High Praise for World Bank’s Latest “Doing Business” Report
World Bank President Robert Zoellick unveiled the results of the bank’s latest annual study of business conditions and regulation worldwide at a USCIB forum in New York on September 26. Business representatives were quick to praise the bank’s efforts to spur private-sector development.
The World Bank’s annual “Doing Business” report, begun five years ago, “has become the central benchmark for business regulatory practices all over the world,” stated Mr. Zoellick.
The report measures the time and the costs involved with setting up, running and closing a business in 178 countries around the world. Mr. Zoellick said its comparative approach served as a spur to more effective business regulation.
“Governments don’t want to lag in rankings with countries they have to compete with for investment, or for exports,” he stated. “And the potential for cross-country learning expands enormously.”
According to “Doing Business 2008,” countries in Eastern Europe and the former Soviet Union were among the leaders in improving the conditions for business. Large emerging markets like China and India also made major progress, according to the bank’s “Doing Business 2008” Report.
The World Bank’s International Finance Corporation (IFC), the private-sector arm which prepares the report, ranks countries based on ten indicators of business regulation measuring the time and cost it takes to start and run a business, including rules governing trade, taxation and business closure. Countries at all levels of development can gain by undertaking measurable regulatory reforms, it said.
“The report finds that equity returns are highest in countries that are reforming the most,” stated Michael Klein, the IFC’s vice president for financial and private sector development, who presented the report’s finding in detail. “Investors are looking for upside potential, and they find it in countries that are reforming, regardless of their starting point.”
Business representatives at the event, hosted by JPMorgan Chase, praised the Doing Business report as a much-needed spur to investment, economic development and job creation.
Abraham Katz, president of the International Organization of Employers (IOE), congratulated the World Bank “for creating a reform movement that has already begun to increase development and improve people’s lives.” The reports, he said, “identify the areas where reform is needed and, most importantly, provide the incentives for governments to act.” The IOE, part of USCIB’s global network, issued a statement praising the latest Doing Business report.
Large emerging markets are reforming fast, noted Mr. Klein. China, Egypt, India, Indonesia, Turkey and Vietnam all improved their rankings significantly in the latest report. Overall, Singapore was ranked as the easiest economy in which to do business, followed by New Zealand, the United States, Hong Kong and Denmark. Eight of the top 25 countries in the latest ranking came from outside the OECD The country that dropped the farthest: Venezuela, which went from number 144 to number 172, out of 178 economies surveyed.
“These reports target the root causes of slow growth in many countries, and they have had a measurable impact in promoting specific reform measures at the national level,” stated USCIB Chairman William G. Parrett, senior partner with Deloitte Touche Tohmatsu.
In the area of employment regulation, business representatives at the USCIB event observed that the reports measure regulatory flexibility, and do not call for wholesale deregulation, as some critics have claimed. The report’s indicators on employment are fully consistent with the International Labor Organization’s fundamental labor principles and rights, they said.
Mr. Katz emphasized the importance of simplicity and stability in national regulations. “When I talk to business people, they stress the need for one-stop shopping to get the answers to their questions and to get action on their requests, for licenses and other matters that enable them to do business,” he said. “They stress the importance of stability of regulations. They frequently say they could adapt to almost any regime as long as they know that the rules of the game have a certain permanence. Underlying everything is a legal system in which the right to private property is enshrined.”
Mr. Katz said employers around the world would welcome opportunities to contribute to future Doing Business reports.
Other speakers at the event included Tim Ryan, vice chairman of JPMorgan Chase’s financial institutions group, and Elizabeth Dibble, principal deputy assistant secretary of state for international finance and development, who moderated a discussion with the numerous business and government representatives in attendance.