In recent decades, the percentage of Venezuela’s workforce employed in the informal sector has been steadily growing, and by 2003 more people were employed in the informal sector than in the formal sector. This phenomenon – informality – can severely undermine a country’s economic and political progress and stability through weak rule of law and ambiguous property rights. Informal entrepreneurs cannot access the benefits associated with formal businesses, such as bank credit and legal recognition of their businesses.
In October 2003, when the Center for International Private Enterprise (CIPE) opened its office in Kabul, Afghanistan, strong and sustainable business associations were in short supply. Establishing an effective, trusted business network was crucial to private sector development. At the time, apart from the Afghan-American Chamber of Commerce (AACC), which was headquartered in Washington, D.C.
In the early 1980s, Hernando de Soto, a successful businessman and economist, left Europe to visit his native Peru. During his trip, he was struck by the disparity between the vibrant entrepreneurial spirit of the people and their desperate poverty. To find the reason for this gap between motivation and result, he decided to open a small garment factory in Lima. His first step was to hire four university students who would complete the bureaucratic procedures necessary to obtain a business license.
In the decade since the overthrow of the authoritarian Marxist Derg Regime, Ethiopia’s government has implemented an economic reform program designed to stabilize the country’s finances, promote private sector participation in the economy, and attract foreign investment. Yet decades of poverty, civil conflict, highly centralized authority, and unfamiliarity with democratic concepts are not easily overcome. Ethiopia’s transition to democracy depends on strengthening alternative sources of information and broadening political debate.
The Asian financial crisis of 1997 underscored the need for governance reform not only in the business community but also in national development finance institutions (DFIs). DFIs are established by governments to provide long-term financing and technical assistance to sectors of the economy not served by other providers of capital. Unlike regular commercial banks, development banks provide training and management expertise in addition to financial assistance. They can therefore play a central role in advancing corporate governance reforms.
The Philippines has struggled in the last few decades to establish a democracy capable of addressing the needs of all levels of society. Reforms must strengthen the institutions of government and address inadequacies in business and social sectors in order to build a more representative public governance system. In the words of Dr.
In the mid-1990s, most private businesspeople in Georgia felt that they were caught in a “no-man’s land” between the command economy and a market economy. The Georgian Parliament passed 700 new pieces of legislation over five years to help create the legal framework for a market economy. Yet the legal transition was hampered by a lack of mechanisms for effective implementation, administrative lethargy, and contradictions among the different laws.
Bulgaria’s transition to democracy and a market economy in the 1990s was severely constrained by corruption. As state resources were privatized, institutional weaknesses left openings for corruption and allowed the influence of former communist nomenklatura and organized crime. Corruption reached every sphere of life and weakened public confidence in democracy.
In Kenya, the millions of entrepreneurs and workers in the informal sector have long been disorganized and without a voice. Known as the jua kali, the sector faces numerous challenges. Cumbersome laws and regulations tend to inhibit the growth of jua kali businesses, and as business owners are unable to secure ownership over their shops and land, it is diffi cult to access credit.
To these numerous challenges, the government has given a mixed response, largely because of a lack of dialogue between the government and the informal sector.
The Dhaka Chamber of Commerce and Industry (DCCI) has led the way in integrating private sector input into Bangladesh’s national policy process. With assistance from the Center for International Private Enterprise, DCCI developed an advocacy campaign that achieved important economic reforms. These reforms liberalized the economy, improved the investment climate, facilitated job creation, and made government more responsive and accountable.
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