Wednesday, September 10, 2008

Doing Business Report 2009

The IFC and WB have just published an annual report on the ease of doing business in countries around the world. The report, which is widely covered in the media and is taken as one of the tools to gauge investment and business climate in a country, states that the top ten reformers in 2007/08 are: Azerbaija, Albania, Kyrgyz Republic, Belarus, Senegal, Burkina Faso, Botswana, Colombia, Dominican Republic, and Egypt. It tracks ten stages in the "lifecycle of a business" and ranks countries on their regulatory ease of doing business. Here is the report overview.

The indicators used in the report are: starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, and closing a business. The rankings do
not reflect such areas as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates.

Singapore leads the global rankings on the overall regulatory ease of doing business for a third consecutive year. New Zealand is runner-up, and the United States third. Bahrain and Mauritius join the ranks of the top 25 this year.

The top 25 are, in order, Singapore, New Zealand, the United States, Hong Kong (China), Denmark, the United Kingdom, Ireland, Canada, Australia, Norway, Iceland, Japan, Thailand, Finland, Georgia, Saudi Arabia, Sweden, Bahrain, Belgium, Malaysia, Switzerland, Estonia, Korea, Mauritius, and Germany.

Sadly, the report states that "no major reforms were recorded." Nepal rank is 121 on the list. In South Asia, Maldives has the highest ranking (69), followed by Pakistan (77), Sri Lanka (102), Bangladesh (110), Nepal (121), India (122), Bhutan (124), and Afghanistan (162).

I will have more on the ease of doing business in Nepal and in South Asia discussion in later posts.

I am getting late for class now!

Links of Interest (9/9/08)

Thomas Friedman talks about his new book Hot, Flat, and Crowded: Why We Need a Green Revolution- and How It Can Renew America(More here from Foreign Policy magazine: Seven Questions)

"Hot, Flat, and Crowded": There is a convergence of basically three large forces: one is global warming, which has been going on at a very slow pace since the industrial revolution; the second--what I call the flattening of the world--is a metaphor for the rise of middle-class citizens, from China to India to Brazil to Russia to Eastern Europe, who are beginning to consume like Americans. That's a blessing in so many ways--it's a blessing for global stability and for global growth ... And lastly, global population growth simply refers to the steady growth of population in general, but at the same time the growth of more and more people able to live this middle-class lifestyle. Between now and 2020, the world's going to add another billion people. And their resource demands--at every level--are going to be enormous. I tell the story in the book how, if we give each one of the next billion people on the planet just one sixty-watt incandescent light bulb, what it will mean: the answer is that it will require about 20 new 500-megawatt coal-burning power plants. That's so they can each turn on just one light bulb!

The green revolution is about how we produce abundant, cheap, clean, reliable electrons, which are the answer to the big problems we face in the world today. I would point to five problems, and they’re all related: Energy and resource supply and demand, petrodictatorship, climate change, biodiversity loss, and energy poverty. They all have one solution: abundant, cheap, clean, reliable electrons. The search for and the discovery of a source of those electrons is going to be the next great global industry. And I think the country that mounts a revolution to be the leader of that industry is going to be a country whose standard of living is going to improve, whose respect in the world is going to improve, whose air is going to improve, whose innovation is going to improve, and whose national security is going to improve. That’s what this book is about.

10 worst ideas of McCain and Obama

Freddie Mac and Fannie Mae: A rebuild or a teardown?

Bail out of NOC, a financially bankrupt state-owned enterprise in Nepal

Reforming without resourcing: The case of the urban water supply in Zambia

The commercialisation of the WSS in Zambia has proven to be less than effective because of inherent design flaws. The reforms stressed tariff rationalisation and cuts in government transfers. At present, commercial utilities persist in a “vicious circle” of low investment levels, high system losses, unaffordable tariffs and low access levels. The commercial improving the effectiveness of cross-subsidisation and ensuring the utilities’ financial viability, since such a step would help reduce the unit cost of production through both the scale effects and lower UFW rates.

Is the conditionally necessary in CCT Programmes? Evidence from Mexico

Our results show that the benefits of conditionalities can be large. They could also be made much more efficient by  calibrating the design of programmes based on the heterogeneity of the effect of the conditionality, they could be much more efficient.

Microfinance meets the market

The role of public and private sectors

Here is Jean-Michael Severino on the role of public and private sectors in the economy. Behind his argument lies the fact that market is not perfect and there are numerous sectors where the private sectors have not yet penetrated due to high risks and uncertainty. It is the public sector job to encourage the private sector to invest in these untapped sectors (infrastructure, education, health, irrigation, agriculture, energy, environment protection) by first sharing risk and then, if necessary, providing other incentives like funding and insurance against potential losses due to high overhead costs. Gone are the days of too much inclination to either one of the ideological schools of thought in economics. We need to be practical, which demands the role of both the government and the private sector. No sector is naturally reserved for this or that entity! The depth of state's involvement should be restricted to the point where its involvement is not disturbing incentives in individuals and in the private sector.
Severino puts it in a better way:

The role of public actors can precisely be to make private actors step into sectors which they would not have thought of penetrating, and enabling or inciting them to walk the extra mile in a way that is compatible with their business approach, but for which they would have lacked financial means, or for which they need to share risks with a third party. So in itself, private sector intervention is a significant contribution to development policy.

The public sector’s role is to comfort the private sector in risk-taking. The private sector’s role is fundamentally to insure and take on that risk, and to manage the concrete operations. Ultimately, what this public-private partnership in favor of economic growth and global public goods in developing countries does is this: developing new services in favor of the populations by taking on additional risks and filling in gaps, I would say, in the financial market. In pushing limits that appear and that would not have been surpassed without concerted action of these two types of actors.”