Countries can boost global investment competitiveness - WB
Overly restrictive and obsolete laws are an impediment to foreign
direct investment and their poor implementation creates additional costs
to investment, a new report by the World Bank Group on Investing Across
Borders 2010 revealed.
This is the first World Bank Group report to offer objective data on
laws and regulations affecting foreign direct investment that can be
compared across 87 countries.
Clear and effective laws and regulations are vital for ensuring best
results for host economies, their citizens, and investors.
"Foreign direct investment is critical for countries' development,
especially in times of economic crisis. It brings new and more committed
capital, introduces new technologies and management styles, helps create
jobs, and stimulates competition to bring down local prices and improve
people's access to goods and services," World Bank Group Financial and
Private Sector Development Vice Persident Janamitra Devan said.
In Angola and Haiti excessive red tape means it can take half a year
to establish a subsidiary of a foreign company.
In Canada, Georgia, and Rwanda, this can be done in less than a week.
Leasing industrial land in Nicaragua and Sierra Leone typically requires
half a year as opposed to less than two weeks in Armenia, Republic of
Korea, and Sudan. In Pakistan, Philippines, and Sri Lanka it can take up
to two years to enforce an arbitration award.
The report finds that countries that do well on the Investing Across
Borders indicators also tend to attract more foreign direct investment
relative to the size of their economies and population.
Conversely, countries that score poorly tend to have higher incidence
of corruption, higher levels of political risk, and weaker governance
structures.
Investing Across Borders 2010 aims to help countries develop more
competitive business environments by identifying good practices in
investment policy design and implementation. It provides indicators
examining sector-specific restrictions on foreign equity ownership, the
process of starting a foreign business, access to industrial land, and
commercial arbitration regimes in 87 countries.
Investing Across Borders does not measure all aspects of the business
environment that matter to investors.
For example, it does not measure security, macroeconomic stability,
market size and potential, corruption, skill level, or the quality of
infrastructure.
However, the indicators provide a starting point for governments
wanting to improve their global investment competitiveness.
- World Bank |