When government regulations establish a privileged position for certain companies or individuals it often creates opportunities for rent-seeking — an abstract economic concept perfectly illustrated by the plight of Khartoum’s 20,000 wheelbarrow users.
Typically, rent-seeking involves firms like regulated power monopolies leveraging their privileged position in a marketplace to extract excess profits by suppressing competition. Rent-seeking doesn’t generate wealth, it just redistributes it to those with more power and influence. The company benefits, and often the government officials involved benefit, but the rest of society loses out.
The regulations that enable rent-seeking are usually deeply entrenched and difficult to dismantle – for no reason other than the fact that someone, somewhere is benefiting from them.
The BBC recently examined a peculiar, yet classic, example of how such nonsensical regulations hamper entrepreneurship and economic growth: wheelbarrow fees in Sudan. According to the report, local Sudanese in Khartoum are not allowed to own their own wheelbarrows. Instead, they are forced to rent them from contractors who have made a deal with the local government.
“Enterprise Cities” aim to emulate the success of places like Dubai.
With rates of urbanization increasing, the idea of “Enterprise Cities” is gaining ground as countries to rethink their approach to economic policy and the best strategies to promote broad-based job creation and growth.
Driven by industrialization and the search for better jobs, millions of people are moving from the countryside into cities. This is proving challenges for governments as it creates increased demand for public services and expensive infrastructure projects to meet the needs of citizens. Globalization is also increasing competition among countries to attract multinational companies and foreign direct investment.
Widespread reluctance to implement comprehensive reforms, as well as burdensome legal and regulatory regimes, are impediments to economic growth and entrepreneurship, leaving developing countries in a difficult situation.
Special zones with autonomous regulatory systems that bolster competition and foster the growth of competitive markets are one way to cut through the gridlock and bring prosperity to the burgeoning cities of the developing world.
By David Owiro. This post originally appeared on IEA Kenya’s blog.
If you have ever taken a walk around the major towns in Kenya you will come across warning notices and signboards announcing to the world that “this plot/land is not for sale” or that “this property is not for sale.” Also, if you are a keen reader of the daily newspapers you will come across, in the back pages, notices announcing “caveat emptor or buyer beware” on some parcels of land. These are often put up by individuals seeking to enforce their property rights by deterring members of the public who are likely to be defrauded by unscrupulous groups or individuals.
And now, the National Land Commission, which is the body mandated by the constitution of Kenya to hold public land in trust, has also began placing adverts warning members of the public against buying land without carrying out background searches or relying on certificates of titles.
The reason all this is happening is that people have taken advantage of the previously weak property rights regime that allowed for exploitation and manipulation of official land and property records in order to defraud unsuspecting members of the public.
Last month more than 1,000 people gathered for the 2014 Nepal Economic Summit,a historic event hat brought attention to the challenges and opportunities to Nepal’s economic development.
More than 30 international speakers participated in the event including government officials, key ministers, business leaders, and civil society representatives. USAID Administrator Rajiv Shah also attended the event and gave some closing remarks.
CIPE partner Samriddhi, the Prosperity Foundation was the knowledge partner of the event and has been working closely with the government and stakeholders in formulating the reform agendas over the last two years, preparing discussion papers on key issues such as agriculture, energy, and tourism, outlining major challenges and making recommendations. The papers build on Samriddhi’s Nepal Economic Growth Agenda, launched in 2012. Samriddhi’s economic research has become an important source of independent policy analysis in Nepal.
Some central questions in international development are how to measure progress, make sound cross-country comparisons, and build the case for political and economic reforms. Multilateral institutions such as the World Bank play the role of repositories of credible, accessible, and up-to-date information that serves as an international benchmark for progress. Access to information is the basis for evidence-based policymaking and can serve as a catalyst for necessary reforms.
The World Bank recently convened a conference to present research around its Doing Business index at my alma mater Georgetown University. The keynote speaker, Tim Besley of the London School of Economics, discussed the importance of World Bank data that is publicly available and internationally recognized as a reliable source of evidence-based policymaking.
The Doing Business Survey focuses on two main sets of indicators: regulations and legal institutions. The regulation indicators are the number of procedures, time, and cost involved in starting a business, to obtain a construction permit, getting access to electricity, registering property, paying taxes, and the ability to trade across international borders.
Women entrepreneurs at a networking even in New Delhi. (Photo: Wikimedia Commons)
By Laura Boyette and Teodora Mihaylova
Including women in the economy is not just the right thing to do, but also the smart thing for a country’s economic growth. Women’s participation in the workforce is potentially a major source of global economic growth and job creation, and yet a recently released World Bank report finds that nearly 90 percent of 143 countries studied contain at “least one legal difference restricting women’s economic opportunities.”
Women make up half of the world’s population, yet face many more cultural, legal, familial, religious, and economic barriers than men to entering the market. These impediments limit women’s ability to provide for themselves and their families, depriving them of the essential human right of autonomy in their decisions, economic opportunities, and the ability to petition the government or have access to institutions. These barriers also deprive countries of significant GDP growth and stand in the way of attaining full development goals. Previous CIPE blogs have discussed the merits of closing the economic participation gender gap, how gender equity is an integral part of the post-2015 development agenda, and the fact that women are natural entrepreneurs but lack resources to develop skills.
The Women, Business and the Law report, recently introduced at the Brookings Institution, examines the legal and regulatory barriers to women’s participation in the workforce through seven indicators: gaining access to institutions, using property, getting a job, providing incentives to work, building credit, going to court, and protecting women from violence.