Sweden good but far from best

Monday 23 January 2017

“Despite the crisis, the EU is still a very effective engine in the economic reform process,” said Augusto Lopez-Claros when he presented the World Bank’s Doing Business 2017 report. It is the only global ranking of the business climate in 190 countries. Europe and Central Asia are showing the greatest success.

This year’s report, which was presented at a packed seminar arranged by IVA and the Entrepreneurship Forum, focuses on different dimensions of inequality and for the first time includes a gender perspective in several indicators. 43 countries have laws and regulations that make it more difficult for women to run a business. To correct for this, countries lose points in the ranking if they discriminate against women. This year’s report also contains a broader look at taxes and an embryo of a twelfth indicator dealing with public procurement.

“The world is changing and so is our report. We are seeing how the new indicators are improving our relevance. One positive sign is that several countries are using Doing Business as a basis for their reform work, not least in Africa,” said Augusto Lopez-Claros, who is the director of the department responsible for the Doing Business reports at the World Bank. 

Augusto Lopez-Claros highlighted Europe and Central Asia as the regions having the greatest success. Augusto Lopez-Claros explains this by momentum from the EU. Countries applying for membership have implemented economic reforms with a focus on trade and economic stability. And after joining the EU these new EU nations continue their reform work because they now need to compete with older EU nations.

“Despite the crisis, the EU is still a very effective engine in economic reform processes.”

Johan Eklund, CEO of Entrepreneurship Forum, pointed out how useful and important the index is. But Sweden needs to be conscious of the risk of comparing itself to countries with uneven levels of development. In the total ranking Sweden does well (ninth place), but we should only compare ourselves with the best.

“Sweden must compare itself with the countries that rank at the top, and that shows us that we are quite mediocre.”

Leif Johansson, Chairman of AstraZeneca, Ericsson and IVA, emphasised how Doing Business shows that the EU project, despite the crisis, has been enormously successful in terms of strengthening the business climate and the economy in general.

“The EU deserves a lot of praise; we’ve come a long way since WWII.

The index is very useful to us in our work,” said Lena Sellgren, Chief Economist at Business Sweden. “We use the index, for example, to map competition, to prioritise markets and to provide guidance to Business Sweden’s offices around the world. Seeing where we stand in the international competition improves Swedish self-confidence.”

Leif Johansson also pointed out the practical benefits; the index can be used to decide where the best places to invest are. He also drew attention to how economic development actually makes things better for everyone.

“It’s not a zero-sum game; a better business climate and increased competition strengthens the whole world.”

Chairman of the Government’s committee on trade and industry (Näringsutskottet) Jennie Nilsson (S) maintained that the benchmarks in Doing Business are very useful. She emphasised the importance of Sweden continuing to improve in weak areas such as financing, the regulatory burden and framework conditions.

“We’re prioritising reforms to improve the business climate, but are we doing it well enough? It’s a race to the top.”

Augusto Lopez-Claros concluded the seminar by adding that the index does not at present include job market indicators, but that they are hoping to be able to reintroduce them.

“If the job market indicators come back it is likely that Sweden will decline in the rankings in areas where there is room for improvement.”

DOING BUSINESS INDEX

The index covers eleven indicators on the climate for starting and running a business. The focus is on the formal sector, regulations and laws, as well as other factors impacting the daily operations of SMEs. This year’s results show that there has been improvement in 137 of the 190 countries and in the world as a whole 248 reforms have been implemented to simplify and improve the business climate. The indicators are relative, which can mean that one country loses points despite implementing reforms. To balance this, the study is supplemented by the distance to frontier benchmark. This makes it possible to compare a country with the top ranking ones. Even if a country falls in the overall ranking, it can still improve in the distance to the best practice frontier.

 

Author: Text och bild: Entreprenörskapsforum