The economic reform wave

What do Azerbaijan, Albania and the Kyrgyz Republic have in common? They are all Eastern European or Central Asian states and they all currently top the list of the world's most enthusiastic economic reformers, says the Wall Street Journal.

According to the World Bank and International Finance Corporation's series of annual reports on the state of pro-growth policies around the world, there were 239 pro-growth reforms in 113 countries from June 2007 to June 2008, compared to 200 reforms in 98 countries last year. Cutting the red tape on business start-ups was the most popular kind of reform and 49 countries took such steps, including:

  • Top reformer Azerbaijan opened a one-stop shop to handle new business registrations and cut the number of regulatory steps to six from 13; it now ranks 33rd, up from 97th last year.

  • Malaysia simplified and cut corporate income taxes (now a 26 per cent flat tax, which will drop to 25 per cent next year) and introduced online filing. It moved up to 20th from 25th.

  • Colombia, South America's top reformer, embraced trade by cutting export and import processing times via a host of administrative reforms, helping to improve its ranking to 53rd from 66th.

    A notable bright light here is in Africa:

  • Senegal, Burkina Faso and Botswana made the list of top 10 reformers.

  • Senegal improved its ranking to 149th from 168th, in part by speeding customs clearance for trade.

  • Burkina Faso slashed red tape on construction permits and it cut taxes, helping bump it to 148th from 164th.

    A lot of work clearly remains to be done; yet, this report is a welcome sign that many countries are pushing ahead with reforms, says the Journal.

    Source: Editorial, The Economic Reform Wave, Wall Street Journal, September 11, 2008; based upon: Doing Business 2009, World Bank and International Finance Corporation, 2008.

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    FMF Policy Bulletin/ 16 September 2008
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