terms of competitiveness in Latin America. Colombia is ahead in terms of moving faster than other countries in Latin America in improving the business environment.”
Ranked 11 in the world, Georgia is another country where USAID has supported sweeping reform. USAID was involved in 18 of the 22 key reforms underpinning Georgia’s improvement in “Doing Business,” according to USAID’s office in Georgia. In 2006, Georgia ranked 112; in 2007, it ranked 37.
“The increase in business registrations is really dramatic and it correlates with the improvement in the ‘Doing Business’ survey,” said David Gosney, director of USAID’s Office of Economic Growth in Georgia. “There are a lot of things that came together in driving that statistic. But we feel that one of them is the ease in registration.”
Despite the achievements in Rwanda, the world’s top business reformer this year, the report indicates a need for significant work in sub-Saharan Africa, home to the majority of the lowest-ranking countries for business reform.
With growing USAID investment in food security and enhancing market opportunities in the agricultural sector in sub-Saharan African, O’Hara predicts greater Agency attention to investment barriers related to agriculture.
“While a farmer may know how to grow crops, if he still can’t get access to credit, if he can’t move his harvest to a port and ship it efficiently and cheaply, if he can’t hire seasonal workers, if the rate of taxation is so high that it becomes predatory, all of these things make it impossible to succeed,” O’Hara said.
The desire for reform must come from the home government, he added.
“It’s a challenge of political motivation,” O’Hara said. “Our programs succeed where we support reformers.
To remain competitive, economies must continuously reform business regulations. Since the first publication of the report, due in part to media attention and competition among nations, the rate of reform has increased dramatically.
“While development is a long-term goal, we have also learned that dramatic improvements are possible when governments and donors form partnerships in support of an aggressive reform agenda,” said then Acting Administrator Alonzo Fulgham. “USAID is committed to supporting further reforms, and partnering with governments that take responsibility for establishing good economic policy and governance.”
For more information
on the report, go to
www.doingbusiness.org.
★
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