Poland and Greece lead business-friendly reform
by Daniel Mason
23 October 2012
Poland and crisis-hit Greece have made more progress than almost any other countries in improving regulations to make it easy to do business, according to a World Bank report published today. The study also found that Eastern Europe was matched only by central Asia for its reforming zeal.
Although Poland and Greece were placed relatively low on the list of business-friendly nations at 55th and 78th out of 185 respectively, they were both among the top 10 improvers over the course of the past year.
Poland made more strides than anywhere else with reforms to property registration, the tax system, enforcing contracts and resolving insolvency. Meanwhile Greece, forced to implement structural reforms as a condition of its international bail-out, was the eighth most improved thanks to changes in the way it deals with construction permits, protects investors and resolves insolvencies.
"European economies in fiscal distress are introducing reforms to improve the business climate as part of an effort to establish a firmer foundation for long-term growth," said Augusto Lopez-Claros, the World Bank's director of global indicators and analysis. "Countries in southern Europe were very active in reforming their business regulatory systems and Greece, for the first time, is among the 10 economies globally that improved the most across three or more areas."
The annual survey put Singapore as the most business-friendly place in the world for the seventh year in a row. The highest ranked European Union nations were Denmark in fifth place and the United Kingdom in seventh. The rest of the top 10 was made up of Hong Kong, New Zealand, the United States, Norway, South Korea, Georgia and Australia. Other top EU performers included Finland, Sweden, Ireland and Germany in the top 20 and Estonia in 21st. Portugal was in 30th, France was placed down in 34th, Spain in 44th and Italy in 73rd. The lowest ranked EU country was Malta in 102nd.
"Greece, Italy, Portugal and Spain were among those most affected by the crisis and associated market pressures," the report said. "Aware that the resumption of economic growth would be key to returning to a sustainable fiscal position, authorities in these economies moved to implement broad-ranging reforms.
"Business regulation reforms were an integral part of these plans, as reflected in the Doing Business data," it went on. "While Greece is among the 10 economies with the biggest improvements in the ease of doing business in the past year, the other three economies also made important strides. Italy made it easier to get an electricity connection and to register property. Portugal simplified the process for construction permitting, for importing and exporting and for resolving insolvency. Spain made trading across borders simpler and amended its bankruptcy law. All four economies reformed or are also in the process of reforming their labour laws with the aim of making their labour market more flexible."
Much of the reform over the last year came in Eastern Europe and central Asia, with 88 per cent of countries in those regions making changes in at least one of the areas measured. Globally, the report found that, since 2005, the average time to start a business has fallen from 50 to 30 days. There have been nearly 2,000 regulatory reforms implemented in 180 economies over the last decade.
Developing countries have made significant progress, though in the Middle East and North Africa the "reform momentum has slowed since the beginning of the Arab spring in January 2011", the report said. "Over the years, governments have made important strides to improve their business regulatory environment and to narrow the gap with global best practices," said Lopez-Claros. "While the reforms we measure provide only a partial picture of an economy's business climate, they are crucial for key economic outcomes such as faster job growth and new business creation."
The Doing Business study looked at regulations applying to start-up and operations, trading across borders, paying taxes and protecting investors, but did not cover fiscal management, the resilience of financial systems or the skills of the labour force.
France's relatively poor performance was compounded by an Organisation for Economic Cooperation and Development report warning about the low level of convictions for bribery. It described the response of authorities in dealing with cases of foreign bribery in France as "lacklustre". Only five convictions have been handed down over the last 12 years.
While praising the government recent efforts to ensure the independence of prosecutors, the OECD said France should do more to ensure companies and their subsidiaries cannot avoid criminal liability, clarify existing laws, ensure that the defence secrecy regime does not impede investigations and prosecutions, and encourage reporting by public officials by raising awareness of protections for whistleblowers.
Although Poland and Greece were placed relatively low on the list of business-friendly nations at 55th and 78th out of 185 respectively, they were both among the top 10 improvers over the course of the past year.
Poland made more strides than anywhere else with reforms to property registration, the tax system, enforcing contracts and resolving insolvency. Meanwhile Greece, forced to implement structural reforms as a condition of its international bail-out, was the eighth most improved thanks to changes in the way it deals with construction permits, protects investors and resolves insolvencies.
"European economies in fiscal distress are introducing reforms to improve the business climate as part of an effort to establish a firmer foundation for long-term growth," said Augusto Lopez-Claros, the World Bank's director of global indicators and analysis. "Countries in southern Europe were very active in reforming their business regulatory systems and Greece, for the first time, is among the 10 economies globally that improved the most across three or more areas."
The annual survey put Singapore as the most business-friendly place in the world for the seventh year in a row. The highest ranked European Union nations were Denmark in fifth place and the United Kingdom in seventh. The rest of the top 10 was made up of Hong Kong, New Zealand, the United States, Norway, South Korea, Georgia and Australia. Other top EU performers included Finland, Sweden, Ireland and Germany in the top 20 and Estonia in 21st. Portugal was in 30th, France was placed down in 34th, Spain in 44th and Italy in 73rd. The lowest ranked EU country was Malta in 102nd.
"Greece, Italy, Portugal and Spain were among those most affected by the crisis and associated market pressures," the report said. "Aware that the resumption of economic growth would be key to returning to a sustainable fiscal position, authorities in these economies moved to implement broad-ranging reforms.
"Business regulation reforms were an integral part of these plans, as reflected in the Doing Business data," it went on. "While Greece is among the 10 economies with the biggest improvements in the ease of doing business in the past year, the other three economies also made important strides. Italy made it easier to get an electricity connection and to register property. Portugal simplified the process for construction permitting, for importing and exporting and for resolving insolvency. Spain made trading across borders simpler and amended its bankruptcy law. All four economies reformed or are also in the process of reforming their labour laws with the aim of making their labour market more flexible."
Much of the reform over the last year came in Eastern Europe and central Asia, with 88 per cent of countries in those regions making changes in at least one of the areas measured. Globally, the report found that, since 2005, the average time to start a business has fallen from 50 to 30 days. There have been nearly 2,000 regulatory reforms implemented in 180 economies over the last decade.
Developing countries have made significant progress, though in the Middle East and North Africa the "reform momentum has slowed since the beginning of the Arab spring in January 2011", the report said. "Over the years, governments have made important strides to improve their business regulatory environment and to narrow the gap with global best practices," said Lopez-Claros. "While the reforms we measure provide only a partial picture of an economy's business climate, they are crucial for key economic outcomes such as faster job growth and new business creation."
The Doing Business study looked at regulations applying to start-up and operations, trading across borders, paying taxes and protecting investors, but did not cover fiscal management, the resilience of financial systems or the skills of the labour force.
France's relatively poor performance was compounded by an Organisation for Economic Cooperation and Development report warning about the low level of convictions for bribery. It described the response of authorities in dealing with cases of foreign bribery in France as "lacklustre". Only five convictions have been handed down over the last 12 years.
While praising the government recent efforts to ensure the independence of prosecutors, the OECD said France should do more to ensure companies and their subsidiaries cannot avoid criminal liability, clarify existing laws, ensure that the defence secrecy regime does not impede investigations and prosecutions, and encourage reporting by public officials by raising awareness of protections for whistleblowers.
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