Streamlined regulation aids business climate?

Filed in archive Bootstrapper News on October 29, 2006

In line with our past seven posts, Romanian entrepreneur Cristian Dorobantescu sends this from a 2005 World Bank report on efforts to encourage entrepreneurship in Eastern Europe.

Eastern European and Baltic nations are aggressively courting entrepreneurs with far-reaching reforms that streamline business regulations and taxes, according to a new report from the World Bank Group.

The release on the report also states:

The annual report, which for the first time provides a global ranking of 155 nations on key business regulations and reforms, finds that every country in Eastern Europe improved at least one aspect of the business environment-the highest rate of reform of any region.

Romania topped the list of Eastern European and Baltic nations along with Serbia, Montenegro, Slovakia and Latvia for the most reforms enacted.

Specifically, the report overview says:

• Three new private credit bureaus kicked off operations, in Lithuania, Romania, and Slovakia, making it easier for lenders to assess creditworthiness.

• Four countries made it easier to create and enforce collateral agreements: Bosnia and Herzegovina, Croatia, Romania, and Serbia and Montenegro.

• Romania introduced a 16 percent flat tax and cut payroll taxes.

With the exception of the tax reforms, it's hard to see how these changes will be much help to the smallest bootstrap start-up businesses many of which will be borrowing very little yet contributing to an important grass roots economy in the region.

The fact that Starbucks and other multi-nationals can now successfully operate in Eastern Europe is not an economic development triumph, Mr. Wolfowitz.

Despite the World Bank's still lofty rating for the United States, some critics here too have observed that, especially in larger urban environments in which the economic need is greatest, too much regulation, streamlined or not, still hamstrings the smallest of start-up businesses.