The Burden of Red Tape
The Doing Business in 2005: Removing Obstacles to Growth report, co-sponsored by the World Bank and International Finance Corporation, the private sector lending arm of the World Bank Group, estimates that an improvement from the bottom to the top quartile of countries in the ease of doing business is associated with an additional 2.2 percentage points in annual economic growth. An indication of the payoff comes from Turkey and France, each of which saw new business registration increase by 18 percent after the governments reduced the time and cost of starting a business last year. Slovakia’s reform of collateral regulation helped increase the flow of bank loans to the private sector by 10 percent.On average, it takes a business in a rich nation six procedures, 8 percent of income per capita, and 27 days to get started; in a poor or lower-middle-income economy, the same process takes 11 procedures, 122 percent of income per capita, and 59 days. In more than a dozen poor countries, registering a new business takes more than 100 days. Potential investors in many rich nations enjoy full access to the ownership and financial information of publicly listed companies while investors in most developing countries have hardly any access. Data can be easily obtained online for 145 countries.
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