Context
Despite a positive reform trend over the past decades, complex requirements or ineffective regulations in many countries continue to stifle innovation, discourage investment, weaken competitiveness, compromise economic diversification, and as a result, hinder economic growth. Often times regulations also contribute to low female participation in the economy and informality.
Strategy
The World Bank Business Regulation team supports client governments through analytics, technical advice and lending operations. We support the implementation of reforms designed to promote entrepreneurship, investment and competitiveness by making it easier to do business in a country. Our work with governments focuses on microeconomic interventions and business regulatory reforms. Regulations and institutions governing the entry, growth and exit of firms—including registration, licensing, inspections, property rights, and others—play an important role for creating contestable markets and thus supporting productivity gains and growth. When done right, these regulatory reforms can reduce the costs and risks of doing business in a country while also ensuring a level playing field and protecting consumers, public health and safety.
To help client countries address legal and institutional deficiencies that impact private investment and support women’s economic participation, we use a variety of diagnostics and global knowledge tools to provide support to client governments. These include primary research as well as comparator analysis leveraging benchmarking indicators such as the World Bank Group’s Doing Business indicators; Women, Business and the Law; and enterprise surveys, among others. We also leverage internal and external partnerships to support our offering.
Working through a wide range of Bank Group instruments – including advisory services and analytics (ASAs), reimbursable advisory services (RASs), and diverse lending products – to help developing countries, the business regulation team works with client governments to:
- Design business regulations governing firm entry, operation, growth and exit that are transparent and effective at addressing market failures while protecting public goods such as environment, health and safety.
- Apply risk-based principles to regulation to allow governments to allocate scarce public resources effectively, mitigate excessive discretion, and reduce burden on low-risk businesses.
- Address administrative and institutional deficiencies that impact private investments.
- Streamline bureaucracy to lower the cost of doing business and reduce opportunities for corruption, and informal activity.
- Design gender-neutral regulations bringing greater equality to women’s working lives and promoting women’s participation in the economy, including entering the workforce, starting/running a business, accessing credit, pay equality, childcare managing assets, and receiving a pension.
- Put in place effective cross-sectoral reform strategies and implementation mechanisms.
In practice
- In Greece, the team supported the government with introducing a risk-based licensing and inspection regime impacting over 100 economic activities in key sectors (e.g. tourism) and saving firms up to three months in time spent on complying with licensing regulations.
- In Saudi Arabia, the team worked with the Ministry of Commerce and Investment to lift legal barriers to women’s economic participation and pass a historic reform package which introduced freedom of travel and legal equality in employment and pensions, as well as removed the obedience provision and allowed women to be head of household among others. Over 5 million women over 21 years old are benefiting from the reforms and the number of women-owned businesses increased by 50%.
- In Bangladesh, the government introduced a broad simplification program including cost reductions for connecting to the electricity grid and a one-stop shop (OSS) for investors. The reforms resulted in over $721 million cost savings for businesses and citizens. Over 1,200 firms have benefited from the OSS to date.
- In Ecuador, the team supported the introduction of a new simplified stock corporation, a more flexible legal form tailored to small- and medium-sized companies. Within six months, over 3000firms were created under the new type, close to 50% of all companies incorporated during that time period.
