Putting it to Work in Developing Countries - Nathan Associates

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Exhibit 5-2 Selected Investment Climate Reforms in Developing Countries by Doing Business Area, 2005-2006 Starting a Business Made registration an administrative (nonregulatory) process Antigua and Barbuda, Czech Republic, Macedonia, Uganda Created “one-stop shops” for company registration Burkina Faso, Croatia, El Salvador, Guatemala, Lithuania, others Abolished or reduced minimum capital requirement China, Georgia, Laos, Madagascar, Micronesia, Morocco Simplified tax registration Armenia, Benin, Bulgaria, India, Lesotho, Lithuania, Tanzania, Uruguay Dealing with Licenses Reduced number of licenses and permits Armenia, Georgia, Kenya, Latvia, Moldova, Ukraine Introduced statutory time limits for issuing a license Cambodia, Guatemala, Mali, Ukraine, Vietnam Standardized application documents Georgia, Romania Computerized licensing process Moldova Employing Workers Made fixed term contracts more flexible Romania, Vietnam Decreased mandatory notice period for dismissal or decreased severance pay Argentina, Georgia, Macedonia Reduced work hour restrictions or over time cost Georgia, Lithuania Removed procedural requirements for redundancy Georgia Getting Credit Introduced or revised law for credit bureaus Algeria, Dominican Republic, El Salvador, Thailand, others Established new credit registry Bulgaria, China, Czech Republic, Georgia, Mauritius, others Made enforcement of collateral out of court possible Armenia, India, Kyrgyz Republic, Peru, Serbia Established collateral registry Azerbaijan, Lao PDR, Peru Registering Property Decreased taxes or fees Bosnia and Herzegovina, Ghana, Kyrgyz Republic, Nicaragua, others Sped procedures in the registry Botswana, Croatia, El Salvador, Mali, Nigeria Computerized registry and/or made online procedures possible Croatia, El Salvador, Guatemala Combined and eliminated procedures Armenia, Côte d’Ivoire, Nigeria Enforcing Contracts Introduced or expanded scope of specialized courts Burundi, Chad, Gambia, Georgia, Guyana, Nigeria, Peru, Rwanda Modified procedural rules or adopted new ones Brazil, Burundi, Estonia, Gambia, Georgia, Macedonia, Nigeria Introduced out-ofcourt enforcement of small or uncontested claims Croatia Reduced backlog in lower courts Dominican Republic, Macedonia 60
Protecting Investors Increased disclosure requirements Mexico, Peru, Poland, Romania Opened company books for shareholder inspection China, Tunisia Made it easier to sue directors India, Mexico, Tanzania Centralized financial market regulation in one agency Colombia Paying Taxes Reduced profit tax rates Albania, Egypt, Guinea-Bissau, Lesotho, Mexico, Pakistan, others Reduced number of taxes Belarus, Egypt, Ghana, Lithuania, Russia, Yemen Introduced value added tax Bosnia and Herzegovina, India Introduced electronic filing Bulgaria, Latvia Trading Across Borders Introduced customs Improved infrastrucadministration reforms ture and interagency Cambodia, Georgia, cooperation at ports Jordan, Kenya, Nigeria, China, Colombia, Pakistan, Romania, Jordan, Kenya, Nigeria, Syria Togo Applied risk management techniques China, Colombia, Ghana, India, Jamaica, Kenya, Nigeria, others Introduced or improved EDI systems China, Colombia, Ghana, Jamaica, Kenya, Nigeria, Pakistan, others Introduced bankruptcy law Burundi, Micronesia Closing a Business Strengthened creditors’ powers Romania, Slovakia Allowed pre-insolvency proceedings; made reorganization more attractive Slovakia Improved supervision of bankruptcy administrators Chile, Latvia, Serbia, Slovakia SOURCE: World Bank, Doing Business in 2007. macroeconomic stability and institutional and policy predictability, governments in developing and developed countries alike tend to concentrate on two kinds of efforts to improve the investment climate. First, they seek to lower costs, risks, and barriers to competition through pragmatic, across-theboard microeconomic reforms. The content of such reforms will vary according to country conditions, but normally pertains to taxes, property rights, and business approval procedures (Exhibit 5-2). Such reforms may be general or sector-specific, and may require cooperation among national, provincial, and municipal governments. Some governments may introduce or upgrade special investment regimes embodying reform to establish an attractive subclimate for FDI-based firms. (These intermediate measures are discussed below). Second, they enter into international or regional trade or investment accords that can improve fundamental market characteristics. Such improvements might include market enlargement through regional trade arrangements to attract FDI, and harmonizing and liberalizing trade and investment rules and standards with trading partners through those agreements (see Chapter 6). In doing so, governments may forgo some policy flexibility as a worthwhile tradeoff to make markets more attractive and the investment climate more certain for potential investors. 61
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FOREIGN DIRECT INVESTMENT PUTTING I
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Sponsored by USAID’s Bureau of Ec
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5. Attracting FDI 55 What Foreign I
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PREFACE Trade and foreign direct in
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• Strengthening competition and e
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15 years is mixed at the industry l
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asis of careful country-by-country
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esources, including Internet addres
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Figure 1-1 Net Total Resource Flows
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Singapore’s Rise and FDI Througho
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FDI BY FINANCIAL COMPONENT A foreig
Page 27 and 28: 2. THE CASE FOR FDI International b
Page 29 and 30: The Global Factory—Catalyst for E
Page 31 and 32: countries through mergers and acqui
Page 33 and 34: conditions and policies in host cou
Page 35 and 36: labor market structure and flexibil
Page 37 and 38: and distributors and to invest in e
Page 39 and 40: 3. TRENDS AND PATTERNS IN FDI FLOW
Page 41 and 42: 3. A wave of international corporat
Page 43 and 44: undo improvements in investment cli
Page 45 and 46: Table 3-2 Top Developing Country Re
Page 47 and 48: Three Global Variables in FDI Flows
Page 49 and 50: help maintain and perhaps even add
Page 51 and 52: shot up to almost $16 billion in 20
Page 53: tions and finance, including recent
Page 56 and 57: Table 4-1 Sector Distribution of Es
Page 58 and 59: Table 4-2 Estimated Developing Coun
Page 60 and 61: Figure 4-2 Selected Service Industr
Page 62 and 63: traditional clients more cost-effec
Page 64 and 65: Figure 4-5 Selected Manufacturing I
Page 66 and 67: countries or the Morocco-U.S. FTA w
Page 68 and 69: PRIVATE INFRASTRUCTURE DEMAND Robus
Page 70 and 71: eported to be a source of FDI throu
Page 72 and 73: But, in addition to these commercia
Page 74 and 75: Exhibit 5-1 Selected Investment Sco
Page 78 and 79: Ultimately, governments must make f
Page 80 and 81: expedite approvals. Otherwise the a
Page 82 and 83: Where governments deem incentives n
Page 84 and 85: services in this phase involve one-
Page 87 and 88: 6. INTERNATIONAL AGREEMENTS AND INS
Page 89 and 90: FREE TRADE AND REGIONAL INTEGRATION
Page 91 and 92: 1998. 11 But many advocates, partic
Page 93 and 94: Encouraging Local Supply Links: Car
Page 95 and 96: International Finance Corporation.
Page 97: specific decisions to invest but do
Page 100 and 101: 4. Some FDI already flows to every
Page 102 and 103: following priorities recognize thos
Page 104 and 105: on creating regulatory systems that
Page 107 and 108: ENDNOTES CHAPTER 1 1 United Nations
Page 109 and 110: in Empirical FDI Studies,” in Doe
Page 111 and 112: 25 See Koji Miyamoto, “Human Capi
Page 113 and 114: 5 WIR 2004, p. 150, for a descripti
Page 115 and 116: Countries—The Importance of ICT a
Page 117 and 118: equirement to export a certain prop
Page 119: APPENDIX A Data on FDI Flows and St
Page 122 and 123: Table A-2 Estimated Value of Inward
Page 124 and 125: Table A-3 Estimated Distribution of
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Table A-4 Developing Countries' Sha
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Resource and Availability UNCTAD. 2
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Resource and Availability Descripti
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Resource and Availability UNCTAD. 2
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Resource and Availability Moran, Th
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Resource and Availability World Ban
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Business linkages. Supplier-produce
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Investment promotion agency (IPA).
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Subnational investment promotion. A
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