Regulatory Reforms for Improving the Business Environment in Selected Asian Economies — How Monitoring and Comparative Benchmarking Can Provide Incentive for Reform

56 Pages Posted: 24 Mar 2010 Last revised: 28 Sep 2010

See all articles by Srinivas Madhur

Srinivas Madhur

Asian Development bank

L Schou-Zibell

Asian Development Bank

Date Written: January 16, 2010

Abstract

The determinants of a business friendly environment that underpin rapid and sustained economic growth include the macroeconomic and financial market environments, infrastructure, labor market skills and efficiency, and governance and institutions. Obtaining licenses and credit to start a business, finding and managing labor, ensuring investor protection, enforcing contracts, paying taxes, trading across borders, and identifying the requirements for closing a business are all important factors in assessing the operating climate for doing business. By comparative benchmarking, this paper examines these determinants in six developing Asian economies — the People’s Republic of China, Indonesia, Malaysia, the Philippines, Thailand, and Viet Nam — and compares them with similar indicators for five benchmark economies — the newly industrialized economies (NIEs) of Hong Kong, China; the Republic of Korea; and Singapore; and the developed economies of Japan and the United States.

This paper also identifies areas where reform has taken place and where further efforts are needed, such as addressing policy uncertainties, the quality of governance and legal and institutional frameworks, and inadequate regulatory capacity. Attending to these shortcomings will require policymakers to implement structural reforms that improve efficiency and competitiveness by minimizing unnecessary regulatory barriers in business activities, encouraging private incentives and market discipline, creating a level playing field across all sectors, and fostering competition to upgrade institutional capacity. This paper argues that the regular monitoring of relevant indicators and comparative benchmarking can provide important incentive structures that encourage the sharing and implementation of good practices through peer pressure mechanisms and serve as a starting point for dialogue between governments and the private sector on reform priorities that can improve the business environment.

Keywords: Business environment, investment, Asia, benchmarking

JEL Classification: D21, D73, F21, K4, O57

Suggested Citation

Madhur, Srinivas and Schou-Zibell, Lotte, Regulatory Reforms for Improving the Business Environment in Selected Asian Economies — How Monitoring and Comparative Benchmarking Can Provide Incentive for Reform (January 16, 2010). Available at SSRN: https://ssrn.com/abstract=1572412 or http://dx.doi.org/10.2139/ssrn.1572412

Srinivas Madhur

Asian Development bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Lotte Schou-Zibell (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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