Syndicate content

doing business

Trade facilitation reform in Sri Lanka can drive a change in culture

Marcus Bartley Johns's picture

Two years ago, we started counting how many Sri Lankan agencies were involved in trade facilitation processes such as issuing permits and managing the movement of goods in and out of the country.  We counted at least 22 agencies in this assessment, and today, the Department of Commerce estimates that number at least 34 agencies are involved in issuing permits or publishing regulations that affect trade.
 
We know trade is critical to Sri Lanka’s future and that there are strong links between trade, economic growth and poverty reduction.

However, the trading community reports a lack of transparency, confusion around rules and regulations, poor coordination between various ministries and a dearth of critical infrastructure—you can see why trade has suffered in Sri Lanka.

 

When the World Bank evaluates a country’s performance in critical rankings like Doing Business, the ease of trading across borders is one of the benchmarks we consider. In this, and in other lists like the Logistics Performance Index, Sri Lanka is underperforming compared with its potential. Here, the average trade transaction involves over 30 different parties with different objectives, incentives, competence and constituencies they answer to, and up to 200 data elements, many of which are repeated multiple times. This environment constrains the growth of Sri Lanka’s private sector, especially SMEs.  
 
But now for the good news. By ratifying the World Trade Organisation Trade Facilitation Agreement, Sri Lanka has signalled its determination to intensify reform efforts.

Learning from our global benchmarking reports: A day in Singapore

Paramita Dasgupta's picture

Global benchmarking reports are great conversation starters. Here in Singapore, a nation defined by its drive for excellence, these benchmarking reports are held as evidence of the country’s development success.  From topping the global education index PISA, the Global Competitiveness Index, and the Leading Maritime Capitals of the World Report, Singapore takes great pride in being first, in Asia if not globally.  
 
An important global ranking for Singapore is the Doing Business survey, a ranking the island nation topped for many years, indicating the ease with which business can be done in the little red dot.

Thailand steps up reforms to make doing business easier

Ulrich Zachau's picture

A Thai business owner in Chiang Mai might open a small resort serving local people as well as tourists. It would probably take him about two months to set up his business after finding the location, staff and getting the company registered. He would find it reasonably easy to start his business.    

At the same time, a foreign investor living in Vietnam and considering whether to invest 3 million baht in Thailand to start a restaurant might have a different experience. She would likely find the process a bit complex and challenging. Most websites with the relevant information are written in Thai, the paperwork involved in registering a company can be pretty daunting for foreigners, and getting work permits and a business license can take longer than expected.

Private sector engagement is key to success on gender equity

Anabel Gonzalez's picture

Photo: Visual News Associates / The World Bank

As we celebrate International Women’s Day, if there is one concept to keep in mind above all others, it’s that gender equity is vital 24-7-365, and not just as a once-a-year observance.

You have heard the argument before and you will hear it again: Economies cannot reach their full potential if half the population is systematically blocked from full participation. This fundamental idea motivates the World Bank Group as it redoubles its efforts to address gaps in gender equality.

Our deepening work to close key gender gaps shows that the issues go far beyond economic inequity. Barriers to women’s full economic participation also impose moral, emotional and at times even physical costs.

We see this in the laws that prevent wives from making autonomous decisions about their careers. We see it in instances of violence against women in the workplace. We see this when harassment occurs at rural border crossings where women traders can encounter threats, and worse, from border guards.

In developing and developed countries alike, women face obstacles to starting and managing a business, to accessing finance, to earning equal pay for equal work, and to owning land or other assets. Many countries maintain laws and regulations that advantage men while discriminating against women, often relegating them to the status of a legal minor.

As Emeritus Professor Linda Scott of Oxford University’s Saïd Business School told us recently, “Women are economically disadvantaged in every country on the planet” and “women’s economic exclusion imposes a significant drag on world economies and societies.”

A key part of the Bank Group’s gender effort revolves around the importance of leveraging the private sector to ensure that reform goes beyond policy statements and creates real economic benefits for women and men. The Bank Group’s Trade & Competitiveness Global Practice (T&C) has developed an approach to gender equity that focuses on expanding market opportunities, enabling private initiative, and developing dynamic economies.

The work we are doing recognizes the entrenched nature of the obstacles to fuller economic empowerment for women. Achieving results at scale will require sustained commitment. But we also understand the importance of realizing near-term progress to catalyze change, and we recognize how interventions in particular countries can show the way forward elsewhere.

The concept is simple: Good results generate more good results.

Things to do with Trade and Competitiveness Data… thank you API

Alberto Sanchez Rodelgo's picture

Who are Spain's neighbors? Is Canada closer to Spain than Portugal? What about Estonia or Greece? The answer? Depends on the data you are looking at!

Earlier this week I crunched data based on a selected list of indicators from the new Open Trade and Competitiveness platform from the World Bank (TCdata360) and found some interesting trends[1]. In 2009 Spain was closer to economies like Estonia, Belgium, France and Canada while 6 years later in 2015, Spain's closest neighbors were Greece and Portugal. How and when did this shift happen?

Other trends I spotted using the same data? It seems the Sub-Saharan region ranks the lowest in Ease of Doing Business, that in 2007 Israel held the record for R&D expenditure as % of GDP, while in the same year Malta topped FDI net inflows as % GDP, and that the largest annual GDP growth in the last 20 years occurred in Equatorial Guinea in 1997.

Figure 1: Dots represent values for an economy at a given point in time for years 1996 to 2016 overlaying their box-plot distributions. Colors correspond to geographical regions.

Doing Business Trading Across Borders and Logistics Performance Index: similar yet different

Valentina Saltane's picture


People who look at the Doing Business report’s Trading Across Borders indicator and the Logistics Performance Index (LPI) often wonder why one country can perform well on one of the rankings but not so well on the other although they both measure trade and logistics. In fact, earlier this year, the Doing Business team organized a workshop at the World Bank Global Knowledge and Research Hub in Kuala Lumpur to clarify the differences between the two datasets.

Let’s start off with a few definitions:

The Doing Business report is a World Bank Group flagship publication, which covers 11 areas of business regulations. Trading Across Borders is one of these areas. It looks specifically at the logistical processes of exporting and importing. Data is updated annually and the latest edition covers 190 economies. Doing Business collects data from local experts and measures performance as reported by domestic entrepreneurs, while taking into consideration factual laws and regulations.

The Logistics Performance Index is a benchmarking tool which focuses on trade logistics. It is created to help countries identify the challenges and opportunities they face as they relate to customs, border management, transport infrastructure, and logistics services. Updated biennially, the latest data and report cover 160 economies. Data is collected from global freight forwarders and express carriers who provide feedback on the logistical “friendliness” of the countries they operate.

Why gender equality in doing business makes good economic sense

Cecile Fruman's picture

Photo Credit: Stephan Bachenheimer / The World Bank

Women today represent about 50 percent of the world’s population and, for the past two decades, about 50 percent of the labor force. Yet there are stark differences in the outcomes they achieve: Women are only half as likely as men to have a full-time wage-earning job. The women who do have paid jobs earn as much as one-third less than men. Fewer women than men are involved in trade or own registered companies. And women are more likely to work in low-productivity activities or informal employment.

There are many reasons for these outcomes, including socio-cultural norms, access to high-quality jobs, the lack of transport and the lack of child-care facilities. In many countries, such differences also continue to be written in the law. 
 
For the first time since it was launched in 2002, the World Bank Group’s annual Doing Business report this year added a gender dimension to its measures, including to the annual ranking on each country's ease of doing business. This is good news, since the report attracts the attention of policymakers worldwide. Global benchmarks and indicators are a powerful tool to raise awareness, motivate policy dialogue and, above all, inspire action by policymakers.
 
Ensuring that women have the same economic opportunities by law and in practice is not only a basic human right, it makes economic sense. A recent study estimates that achieving equality in economic opportunities for women and men could spur $28 trillion in world GDP growth by 2025 – about the equivalent of the size of the Chinese and U.S. economies combined.
 
Looking at gender differences when it comes to starting a business, registering property or enforcing contracts, Doing Business shows that 23 countries impose more procedures for women than men to start a business. Sixteen countries limit women’s ability to own, use and transfer property. And in 17 economies, the civil courts do not value a woman’s testimony the same way as a man’s.

This pattern might give the impression that such legal differences are really only an issue in a selected group of countries.  But Doing Business’ sister publication – Women, Business and the Law  tells us otherwise. The report analyzes gender parity in accessing institutions, using property, getting a job, providing incentives to work, building credit, going to court and, most recently, protecting women from violence. It finds that 90 percent of the 173 countries measured have at least one law impeding women’s economic opportunities. In 30 economies, there are 10 or more legal differences between men and women, predominantly across the Middle East and North Africa.
 
To counter this, there is ample evidence that those countries that have integrated women more rapidly into the workforce have improved their international competitiveness by developing export-oriented manufacturing industries that tend to favor the employment of women. Legal gender disparities are also associated with lower female school enrollment and labor-force participation.
 
There is some good news. The Women, Business and the Law 2016 report shows that, between 2013 and 2015, 65 economies made 94 reforms increasing gender parity. The World Bank Group’s Trade & Competitiveness Global Practice (T&C) – a joint practice of the World Bank and the International Finance Corporation (IFC) – works across the world to support governments as they design gender-informed and gender-neutral policies, and in many cases implement gender-targeted interventions to improve the business environment and expand market opportunities for women.

More than a trend: Africa is becoming better by the year at reforming its business environment

Cemile Hacibeyoglu's picture

"Doing Business 2017: Equal Opportunity For All" was released on October 25, and it marked record progress for the business environment reform agenda in Sub-Saharan Africa. Implementing 80 of the 283 reforms recorded globally, Sub-Saharan Africa once again claims the status of the world's top reforming region. Beyond the record reform count, this year is also marked as the year with the highest number of countries in the region having passed reforms (37 out of 48), confirming that more and more economies in Africa are putting private-sector-led growth at the heart of their development agendas.




There is actual transformation tied to those rankings. For example: It now takes 156 days to build a warehouse in Mauritius, compared to 183 days in France and 222 days in Austria. Rwanda ranks second globally on the Getting Credit indicator, not to mention that, years ago, it used to take 370 days to transfer a property in Kigali, while today it takes only 12 days.
 
But, beyond the figures, a few additional thoughts come to mind.

How has Africa become not only better at reforming, but also become home to some good practice that inspires many to reform?

First, one should mention the unique momentum for reform. Most African countries’ development strategies place the private sector as the engine of their growth, and recognize that creating enabling business environments is a key pre-requisite to attract investments and encourages business expansion. That is a timely move from African governments, especially in the context of the present commodity-price fall, which calls on African countries notably to move away from an exclusive dependence on minerals and to diversify their growth models.
 
Then, Africa countries are simply getting better at reforming. A good sign of this is that reforming today costs less in Sub-Saharan Africa. Recent analysis shows that it costs on average of $310,000 to implement a reform today, versus $730,000 merely four years ago. That is a clear sign of increased efficiency. The capacity-building and hands-on assistance of World Bank Group teams to governments and implementing agencies throughout the region is beginning to bear fruit.

Easy business exit is as important as easy business entry

Simon Bell's picture



How to identify and support fast-growing firms that can take off, create jobs, and yield significant value in a short period of time is one of our biggest dilemmas in nurturing private sector development in emerging markets. 
 
The Sustainable Development Goals (#8) include the need for decent jobs as an important developmental priority, and small and medium size enterprises (SMEs) are expected to create most jobs required to absorb the growing global workforce.
 
But many young firms will fail; by some accounts more than half of new firms won’t make it to their second birthday. 
 
However, despite the high rate of firm failure, research from the US and evidence from India, Morocco, Lebanon, Canada and Europe shows that it’s largely young firms that create the bulk of net new jobs (net jobs are jobs created minus jobs lost) and lasting employment opportunities.
 
In addition, even when a firm survives beyond the first two years of operation, there are no assurances it will become a fast-growing firm -- a gazelle. 
 
Although estimates vary widely, the share of gazelles -- fast-growing firms that generate a lot of value-added and jobs -- is thought to be only between 4% to 6% of all SMEs, and, possibly, even less in many emerging countries.
 
All this makes creating favorable conditions for entrepreneurship a priority. 
 
Easing business entry -- the time and cost involved in establishing a new enterprise -- is extremely important.  As the annual Doing Business report shows, many countries have made a lot of progress on this indicator over the past decade.  
 
But business exit is an equally critical piece of the puzzle.

Why Juba?

Jean Lubega-Kyazze's picture
Construction in Juba
 
The World Bank Group continues to engage in South Sudan despite the odds, and for good reason

Tell people you work in Juba – capital of South Sudan and now the newest member of the East African Community – and more often than not they won’t know where to find it on a map. Those of us who know are often met with doubtful stares when we talk about enhancing trade and competitiveness in a country that is struggling to emerge from decades of grueling civil war, not to mention a 98 percent illiteracy rate, inadequate capacity, a maternal mortality rate of 254 for every 100,000 births and a 250 out of 1,000 infant mortality rate.

Fact is, Juba is situated in the heart of Africa, where such challenges, and the daunting figures that go along with them, exist. But look deeper and you see commitment, potential, and signs of the World Bank Group’s positive impact. In short, you see opportunity.

Pages