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Videoconference: ECA Regional GDLN Policy Dialogue: Regulation of Entry and Enforcement (Inspections)
On July 15, 2004 the Center for the Study of Democracy and Coalition 2000 organized and hosted the Bulgarian participation in a videoconference on regulation of entry and enforcement, which included experts from Washington D.C., Lima, Chisinau, Belgrade and Sarajevo. Ensuring sound and flexible regulations of business entry is vital for the economic development of a country and eliminates one of the worst informal economy and corruption factors in developing countries.

This is the third seminar of a series of videoconferences “ECA Regional GDLN Policy Dialogue on Investment Climate: Regulation of Entry and Enforcement“, which deal with important aspects of government regulation and its impact on the economy and the business environment. Its objective is to show the best practices in key dimensions of the investment climate and governance and stimulate the exchange of ideas between Latin American and European and Central Asia countries. The alleviation and simplification of regulations should also be viewed as one of the main factors for decreasing corruption.

The seminar drew upon the rich experience of Poland and one of the hallmark organizations of reform, deregulation and good governance in development - the Institute for Liberty and Democracy (ILD) of Hernando de Soto in Peru.

Ms. Nancy VanDycke, senior economist with the Operations Policy and Country Services (OPCS) unit of the World Bank, described the recent Investment Climate Assessment the World Bank performed in Poland.The assessment aims at restoring Poland’s competitive position in Central Europe, which it lost in the mid 90-ies of the last century. One of the major challenges for reform in Poland is the burdensome, complex and unstable legal and regulatory framework e.g. according to World Bank survey in 2002 Polish senior management staff spends 9.6 % of their time dealing with regulations compared to 2.8% for the Czech Republic. VanDycke concluded that Poland can improve its competitiveness by focusing not only on the macroeconomic indicators such as inflation, debt size and fiscal stability, but also on the “details” – the micro level determinants of Total Factor Productivity – business entry and regulation, hiring and firing of workers, etc.

Mr. Victor Endo, senior researcher and land administration specialist at the Institute of Liberty and Democracy (ILD) in Lima, presented Peru’s comprehensive experience in reducing the administrative barriers to entry in the 1990-ies and the subsequent loss in reform momentum. He noted that regulation of entry should be viewed in the context of overall simplification of the administrative procedures for businesses. There had been several crucial factors for carrying out the comprehensive administrative reform in Peru in the beginning of the 1990-ies: (1) good analytical background and understanding of the problem among experts; (2) leadership in reform in the face of the Institute of Liberty and Democracy; and (3) early involvement of the citizens and securing of strong political backing (the prime minister). The major formal vehicles for reform in Peru had been the Law for Administrative Simplification and the Unified Business Registry. The results were compelling: in the period 1991-1994 tax collection increased by more than US$ 300 mln., 382,100 new businesses were registered, creating 557,770 new formal jobs However, reforms lost momentum and some were event reversed in the late 1990-ies and currently businesses pay for registration as much as prior to the reform. Time spent on registration also increased from reform low of 4 days to 52 days, which still remain well below the pre-reform 289 days. The lesson according to Mr. Endo having: good laws are important but not enough. Securing sustained political attention and external control from partners, donors and foreign investors is important for delivering long-term reforms.

Agenda of the videoconference
Speakers’ bios
Poland - Converging to Europe: The Challenges of Productivity Growth. Investment Climate Assessment (ICA) – Presentation by Ms. Nancy VanDycke (MS PowerPoint, 85 Kb)
ECA Regional Dialogue Series on Investment Climate. Lessons from Peru: The Permanent Challenge of Eliminating Administrative Barriers to Entry – Presentation by Mr. Victor Endo (MS PowerPoint, 241 Kb)
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