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Doing Business 2007 How to reform Private Sector Development in Small States

Doing Business 2007 How to reform Private Sector Development in Small States. Michael Klein Vice President, Financial and Private Sector Development and IFC Chief Economist September 18, 2006. Doing Business indicators. 2007. 2008. 2006. Update of 2007 Add Paying bribes

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Doing Business 2007 How to reform Private Sector Development in Small States

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  1. Doing Business 2007How to reformPrivate Sector Development in Small States Michael Klein Vice President, Financial and Private Sector Development and IFC Chief Economist September 18, 2006

  2. Doing Business indicators 2007 2008 2006 • Update of 2007 • Add Paying bribes • Add Using infrastructure • Starting a business • Dealing with licenses • Employing workers • Registering property • Enforcing contracts • Getting credit • Trading across borders • Protecting investors • Paying taxes • Closing a business • Update of 2006 • Add 20 countries • - 19 Small States • How to reform • - 50 case studies www.doingbusiness.org

  3. Starting a business in Gambia in January 2006 1. Check the uniqueness of the company name 2. Notarize the company statutes 3. Payment of stamp duty and deposit of corporate tax with commissioner 4. Register with commercial registry 5. Obtain operational licenses 6. Register with Labor department 7. Register employees for Social security 8. Make a company seal Cost (right axis) Cost (% of GNI per capita) Time (Number of days) Time (left Axis) Procedures

  4. Singapore New Zealand United States Canada Hong Kong, China United Kingdom Denmark Australia Norway Ireland Japan Iceland Sweden Finland Switzerland Top 30 on the ease of doing business, 2007 • Lithuania • Estonia • Thailand • Puerto Rico • Belgium • Germany • Netherlands • Korea • Latvia • Malaysia • Israel • St. Lucia • Chile • South Africa • Austria

  5. Top reformers in 2005/06

  6. As a group, small states near global average Average ease of Doing Business

  7. …But there is large variation Doing Business 2007 ranking

  8. Small states average ranking by indicator Average ranking for small states

  9. Small states did not reform much this year Percentage of countries with at least one reform, 2005/06

  10. Small states reformers in 2005/06

  11. Decreases in time and cost to comply with regulations

  12. Large improvements are possible―SmallStateStan would be #3 overall The hypothetical country “SmallStateStan” has the ease of: • Starting a business in Marshall Islands (#13) • Licensing (construction) in St. Vincent (#1) • Employing workers in Tonga (#4) • Registering property in Palau (#13) • Getting credit in Fiji (#21) • Protecting investors in Mauritius (#11) • Paying taxes in Maldives (#1) • Trade in Cape Verde (#20) • Enforcing contracts in Estonia (#20) • Closing a business in Belize (#24)

  13. Heavy regulations exclude the vulnerable Greater Share Lesser Share Least procedures Least rigid Most procedures Most rigid Countries ranked by procedures to register property, quintiles Countries ranked by rigidity of employment index, quintiles Greater Informal Sector to GDP Lesser Women’s Share of Private Employment

  14. Reform payoff: creating jobs Unemployment (%) Lower Higher Countries ranked by ease of doing business, quintiles Note: Relationship is statistically significant at the 1% level and remains significant when controlling for income per capita

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