Exploring business reform committees: Insights and key learnings

|

This page in:

Image
Tooth wheel mechanism with words imprinted on it. | © shutterstock.com
What are business reform committees and how to harness their potential?

All countries have a government, and all governments are different. But there is a universal principle: a good governing structure is key to developing regulations that are fit for purpose. To learn more about the structure of governments and contribute to the debate on institutional capacities and strategies for the development of business regulations, we collected novel granular data on business reform committees across 160 economies from 2020 to 2022. These data, combined with relevant sources such as Business Ready, can better inform governments on business regulatory reforms - important to firms and society at large. We presented our findings in a new paper. (Previously we also shared preliminary findings: here and here).

Business reform committees (also known as reform councils) are institutional mechanisms or structures tasked with convening policy discussions pertaining to (and making specific recommendations on) business regulatory issues, to monitor improvement efforts, and ensure regulatory coherence between agencies while enhancing regulatory quality. They are often the link between policy design and implementation, both of which matter for economic development.

What did we learn about them?

1. Mandate and scope: Reform committees are heterogeneous structures, prevalent in lower-middle-income economies (85 percent), followed by upper-middle-income economies (68 percent). Most of them indicate that their mandate is to improve competitiveness globally by improving the business regulatory framework, going beyond improvements of the business environment for domestic companies. The second most common reason is to improve inter-agency coordination on business regulatory matters followed by providing a platform for public-private dialogue. (Figure 1)

2. Organizational structure and operational framework: One of the main elements of reform committees is its leadership, who sets priorities and decides where the committee is housed vis-à-vis the country’s centers of power. In close to 50 percent of economies with a functioning reform committee, the priorities are set at the level of a Ministry, followed by the Prime Minister’s office (Figure 2). Europe and Central Asia is the region where most reform committees have their priorities set by the highest government body (i.e., the Prime Minister/President). Across Latin America & the Caribbean, reform committees in Brazil, Colombia, El Salvador, and Panama are housed within their respective office of the President, who also sets its priorities.

While it helps to have the highest-level representation from the government in reform committees to achieve credibility outside the committee, the private sector needs to be included. Some committees include the private sector in their management, with leadership being co-chaired by a member of the government and a member of the private sector (e.g., the case of PEMUDAH in Malaysia).

Many reform committees engage very actively with the private sector, while others do not engage at all or very little. Most economies engage the private sector in the legislative process, but not throughout the entire cycle of policy formulation, implementation, and evaluation. Formal consultations through selective outreach to the private sector is also seen to be the most common practice during the early stage of the stakeholder consultation process. Arlet et al., using the new business reform committees’ data, elaborate on the different stages of engagement with the private sector while reforms are being implemented.

3. Stakeholder engagement and communication: According to the data on reform committees, international organizations (including the World Bank) have supported the creation of these reform committees mostly in low and lower middle-income setups. As a part of their work program, reform committees also engage in peer-to-peer learning initiatives, such as meetings with states or other departments that have successfully implemented reforms. These initiatives capture knowledge sharing across states and can play a role in reforming, as countries can learn from their neighbors’ efforts to establish reform committees. Sub-Saharan Africa, followed by East Asia and the Pacific and high-income OECD are the regions with the highest number of peer-to-peer learning initiatives organized by and within the reform committee.

How can these data be used?

Researchers: This paper is the first step in a longer research agenda on the mandate, structure, and composition of reform committees. As such, the current data lays a foundation that could be further refined and expanded to answer different research questions and empirical testing. For example, is there a correlation between the existence of a reform committee and the number of business regulatory reforms enacted?

Governments: This paper and accompanying dataset provide new insights to help governments strengthen their institutions for better business regulations. These data, combined with other sources, such as Business Ready, can better inform governments on business regulatory reforms.

General public: This dataset is a public good meant to contribute to citizens’ knowledge on this topic but also encourage public interventions, debate, and public consultations on proposed and existing regulations.

Through engagement and better knowledge sharing, the goal is to encourage countries to have more efficient institutions and design better quality regulations, thereby contributing to equitable and balanced growth and job creation.

Authors

Dorina Georgieva

Economist, Development Economics Indicators Group

Michael Woolcock

Lead Social Scientist, Development Research Group, World Bank

Join the Conversation