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How do courts impact the business climate… really?

Georgia Harley's picture
Tim Cordell, Cartoonstock.com

We know that the justice system dampens the business climate in many of the countries where we work. In Bank reports, national strategies, and in common parlance, we lament that poorly performing courts delay business activity, undermine predictability, increase risks and constrain private sector growth. Going further, we conclude that weak justice systems disproportionately hamper micro, small and medium sized enterprises (MSMEs) because they have less buffer to absorb these problems - which can become make-or-break for their businesses.

So that’s the ‘what’ but, precisely, how, do courts impact businesses?

On that we have less hard data. Which steps in the court process cause businesses the most frustration? What types of cases affect businesses the most? Which industry sectors are most affected and what types of businesses? What is the mechanism of cause and effect? What about businesses that go to court vs those that avoid the court at all costs?  What about corruption? What about access? costs? How does court activity affect business operations?

These are among the key questions we are now posing in the new Courts and the Business Climate (CBC) Survey. The CBC Survey will be conducted across eight countries – Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, Macedonia, Montenegro and Serbia. 

We hope to conduct face-to-face interviews with more than 350 businesses in each country to ensure robust findings. We’ll stratify based on sectors, firm size, and location to better understand how businesses of different types are affected by the justice system in these countries. The CBC Survey will also collect data from firms with real and recent court experience, as well as from businesses that avoid the courts and operate in the shadow of the law. 

For an in depth, interactive view of businesses’ perception of the work of the judiciary, the CBC survey will also include some qualitative research - including focus group discussions in each country. Business groups will be able to express their views and preferred options for resolving justice problems and dealing with the courts.

In all, the CBC Survey aims to understand how justice affects business and which justice issues present the greatest barriers for businesses in the region. Because the ultimate question, of course, is: what can be done about it?

The more precisely that we understand the mechanism by which courts affect businesses, the more targeted our response can be. The CBC Survey’s findings can help the World Bank - and our clients - identify more specific reform opportunities to improve the delivery of justice services for businesses - thereby improving the business climate in the region. The survey can also serve as a baseline to measure future improvements in justice reform and the business climate. 

We hope to share results with you in mid-2018. With the CBC’s country-wide representative findings in hand, we hope to energize a wider discussion that improves our shared understanding of how courts impact the business climate in the region, and possibly beyond.

In the meantime, let us know your comments or ideas. Have you worked on identifying and analyzing how the justice system impacts the business climate? Tell us!

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