Measuring “Doing Business in 2010″ – World Bank vs. Reality

Doing Business - World Bank 2010

In newly released “Doing Business 2010” report, World Bank has very good news! In 2009, pro-enterprise reforms went 20% up; Eastern Europe, Central Asia, Middle East and Northern Africa are world regions with the most reforms implemented per country.

Between June 2008 and May 2009, 287 reforms were recorded in 131 economies, 20% more than the year before. Reformers focused on making it easier to start and operate a business, strengthening property rights and improving the efficiency of commercial dispute resolution and bankruptcy procedures.Two regions were particularly active this year: Eastern Europe and Central Asia and the Middle East and North Africa. In Eastern Europe and Central Asia, 26 of the region’s 27 economies reformed business regulation in at least one area covered by Doing Business. Governments in the Middle East and North Africa are reforming at a similar rate, with 17 of 19 reforming in 2008/09. In both cases, competition among neighbors helped inspire widespread reform.

I am in particular cheery for Moldova. As one of the top 10 performers in reforming business, Moldova’s 2010 regulations are supposedly making it easier for local entrepreneurs to start up a business (“offers an expedited, 24-hour company registration service for an additional fee”), to register property (number of days to register land went from 48 to 6 days), and paying taxes (employers’ payments to social security funds went down).

However, I am skeptical about World Bank’s tools and methodology as far as measuring “de facto” versus “de jure” improvements in doing business over time in country X or Z.  Especially with respect to the rigid assumptions in their approach to target businesses: no corruption, no foreign trade, ltd. only, 100% local ownership, etc. Their narrow definitions of business assume away a lot of potential inhibiting factors ( increases in either formal, informal or both types of transaction costs) that could offset the new achievements in regulating business. A few new official business reforms, therefore, might not de facto translate into easier doing of business in Moldova or in any other country, just as it also might not say a lot about development.

Trouble in the Silicon Valley. Blame USCIS

The US anti-immigration laws are bankrupting the Silicon Valley (Tech Crunch). H-1B – work visa – related costs and quotas impede American tech companies from employing foreign minds trained in American universities .

Running a business (profitably) is not easy; an economic crisis and the world wide competition in the industry will make sure you constantly optimize your costs and outputs. By all means, cutting back on costs is vital. In the tech industry’s case, firms look up cheaper yet highly skilled sources of labor – foreign labor. International students in US universities acquire virtually the same level of skills as their American colleagues, yet because of their lower opportunity costs in their home markets they will settle on mutually agreed lower wage rates with US employers. Cheaper yet equally or more productive labor will improve firms’ cost structure which in turn will lead to an increase in revenues, and maybe even profits!

Business in “modern” Russia – back to primitive violence

This is, sadly, the main reason why even if I wanted to, I wouldn’t do business in today’s  “modern” Russia…

“He was a very successful businessman,” Yelena Denisova, a member of the company’s board of directors, told The Moscow Times in a telephone interview Monday. “The company has produced the best wine in Russia. I don’t think he had any enemies. It could be only a robbery.”

I hope, I am not the only one who cannot believe that this was a case of a simple robbery, but rather a case of “normal” way to “compete” on the Russian market, as in if your business becomes attractive, and there is no way you would give up the gains earned through honest hard work, you will eventually be “stepped aside”, forever…

Wind farms – more could mean less

From yesterday’s Economist.com we find out that if there is one policy area that President Obama should not worry (about not being able to keep his promise), that is the renewable energy area as America has just become the world leader in wind power! They proudly say that last year America increased its wind-power capacity so much that it led to the overthrowing of Germany – the previous leader.

How cool… This seems to be excellent news that should make every American feel proud of his country and president. However, at a closer look, how good news is this?

First, I doubt that building more “capacity”, that is planting more wind farms, is necessarily a good thing for the economy. It depends on the efficiency of this form of energy in comparison with other possible alternatives. Questions such as, “what is the production rate per unit of time of all this newly created capacity?”, “What are the benefits provided by it in comparison with the costs of installing and maintaining it?” should have been answered in this article before jumping to easy conclusion.

Is it really so important for American people to know that they are nation is world’s number one in wind energy? May be, but I doubt they would enjoy it just for the sake of being number one as opposed to achieving it as a clear result of a competitive process.

Second, how can something like this be attributed to the current president? He has been in the office for only two weeks. This seems to be just one of those “lucky” coincidences in his case.

Whole thiefs on Amazon.com

If I were to describe myself as a customer, I would say that I am the passive type. The passive customer I define never complains to the seller about a product’s integrity ex-post buying it, but sees the situation as a rather unfortunate one – a bad choice made at the time of purchase – and takes full responsibility of his action rather then seeing it as an attack to his wallet. After all, no one forces us to buy or do anything; we do things because we want to and “No one needs anything, we simply want one thing or another” as my Microeconomics Professor Russ Roberts always says.

Lectia nr. 1 in project management – teoria constrangerilor

A ajuns si la urechile mele Teoria Constrangerilor – o filosofie a managementului de proiecte avansata de catre Eliyahu M. Goldratt un fizician israelian pasionat de administrarea afacerilor. In studiile si romanele sale (The Goal , It’s Not Luck , Critical Chain, Necessary But Not Sufficient) Goldratt propune solutii practice in intampinarea diverselor “constrangeri” cu care se confrunta managerii de proiecte in inecrarea lor de a realiza scopul urmarit in conditii optime. Constrangerile aparute sunt de fapt conflicte intre resurse, timp, control: – Data limita initiala de predare a proiectului ajunge a nu fi respectata;

Afacereza – expresia globalizarii afacerilor de pretutindeni

Unul din marile beneficii ale globalizarii este raspandirea si conectare rapida a ideilor antreprenoriale, a know-how-ului, a tehnologiei, etc., iar afacereza este dovada clara ca datorita prezentei multinationalelor in mediul lor de afaceri antreprenorii romani au adoptat cu succes atat teoria cat si practica de business americana.

Acest concept de “afacereza” este inventat si promovat de The Money Channel pentru un nou tv quiz-show – TESTUL DE AFACEREZĂ – primul concurs de cultura de business din Romania. De fapt, cred ca afacereza (afaceriengleza mai bine spus) e singura cultura de business din Romania si e super OK asa.

Problemele pentru noi apar insa in momentul in care sedusi de termeni in engleza avem tendinta de a-i folosi mai mult intuitiv, fara a avea o intelegere clara a semnificatiei acestora. Si mai grav e atunci cand esti in situatia de a explica sau a traduce termeni de afacereza non-vorbitorilor de engleza, adica publicului tau tinta pe piata: clientul roman (corporate).