Post on 05-Jan-2016
transcript
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Governance
World Business Council for
Sustainable Development
Geneva, September 2007
Doing Business with the World - The new role of corporate leadership in global development
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The global view: Economic freedom
Assessing governance
Measuring rule of law
Overview
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The global view:Economic freedom
Economic Freedom vs. Per Capita GDP
“There is a clear relationship between economic freedom and numerous other cross-country variables, the most prominent being the strong relationship between the level of freedom and the level of prosperity in a given country.”
-2007 Index of Economic Freedom The Heritage Foundation/Wall Street Journal
In the 2007 Index of Economic Freedom, 157 countries are measured across 10 specific factors of economic freedom.
Source: 2007 Index of Economic Freedom, at:http://www.heritage.org/research/features/index/chapters/htm/index2007_execsum.cfm , (accessed 2 August 2007)
There is a strong relationship between
economic freedom and per capita GDP.
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Assessing governance
The World Bank identified six
criteria for assessing
governance
World Bank. “Governance Matters 2007” http://govindicators.org (27July 2007)
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Measuring rule of law today
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Lack of respect for the rule of law deters local entrepreneurship and
foreign investment.
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Running a business – from beginning to
end
Tax compliance
Correlation between corruption and doing
business
Where are the challenges?
Needs &Challenges
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Running a business – from beginning to end
Every country needs effective procedures for closing a failed business
or saving a viable one that is experiencing temporary problems.
-World Bank Doing Business in 2006.
“
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Number of days to start a business
Source: World Bank. Doing Business in 2006: Creating Jobshttp://www.doingbusiness.org/documents/DoingBusines2006_fullreport.pdf
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Tax compliance
Tax evasion is a
national sport in Bolivia.. -José, businessman in La Paz
(Quote from Doing Business 2007)
“”
Taxes in Bolivia= 80% of company profits
= 189 days
= 41 payments/yearSource: World Bank. Doing Business in 2007: How to Reform.http://doingbusiness.org/documents/DoingBusiness2007_FullReport.pdf
Source: World Bank. Doing Business in 2007: How to Reform.http://doingbusiness.org/documents/DoingBusiness2007_FullReport.pdf
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Correlation between corruption and doing business
As the number of business procedures increases, so does the hassle and corruption. Each additional procedure represents another possible bribe. The cost is the forgone jobs that new firms would have created.1
Source: World Bank. Data were taken from the World Bank’s 2006 “Doing Business” database and Transparency International’s Corruption Perception Index for 2006 . http://psdblog.worldbank.org/psdblog/2006/11/corruption_rank.html (24 August 2007)
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What are the challenges?
Lack of political will Governance goes hand-in-hand with
providing basic services Both legislative and procedural
challenges Socio-cultural issues
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How can business contribute?
Reforming business start-up: what are
the implications?
Key messages
Opportunities
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How can business contribute?
Engage with developing country governments, local companies and communities to actively participate in shaping framework conditions
Provide information technology to automate many administrative procedures performed by government
Train and assist small and medium enterprises in developing countries
Establish and participate in business-led forums to provide a voice in local affairs
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Reforming business start-up: focus on El Salvador
Source: World Bank. Doing Business in 2007: How to Reform.http://www.doingbusiness.org/documents/DoingBusiness2007_FullReport.pdf
With no changes to the law, El Salvador cut the number of days required to register a business from 115 days to 26 days in two years.
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Key messages
For business, investing time and resources in good governance can:
Lead to improved framework conditions
Create greater transparency
Facilitate opportunities to engage with developing country governments
Enable business to root out corrupt practices, thereby making conduct of business easier
Give rise to more stable operating environments
For governments, an effective policy framework to improve governance can:
Create optimum enabling conditions for improved economic and human development and growth
Facilitate improved conditions for the development of a market-based economy
Lead to increased respect for rule of law and help root out corruption
Reduce the prevalence of informal economic activity
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www.wbcsd.org/web/development.htm