Simple business rules stimulate job creation

WASHINGTON – Countries with simple and straightforward business regulations create more jobs than those with more involved oversight, a World Bank study released on Monday showed.

The report by the bank’s private investment promotion arm, the International Finance Corp, said New Zealand, Singapore and the United States were the easiest countries to open and run a local business. Poorer countries, particularly in Africa, proved hardest for entrepreneurs because of high business taxes and cumbersome regulations, the ‘Doing Business in 2006’ study found.The Democratic Republic of Congo, Burkina Faso and the Central African Republic ranked lowest on the IFC’s Ease of Doing Business Index of 155 countries.War-torn Iraq ranked 114 and Afghanistan ranked 122.The IFC said complicated regulatory systems often prevent small businesses from expanding into the formal economy, and adding more jobs, and can create opportunities for graft.”Where regulations are costly and burdensome, businesses often operate in the informal economy – and remain small, creating few jobs,” the IFC said.At the same time, it stressed simpler rules are compatible with labour protections and some government oversight.”All the top countries regulate businesses, but they do so in less costly and burdensome ways,” the IFC said, stressing Nordic countries and socially democratic nations like Canada and Germany ranked high on the index.The IFC’s Ease of Doing Business Index weighed factors like the time needed to start a business, tax costs, credit access, property rules, investor safeguards and trade procedures.France, despite placing among the top 10 countries on starting a business, ranked 44 – just after Jamaica – because of weak property registration, credit access and labour market flexibility scores.Large emerging market states had weak showings: China ranked at 91, Indonesia at 115 and India at 116.Serbia and Montenegro, which ranked 92 on the index, was singled out for slashing the time and capital needed to start a business over the past year.The IFC also praised Egypt, ranked 141, for streamlining customs procedures and noted improvements to number 119-ranked Brazil’s bankruptcy laws.While low on the index, the IFC said Rwanda – ranked 139 – had made important strides by improving credit and customs procedures for businesses.It urged others in Africa to pursue similar strategies to create and protect more local jobs.- Nampa-ReutersPoorer countries, particularly in Africa, proved hardest for entrepreneurs because of high business taxes and cumbersome regulations, the ‘Doing Business in 2006’ study found.The Democratic Republic of Congo, Burkina Faso and the Central African Republic ranked lowest on the IFC’s Ease of Doing Business Index of 155 countries.War-torn Iraq ranked 114 and Afghanistan ranked 122.The IFC said complicated regulatory systems often prevent small businesses from expanding into the formal economy, and adding more jobs, and can create opportunities for graft.”Where regulations are costly and burdensome, businesses often operate in the informal economy – and remain small, creating few jobs,” the IFC said.At the same time, it stressed simpler rules are compatible with labour protections and some government oversight.”All the top countries regulate businesses, but they do so in less costly and burdensome ways,” the IFC said, stressing Nordic countries and socially democratic nations like Canada and Germany ranked high on the index.The IFC’s Ease of Doing Business Index weighed factors like the time needed to start a business, tax costs, credit access, property rules, investor safeguards and trade procedures.France, despite placing among the top 10 countries on starting a business, ranked 44 – just after Jamaica – because of weak property registration, credit access and labour market flexibility scores.Large emerging market states had weak showings: China ranked at 91, Indonesia at 115 and India at 116.Serbia and Montenegro, which ranked 92 on the index, was singled out for slashing the time and capital needed to start a business over the past year.The IFC also praised Egypt, ranked 141, for streamlining customs procedures and noted improvements to number 119-ranked Brazil’s bankruptcy laws.While low on the index, the IFC said Rwanda – ranked 139 – had made important strides by improving credit and customs procedures for businesses.It urged others in Africa to pursue similar strategies to create and protect more local jobs.- Nampa-Reuters