Measure first, then cut

Bad regulations rarely make headlines, but a new study by the World Bank, "Doing Business in 2005," shows that excessive red tape is one of the chief obstacles to growth in almost all poor countries. Pointless regulations often foster corruption, as firms and individuals have a greater incentive to bribe officials not to enforce them. Entrepreneurs suffer the most, not only from prohibitively high registration costs. In many poor countries, starting a new business often requires waiting periods of six months or longer, compared to a few days in developed nations. Because these onerous regulations stifle economic growth, the World Bank estimates the developing world could boost growth by 2.2 percentage points by slashing red tape.

Measure first, then cut

A new study shows that bad regulations are a huge brake on global growth and yet they can be reformed easily
Thursday, September 9, 2004

Click here for the original article on The Economist's website.

Copyright © 2004 The Economist Newspaper and The Economist Group. All rights reserved.

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