BRIEF August 10, 2017

Indicator Based Reform

A sound regulatory environment for business contributes to creating a level playing field. It encourages new firm creation and increased competition. Productivity and the overall competitiveness of the local economy increases. Global benchmarks, such as the Doing Business project (DB), have put business regulation reforms on the forefront of policy-makers’ agendas and created strong demand for World Bank Group support in this area. Responding this demand, the Indicator-Based Reform team of the Bank Group’s Macroeconomics, Trade and Investment Global Practice (MTI) helps client countries design and implement reform programs that make it easier for companies to do business throughout their lifecycle.

Why it matters:

Ask the poor and they will tell you that getting a job or starting a business is the most effective way to get out of poverty. More and better-paid work has been critical to poverty alleviation. Around the world, small or medium-sized companies contribute significantly to creating business and employment opportunities, accounting for two-thirds of formal jobs in developing countries and 80 percent in low-income countries. IBR effectively leverages data and evidence to help client countries foster a better business environment and deliver results on the ground. The emphasis is not just on efficiency but the quality of regulations and institutions governing the business life cycle from start-up to insolvency.

Our approach:

With an emphasis on supporting the start-up and growth of small or medium-sized enterprises, the team’s work focuses on the quality and efficiency of regulations and institutions governing the business lifecycle from business start-up through growth and expansion, and, when necessary, to insolvency. Leveraging a unique response platform, IBR experts provide just-in-time technical assistance on improving regulatory areas covered by global benchmarking tools, such as the World Bank Group’s Doing Business and Women, Business and the Law indicators. This includes advice on regulations that foster equal opportunity for women, and institutional mechanisms for effectively managing cross-sectoral reforms that make it easier to start and operate a business. IBR programs leverage the full range of World Bank Group instruments, with a growing number of Reimbursable Advisory Services (RAS) engagements (10 in FY17 alone, including in new markets such as Angola, Brunei Darussalam, and Thailand) and 17 joint programs that combine lending with Advisory Services and Analytics (ASA) across all regions.

The IBR team is well positioned to mobilize Bank Group expertise in all the key regulatory areas covered by global benchmarks such as Doing Business such as business start-up, construction permitting, access to credit, investor protections, tax, trade logistics, contract enforcement, and insolvency. Building on a decade of reform experience, the team applies a thorough understanding of what the indicators measure and how to leverage them in the context of broader competitiveness programs across multiple government agencies and levels. Governments are better able to identify priority areas for reform and to produce measurable and sustainable results. A multi-pronged approach delivers integrated solutions tailored to client needs that fit into a broader competitiveness agenda:

Programmatic technical assistance on business regulation reforms: IBR experts provide first-response technical assistance across key areas of business regulation covered by each Doing Business indicator as well as emerging client demands to create economic opportunities for women. The programmatic approach helps governments link reforms to the longer-term goal of increasing economic competitiveness. IBR experts also help organize the institutional setup for reform efforts across government agencies, foster public-private dialogue, and communicate with the public.

The key deliverables include:

  • Roadmap for reform prioritizing short-, medium-, and long-term areas of focus.
  • Action plans that assign responsibilities and set deadlines for achieving measurable goals.
  • Topic-specific reform advisory, mobilizing subject area experts to assess the regulatory environment in a specific area and recommend reforms. This can entail legislative and reform proposal review, process mapping, and advice on investments to help implement reforms.
  • Reform proposal review to provide feedback when clients develop their own reform proposals, based on global good practice and experience in other countries.
  • Advice on how to organize for reform: Reform programs cut across a multitude of actors and levels of government. Based on global experiences, the team provides advice on how to effectively engage public and private stakeholders, set up monitoring and escalation mechanisms and leverage organizational structures to support implementation.
  • Peer-to-Peer Learning and Advocacy for Reform Implementation: Since 2010, IBR has developed innovative ways to support regulatory reforms in client countries. The team organizes and facilitates peer-to-peer learning events that serve as a platform for sharing global and regional best-practices, in addition to supporting the exchange of experiences, lessons learned, and new thinking among clients.

In Practice:

MTI’s IBR team has supported over one-fifth of all reforms captured by Doing Business since 2008, helping client countries enact over 300 reforms across 75 countries, most of them IDA. Since 2014, Albania has implemented eight reforms in seven areas of Doing Business ranging from constriction permitting to getting an electricity connection. The lifting of a moratorium on construction permits in 2016 helped lift the countries Doing Business ranking by 80 positions—from 186th in 2016 to 106th in 2017. The IBR team helped Colombia implement a multi-year programmatic reform effort to improve the country’s business environment, leading to implementation of 34 investment climate reforms across the entire business cycle. The number of newly registered firms per 1,000 adults doubled from 2005 to 2012. Emerging from a decade-long political crisis, Côte d’Ivoire sought Bank Group support for improving the country’s business environment to spur private sector growth and reclaim its status as West Africa’s economic hub. This led to nine investment climate reforms between 2014 and 2016. By project completion in June 2016, the country had improved its Doing Business ranking by 35 positions and was recognized as a global top-ten reformer in 2014 and 2015. Côte d’Ivoire also adopted regulations to reduce explicit and implicit discrimination against female entrepreneurs recognized by Women, Business, and the Law. In Costa Rica, a top-10 reformer in several Doing Business reports, the team helped launch an online one-stop shop for starting a business, electronic platform for construction, and electronic filing for taxes. Reforms also included a new secured transactions law and collateral registry to facilitate access to credit.

Related Sites

Investment Climate

Business Environment

Investment Policy & Promotion

Experts

Christine Qiang, Practice Manager, Investment Climate (IC)

Sylvia Solf, Global Lead, Indicator Based Reform (IBR)

Blogs

Doing Business: Not Just About the Numbers by Anabel Gonzalez

Why gender equality in doing business makes good economic sense by Cecile Fruman

More than a trend: Africa is becoming better by the year at reforming its business environment by Cemile Hacibeyoglu & Syed Estem Dadul Islam

Publications (SmartLessons)

Better Business in Mexico: How Partnering for Shared Prosperity Is Improving Construction-Permit Regulation in Oaxaca

Winning the Peace and Building Confidence in Burundi: IFC’s Efforts to Strengthen Burundi’s Private Sector

Implementing Trade Logistics Reforms in Complex Multi-Country and Regional Settings: The Case of the Western Balkans

Designing and Building Construction Permit Reform to Improve Urban Resilience: A Case from Bangladesh

It Takes Two to Tango in Togo: Synergy of World Bank Lending and IFC Advisory Services

Why Successful Reforms Need Not Only A Champion, But Also Good Communication And Coordination

Videos / Multimedia

Investment Competitiveness for Business-Led Growth

Simplifying Regulations and Generating Investments in Colombia

Doing Business in Kenya 2016

Côte d’Ivoire: Private Sector-Led Recovery

Open for Business: Côte d’Ivoire Ushers in a New Era of Growth

Recent News

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ALMATY, October 26, 2016 – Kazakhstan, the Kyrgyz Republic, Tajikistan, and Uzbekistan implemented a total of 12 reforms across nine business regulatory areas during the past year, with Kazakhstan recording...
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Date: October 25, 2016 Type: Press Release Language: English

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Date: October 25, 2016 Type: Press Release Language: English 


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