Transcript 694 kb - WBCSD

Governance
Doing Business with the World - The new role of
corporate leadership in global development
World Business Council for
Geneva, September 2007
Sustainable Development
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Overview

The global view: Economic freedom

Assessing governance

Measuring rule of law
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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.
There is a strong
relationship between
economic freedom and
per capita GDP.
Source: 2007 Index of Economic Freedom, at:
http://www.heritage.org/research/features/index/chapters/htm/index2007_execsum.cfm, (accessed 2 August 2007)
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Assessing governance
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The World Bank
identified six
criteria for
assessing
governance
World Bank. “Governance Matters 2007” http://govindicators.org (27July 2007)
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Lack of respect for the rule of law
deters local entrepreneurship and
foreign investment.
Source: World Bank. “Governance Matters 2007” http://govindicators.org
Measuring rule of law today
5
Needs &
Challenges

Running a business – from beginning to
end

Tax compliance

Correlation between corruption and doing
business

Where are the challenges?
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Running a business – from beginning to
end
Number of days to start a business
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.
Source: World Bank. Doing Business in 2006: Creating Jobs
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http://www.doingbusiness.org/documents/DoingBusines2006_fullreport.pdf
Tax compliance
“
Tax evasion is a
national sport in Bolivia..”
-José, businessman in La Paz
(Quote from Doing Business 2007)
Source: World Bank. Doing Business in 2007: How to Reform.
http://doingbusiness.org/documents/DoingBusiness2007_FullReport.pdf
Taxes in Bolivia
= 80% of company profits
= 189 days
= 41 payments/year
Source: World Bank. Doing Business in 2007: How to Reform.
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http://doingbusiness.org/documents/DoingBusiness2007_FullReport.pdf
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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Opportunities

How can business contribute?

Reforming business start-up: what are
the implications?

Key messages
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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
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.
Source: World Bank. Doing Business in 2007: How to Reform.
http://www.doingbusiness.org/documents/DoingBusiness2007_FullReport.pdf
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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
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