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***Please Note: the deadline for submitting comments on the Donor Guidance has now passed***
This Blog has been created to provide a space in which individuals can post comments or feedback on the Donor Guidance produced by the Business Environment Working Group of the Donor Committee for Enterprise Development.
To view the Donor Guidance please click here
General feedback and comments concerning a specific chapter or issue are both warmly welcomed. To view existing comments, or to post your own, please click on the relevant heading. If you would like to suggest additional categories, please email me.
This Blog has been created to provide a space in which individuals can post comments or feedback on the Donor Guidance produced by the Business Environment Working Group of the Donor Committee for Enterprise Development.
To view the Donor Guidance please click here
General feedback and comments concerning a specific chapter or issue are both warmly welcomed. To view existing comments, or to post your own, please click on the relevant heading. If you would like to suggest additional categories, please email me.
1 comment:
What is missing in the Key Messages is a comment on the relevance and the relationship of formal vs. informal institutions.
Success and failure of regulatory business environment reforms can only be understood if reforms of the formal rules of the game (Scope of the Donor Guidance) take into consideration the informal rules of the game. Therefore a sound understanding of informal institutions seems to be indispensable when designing regulatory reform.
The draft Donor Guidance (p.12) argues: "...development agencies should consider the barriers to formality, as well as the incentives to informality"
This is certainly right but maybe deserves a more detailed distinction between economic incentives and socially embedded explanations.
o On the one hand there are the incentives for the rational choice entrepreneur who is a profit maximiser to avoid paying taxes and to disregard environmental obligations etc.
o However, on the other hand informal institutions (e.g. in networks) may also constitute strong incentives to do business informally even if apparently good regulations are in place. Issues of tradition and trust are difficult to measure and therefore it is hard to predict at which costs informal business are willing to register, take contract disputes to court etc.
Finally, informal institutions are as well as formal ones the outcome of a political process thus reflecting interest. How these institutions were created, how they are changed over time is important when designing and reforming regulations which are basically aiming at nothing less than limiting the spread of informal institutions.
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