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A Roadmap to Reform .

January 29, 2018

In Kosovo and Vietnam, the World Bank’s Doing Business Report is providing a framework that helps governments reshape the private sector’s role in advocating for and promoting economic growth.

Opaque regulations, institutional inefficiency, and widespread corruption present immense challenges for developing countries that are trying to strengthen their economies. To build a strong economy, it’s key to have a thriving business environment that brings public sector stakeholders and private sector advocates together.

The World Bank’s annual Doing Business Report offers a useful framework to create this enabling environment: Its annual rankings on business indicators reveal which countries excel — or lag — in creating an environment that encourages and supports private sector growth. Better performance in the report’s rankings is associated with lower levels of unemployment and poverty, and countries that have higher rankings tend to attract more foreign business and investment.

The report has become a guide for implementing regulatory reform and measuring a country’s economic progress. Despite having very different political, social, and economic contexts, Kosovo and Vietnam have used the Doing Business Report to make significant economic progress with the support of USAID projects.

Developing Indicators to Measure Reform in Kosovo

Kosovo’s business environment and high unemployment rate have presented real challenges to the country’s economic development. Excessive regulations prevent businesses from expanding, yet the labor pool continues to grow, making it difficult for those entering the workforce to find jobs. To alleviate these challenges, USAID’s Kosovo Partnerships for Development (PFD) project, implemented by Chemonics, collaborates with the Kosovo government to improve conditions for businesses, create jobs, and fuel private sector growth.

World Bank Doing Business indicators serve as an internationally vetted system for measuring and monitoring improvements in business environment outcomes. By encouraging business enabling environment reforms based on the World Bank Doing Business Report methodology, PFD worked with the government to develop a strategy to design and implement regulatory changes. The report has played a key programmatic role in shaping Kosovo’s economic policy reform, with a focus on increasing efficiency and bolstering efforts to build simple, transparent, and responsive governance.

PFD and the Kosovo government have used the World Bank indicators to increase accountability, reduce corruption, and promote inter-agency cooperation. As a result, Kosovo has seen higher rates of business registration, employment, government revenues, and overall economic activity.

Designing Effective Policies that Streamline Business in Vietnam

For many years, Vietnam ranked below most other members of the Association of Southeast Asian Nations in the annual Doing Business Report. These low rankings had discouraged foreign investment and trade. USAID’s Governance for Inclusive Growth (GIG) Program helps tackle these challenges, working with the country’s public and private sectors to enhance governance and facilitate trade, with an emphasis on improving the legal and regulatory environment, accountability systems, and inclusive growth that benefits all citizens.

With GIG’s support, Vietnam has improved its rankings and implemented economically sound policies. Since 2014, the GIG program has supported the Vietnamese government to implement and amend Resolution 19, which requires ministries to revise their internal procedures and relevant legal documents to spur business. To date, Vietnam has implemented four versions of Resolution 19, each a little more effective.

As GIG Program Director David Anderson expressed: “Thanks to strong government leadership, effective collaboration, public consultations, and field studies to better appreciate the difficulties faced by businesses on the ground, Vietnam jumped 14 rankings ― from 82nd place in the last report to 68th this year. Vietnam has implemented a system of annual reforms through Resolution 19 that promise to continue its trend of reforms.”

Vietnamese businesses are now spending less time processing and paying taxes, clearing exports and imports, enforcing contracts, and getting electricity for office spaces — all key indicators in the report. These improvements have enhanced private sector competitiveness and promoted increased trade and investment in the country.

14

Number of ranks Vietnam increased compared to 2016

10th

Kosovo's ranking overall in ease of starting a business (out of 190)

The Long-Term Impact on Economic Growth

Through PFD and GIG, Kosovo and Vietnam have made tremendous progress. In the 2018 report, Kosovo was ranked number 40 out of 190 countries in overall ease of doing business. Impressively, it ranked number 10 out of 190 countries in the “ease of registering or starting a business” category and was one of the top 10 most improved economies in the world. Vietnam saw its highest increase in rankings in the past decade, increasing 14 ranks compared to last year’s report. It is now ranked at number 68 out of 190 countries in overall ease of doing business.

A robust private sector creates more jobs, facilitates trade, and stimulates economic activity. Improvements in a country’s business enabling environment can catalyze lasting, sustainable economic growth by encouraging foreign direct investment and fostering an entrepreneurial domestic business community. A vibrant private sector, in the medium and long term, also means increased domestic revenue mobilization — allowing governments to invest back in providing improved services to its citizens.

The World Bank Doing Business Report gives countries a tool and a guide to measure improvement toward these goals and enhance overall private sector competitiveness. With the help of USAID, Kosovo and Vietnam are using the report as a roadmap to reform, and to success.