Decentralization ≠ ease of doing business

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Hoping to improve government accountability and assuage ethnic tensions, Spain has handed over the power to regulate transportation, commerce and the environment to regional governments. The devolution has backfired. From the Wall Street Journal [subscription required]:

'The proliferation of regional legislation means that, in some cases, companies have to abide by 17 different regulatory frameworks in their domestic market . . . posing obstacles and higher costs for private enterprise,' said Gerardo Diaz Ferran, head of Spain's employer's association, Confederacion Espanola de Organizaciones Empresariales.

OECD ranked Spanish retail regulations behind Greece and Belgium as the third-most rigid among its member countries.

'We cannot coordinate marketing campaigns or logistics on a national scale, which translates into higher costs,' [says Javier Millan Astray from Anged, a Spanish association of 16 large retailers]. Anged estimates that 3 billion euros, or more than $4 billion, in investment, which could create more than 10,000 jobs, is on hold as a result of these bans.

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