World Bank: Georgia leads in business friendly changes

For a decade, the World Bank has tracked conditions faced by business around the globe and measured which countries were getting better at things such as granting permits, providing electricity and generally making it easier to start or run a company.

The reform champ?

The former Soviet state of Georgia, with Rwanda, Colombia, China and Poland all earning runner-up mentions for their steady pace of business-friendly change.

In Georgia’s case, the country vaulted from the bottom tier of nations when the World Bank began its research into the top 10 on the bank’s latest ease-of-doing-business index. It is part of a trend among nations in Eastern Europe, which the bank found have been among the world’s best in recent years in improving business conditions.

Georgia has enacted dozens of new laws to make it easier to open a business, put one-stop import-export procedures into place at major ports, limited government spending by law and enacted new investor protections.

Although it is hard to match those sorts of changes with economic outcomes — a nation’s fortunes might be buffeted by war, recession among its trading partners or natural disaster — Georgia has been growing solidly and recently won plaudits for its economic management from the International Monetary Fund.

The World Bank’s latest Doing Business report noted several other themes.

The general progress in Eastern Europe, for example, compares with the static rankings of many euro-zone countries.

Competition from nations such as Poland and the Czech Republic, now favored investment destinations for German and other northern European industrial firms, is one reason why Greece, Portugal and others in the euro zone have not fared so well within the currency union. When the union was created, it was envisioned that investment dollars would flow to those southern European countries rather than to former Soviet bloc nations.

In the years when Kazakhstan was climbing the charts — it went from 86th in 2006 to 49th this year — Italy fell three spots to 73rd, Germany fell one spot to 19th and France, after a steady climb, fell from 29th to 34th.

Augusto Lopez-Carlos, the World Bank’s director of global indicators and analysis, said he thinks the euro-zone nations are responding to their problems, with Greece in particular making efforts to improve a legendarily complex and slow-moving bureaucracy. The country jumped from 100th to 78th in the rankings.

“These efforts just need to be sustained,” Lopez-Carlos said. “You can’t narrow the gap with Sweden in one year.”

Sweden is ranked 13th in the report. The United States held onto its fourth-place ranking, behind New Zealand at No. 3, Hong Kong in second place and the world leader, Singapore.

The report ranks countries on broad categories that are broken into measurable components, such as how many separate procedures it takes to start a business, how many days it takes to get a construction permit, how many documents are required to ship an export. The countries’ average rankings in each of the broad categories are then averaged together, and the nations are rated based on that number.

One troubling note: Lopez-Carlos said the political upheaval in the Middle East has thrown several countries, particularly Egypt, off-track after noticeable progress.

Change in Egypt’s business climate seemed to stall in 2009, the report said, while “in the past four years there was no visible improvement.”

“The region suffers from a crisis of governance and trust,” the report concluded.

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For a decade, the World Bank has tracked conditions faced by business around the globe and measured which countries were getting better at things such as granting permits, providing electricity and generally making it easier to start or run a company.

The reform champ?

The former Soviet state of Georgia, with Rwanda, Colombia, China and Poland all earning runner-up mentions for their steady pace of business-friendly change.

In Georgia’s case, the country vaulted from the bottom tier of nations when the World Bank began its research into the top 10 on the bank’s latest ease-of-doing-business index. It is part of a trend among nations in Eastern Europe, which the bank found have been among the world’s best in recent years in improving business conditions.

Georgia has enacted dozens of new laws to make it easier to open a business, put one-stop import-export procedures into place at major ports, limited government spending by law and enacted new investor protections.

Although it is hard to match those sorts of changes with economic outcomes — a nation’s fortunes might be buffeted by war, recession among its trading partners or natural disaster — Georgia has been growing solidly and recently won plaudits for its economic management from the International Monetary Fund.

The World Bank’s latest Doing Business report noted several other themes.

The general progress in Eastern Europe, for example, compares with the static rankings of many euro-zone countries.

Competition from nations such as Poland and the Czech Republic, now favored investment destinations for German and other northern European industrial firms, is one reason why Greece, Portugal and others in the euro zone have not fared so well within the currency union. When the union was created, it was envisioned that investment dollars would flow to those southern European countries rather than to former Soviet bloc nations.

In the years when Kazakhstan was climbing the charts — it went from 86th in 2006 to 49th this year — Italy fell three spots to 73rd, Germany fell one spot to 19th and France, after a steady climb, fell from 29th to 34th.

Augusto Lopez-Carlos, the World Bank’s director of global indicators and analysis, said he thinks the euro-zone nations are responding to their problems, with Greece in particular making efforts to improve a legendarily complex and slow-moving bureaucracy. The country jumped from 100th to 78th in the rankings.

“These efforts just need to be sustained,” Lopez-Carlos said. “You can’t narrow the gap with Sweden in one year.”

Sweden is ranked 13th in the report. The United States held onto its fourth-place ranking, behind New Zealand at No. 3, Hong Kong in second place and the world leader, Singapore.

The report ranks countries on broad categories that are broken into measurable components, such as how many separate procedures it takes to start a business, how many days it takes to get a construction permit, how many documents are required to ship an export. The countries’ average rankings in each of the broad categories are then averaged together, and the nations are rated based on that number.

One troubling note: Lopez-Carlos said the political upheaval in the Middle East has thrown several countries, particularly Egypt, off-track after noticeable progress.

Change in Egypt’s business climate seemed to stall in 2009, the report said, while “in the past four years there was no visible improvement.”

“The region suffers from a crisis of governance and trust,” the report concluded.

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