Tag Archives: business climate

Ukrainian Businesses Should Use the Momentum to Speak Up

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By Iryna Fedets

In Kyiv and in other cities across Ukraine, small and medium-sized businesses were a driving force in the recent protests that resulted in the ouster of former President Viktor Yanukovich and the formation of a new Cabinet of Ministers. Entrepreneurs personally participated in the pro-European Union movement, both on the streets and in financing the demonstrations and providing food and medical supplies.

According to a poll conducted in early February 2014, business owners made up about 17 percent of the protesters, although business owners only make up 4 percent of Ukraine’s overall population. Following the 2008 recession, the former government imposed changes in the regulatory and tax structure that increased corruption and raised the burdens on small business, which helped draw them to the streets.

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Looking for local governance stories

A local district council office in Kerala State, India. (Photo: Jason Diceman via Flickr)

Do you know of a well-intentioned legal framework in your country that seeks to increase accountability, achieve greater representation or encourage efficient service delivery, but lacks effective enforcement by local governments?

Are you familiar with local government practices that contradict laws on the books?

Do you know of civil society organizations, including business associations, conducting policy advocacy campaigns for ensuring effective enforcement of the laws or leading other efforts to improve local governance?

Do you have a knack for writing and for producing investigative economic journalism pieces?

If you answered yes to any of those questions and are a talented journalist or practitioner, CIPE and Global Integrity invite you to share with us your local governance stories. We are interested in stories focused on the role of both non-governmental actors and governments in promoting better enforcement of laws and regulations on the books.

Your story could describe, for example, how or why local governments fail to implement laws or regulations that reduce cumbersome business procedures, and how that under-performance affects entrepreneurs. Your story could also describe efforts by non-governmental organizations to identify public procurement practices at the city or municipal level that diverge from legal mandates, thereby increasing the risk of corruption. Your story could describe a policy advocacy campaign led by a civil society organization to ensure that laws are effectively enforced.

Local governance should be the focus of your story. It is in cities and municipalities where citizens have their first and closest interaction with government officials. Similarly, local governments tend to be responsible for the provision of services, infrastructure, quality of life, and other forms of support that both local and foreign-owned firms need to effectively participate in the market. As a result, well-governed cities and municipalities that enforce laws effectively create growth opportunities for business and geographical areas that increase productivity. Businesses that grow thanks to productivity gains stemming from well-governed local governments help create jobs and growth, while also alleviating poverty.

Your story should be no more than 1,000 words. Selected stories will be incorporated into a local governance publication that CIPE and Global Integrity are planning to publish. Authors will be compensated if their stories make it into the publication. Please visit Global Integrity’s Blog to learn more about this call for stories and how to submit your contribution.

How do you get policymakers to listen?

Many economic and governance challenges cannot be solved without input from the private sector. The private sector has essential knowledge of what drives business growth. Yet all too often policymaking excludes private sector input. As a result, bureaucracy and corruption drive up operational costs and push entrepreneurs into the informal economy.

The private sector and civil society, however, can take concerted action to address such challenges and help open up the policy process. Strategies for Policy Reform, Volume 2: Engaging Entrepreneurs in Democratic Governance—from the Center for International Private Enterprise (CIPE)—explores real-world examples of successful attempts to get policymakers’ attention.

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Urgency and Legitimacy in Post-Conflict Countries

Wade Channell shares great insights on reconstructing legal structures for lasting success in his new essay, “Urgency and Legitimacy: Tensions in Rebuilding the Legal Structure for Business in Post-Conflict Countries.”

“Urgent lawmaking is not the same as urgent building projects…  Normally, laws derive from the surrounding culture and power dynamics, with strong historical underpinnings as well. Unlike a machine in which parts can simply be exchanged, the legal system is dynamic, much more akin to a human body in which parts cannot simply be exchanged because of the complexity of factors involved in the transplant… The primary victim of urgent lawmaking is legitimacy.”

Mr. Channell calls for a voice for business in post-conflict reforms in order to foster legitimate economic reforms that address urgent business priorities while building long-term stability. The essay was published by USAID’s BizCLIR (Business Climate Legal & Institutional Reform).

Google Calls China’s Bluff

It is the 21st century equivalent of a showdown at the OK Corral – Google has called out China for allegedly hacking into the email accounts of Chinese human-rights activists and engaging in disruptive cyber attacks against Western companies that do business in China.  The myth that Western and Chinese companies are treated equally in China has now thoroughly been discredited after having been damaged by the Chinese authorities disapproval of the Coca-Cola/Huiyuan merger last year.  Now news reports are coming out detailing the attacks against a law firm and companies that are suing the Chinese government like Cybersitter for infringing on it’s IP.

Google’s announcement has unleashed a firestorm of debate, claims, and counter-claims from the companies involved as well as netizens around the world.  Chinese officials have stated that perhaps Google is just not prepared to compete in the Chinese market, contrary to the fact that Google has gone from a 15% to 30% search share over the past five years all the while having to jump through more regulatory hoops than its domestic search rival Baidu.  Perhaps most tellingly is the reaction in the real world – citizens have been leaving flowers and wreaths at the entrance to Google’s China headquarters, mourning the loss of their limited freedoms.

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Haiti: Open for Business?

“Haiti is open for business,” said recently the country’s Prime Minister Michele Pierre-Louis. “We’re coming out of the paradigm of humanitarian help and brotherly love and moving to the creation of wealth and business,” added the Haitian Minister of Tourism Patrick Delatour. The leaders’ encouragement came on the heels of a momentous investor conference held in Haiti in early October, organized by the Inter-American Development Bank, and promoted by the United Nations Special Envoy to Haiti, former U.S. President Bill Clinton. However, potential profit-driven investors have to confront a newly implemented rise in the country’s minimum wage.

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Investor’s Focus on the Ukrainian Market

On May 7th I attended an event sponsored by the U.S. – Ukraine Business Council here in Washington D.C. that featured an impressive gathering of legal professionals discussing the investment climate in Ukraine.  Each presenter offered a slightly different take on the current situation in Ukraine, but they all seemed to agree on several key issues:

  1. International investors continue to flood Ukraine with capital despite the risks.  The continued high pace of investment is due to extremely high returns on investment.
  2. Substantial reforms need to be implemented to improve the independence of the legal system and to the protect property rights of investors/owners.
  3. Ukraine’s entry into the WTO should pressure the government to revisit some current legislation on investment.
  4. The private sector and NGOs have provided the Ukrainian government with detailed analyses of reforms needed to improve the overall business climate.

I did notice a definite lack of consensus among the panelists on just how to enact these reforms and improve the business climate.  Providing Ukraine with detailed analysis and recommendations is great, but without government action everything remains “business as usual”.  I came away from the meeting feeling that if the private sector does not gather itself together soon and advocate for real change it will remain hopelessly divided in a semi-transparent and corrupt system.  Ukraine’s private sector is now sufficiently sophisticated to play on the world stage, but they first need to get their own house in order. 

CIPE’s partner in Ukraine, the Ukrainian Center for International Integration, has produced a series of short videos on the subjects of Ukrainian small and medium sized businesses and their place in the world market.  Ukrainian businesses and international investors need to unite to advocate on behalf of reform that will be beneficial for business.  Corrupt officials and semi-transparent legal structures do not provide jobs, income and infrastructure for the people of Ukraine; it is time for the private sector to make its case.