Doing Business 2010 : Reforming through Difficult Times

1. Doing Business 2010:Reforming through Difficult Times Overview Dahlia Khalifa Senior Strategy Advisor

2. DoingBusiness – Overview • Launched 8 years ago. • Goal: to provide an objective basis for understanding and improving the regulatory environment for business. • From 5 indicator sets in 133 economies to 10 in 183 economies. • The objective: efficient regulations, accessible to all, and simple in their implementation. • Focus on regulations relevant to the life cycle of a small to medium-sized domestic business based on standardized case • DO NOT measure all aspects of the business environment.

3. Doing Business indicators – 10 areas of business regulation • Recovery rate • Reallocation of assets Property rights Investor protection Access to credit • Administrative burden • Flexibility in hiring • Entry

4. What's new in Doing Business 2010?

5. Doing Business 2010: Reforming through Difficult Times • 183 economies

6. DB methodology: time and motion indicators – see example of Rwanda’s new companies law Starting a business in Rwanda: now only 2procedures which take 3 days and cost equal 10% of income per capita

7. Legal scoring indicators: Rwanda companies law again drives change Rwanda’s new companies law strengthens investor protection • Based on a standardized case • Establishes indices with scoring scale • Gather all the relevant laws, regulations • Assigns value based on laws, regulation • Main index is often a function of underlying indices

8. Top 30 on the ease of Doing Business 2010

9. Key findings in this year’s report • Against backdrop of global financial and economic crisis, record number of reforms recorded: 287 reforms in 131 countries; 20% more than in the year before. • Focus on SMEs for job creation. Regulatory ease of starting, operating and closing a business influences how well firms can cope and adjust. • Reforms more likely in developing economies: Two-thirds of reforms in low- and lower-middle-income economies. • Rwanda first Sub-Saharan African country to become top reformer: Reforms in 7 of the 10 areas; from143 to 67 in aggregate ranking. • 2 regions stand out for reform pace in 2008/9: Eastern Europe and Central Asia (sixth year in a row) and Middle East and North Africa

10. The top 10 reformers in 2008/09

11. Eastern Europe and Central Asia reformed the most, followed by Middle East and North Africa Percentage of countries with at least one positive reform 96% High Income OECD Eastern Europe and Central Asia 89% 59% 63% 63% 71% 75% Middle East and North Africa South Asia Latin America and Caribbean East Asia and Pacific Sub-Saharan Africa

12. Ease of Doing Business – by Region

13. 287 reforms in 131 economies in 2008/09 made it easier to do business

14. Reforms gained momentum in Developing Economies

15. Broad reform programs more common in developing economies • Following a longer-term agenda aimed at increasing the competitiveness of their firms. • Continually pushing forward and staying proactive. • Following a clear direction in their policy agenda while responding to new economic realities.

16. Some Insights by Indicator

17. Big improvements in starting a business since 2004

18. One-stop shops and risk-based systems popular in construction permitting

19. Increased investor protections in Africa as a result of new company laws

20. In bankruptcy, creditors recover more in high income OECD economies Global Average

21. Benchmarking among states: Subnational Doing Business in Mexico 2006, 2007 & 2008 • Great Initial Impact Political support for reform efforts has continued even after two rounds of local elections and one presidential election since the first benchmark • 29 of 31 states made it easier to start a business in Mexico in 2006 - 2008 Number of states 94% 31 75% 12 9 reformers 29 reformers 2006 - 2007 2007 - 2008 Reformers Non reformers

22. Peer-learning and benchmarking: completed reforms motivated or informed by DB About 270 reforms since 2004 127 reforms in 2008/9 270 • Reform task forces in over 30 countries • At the Prime Minister’s or President’s level (e.g. Colombia, Burkina Faso, India) • At the ministerial level (e.g. Rwanda, Egypt, Kenya, Liberia, Sierra Leone, Kazakhstan, Saudi Arabia) • Using Doing Business to learn from and cooperate with others • Peer-learning events in El Salvador (Central America), Mauritius (Small Island States), Abu Dhabi (Arab World). • Ease of Doing Business action plan for 21 members of Asia-Pacific Economic Cooperation (APEC).

23. Learning from others “What I like about Doing Business … is that it creates a forum for exchanging knowledge. It’s no exaggeration when I say I checked the top ten in every indicator and we just asked them “What did you do”? If there is any advantage to starting late in anything, it’s that you can learn from others.” Dr MahmoudMohieldin, Egypt’s Minister of Investment, and Doing Business 2010 top reformer

24. Growing body of research drawing on Doing Business 405 articles published in peer-reviewed academic journals, about 1,140 working papers Some findings of recent research: • Higher entry costs significantly reduce output per worker and skilled employment. (Barseghyan (2008), Freund and Bolacky (2008), Dulleck et al (2006)) • Women are particularly affected by regulation and its impact on entrepreneurship. (Ardagne and Lusagi (2009)) • Economy’s governance structure and natural resources influence motivation for reform (Amin and Djankov, 2009)

25. Thank you. For more information:www.doingbusiness.org For more information visit: www.doingbusiness.org