The right way to create wealth and fight poverty in the Third World

According to a new report cosponsored by the World Bank and the International Finance Corporation, economic growth in poor countries is often constrained by government-imposed obstacles that inhibit the development of home-grown businesses. The main remedies are to streamline regulations and cut taxes. TCS's Hans Lebohm gives his take (read the whole thing):

"If you were opening a new business in Lao PDR, the start-up procedures would take 198 days. If you were opening one in Syria, you would have to put up $61,000 in minimum capital - 51 times the average annual income. If you were building a warehouse in Bosnia and Herzegovina, the fees for utility hook-up and compliance with building regulations would amount to 87 times average income. And if you ran a business in Guatemala, it would take you 1,459 days to resolve a simple dispute in the courts. If you were paying all business taxes in Sierra Leone, they would take 164 percent of your company's gross profit."

These are the opening sentences of "Doing Business in 2006 -- Creating Jobs", a report cosponsored by the World Bank and the International Finance Corporation, the private sector arm of the World Bank Group. This is the third in a series of annual reports analyzing regulations that enhance or constrain investment productivity and growth. ...

As the report notes, reforms, while often simple, can create many new jobs. Jobs are a priority for every country, and especially the poorest countries. Doing more to improve regulation and help entrepreneurs is crucial to creating more jobs - and more growth. It is also a key to fighting poverty. Women, who make up three quarters of the work force in some developing economies, will be big beneficiaries. So will young people looking for their first job. The past year's diverse range of successful reformers -- from Serbia to Rwanda -- are showing the way forward. "We can all learn from their experience," said Paul Wolfowitz, president of the World Bank Group.