If the 2012 Olympics in London this summer taught us anything, it's that any athlete can win a medal if trained and coached in the right environment. Countries with smaller populations, smaller gross domestic product (GDP) and fewer athletic resources than the United States were able to produce world-record medalists at the games.
The same can be said for businesses around the world. Given the proper regulatory regime, business-friendly environment and the right incentives, companies can thrive and expand well beyond the limited confines of their local markets. That said, in order to achieve success, what must be done to foster the right incentives to provide businesses the tools they need to make it happen?
Each year, the World Bank and its private sector arm, the International Finance Corporation, compile a report entitled Doing Busi ness. The report is a series of annual reports that investigates, ranks and charts the regulations that enhance business activity and the ones that hinder it.
FOSTERING THE RIGHT ENVIRONMENT
Regulations affecting 11 areas of the life of a business are addressed, including starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and employing workers. All of these are measured and ranked for each area.
In analyzing the data, certain trends begin to emerge as factors in the business climate that allow businesses to grow and thrive.
The most important elements of successful business operations worldwide, according to the report, are housed under the law and what the law provides to businesses - in other words, how shareholders and stakeholders are protected. Procedural aspects of how long it takes to start a business and the administrative steps in running a business are also reviewed.
Finally, the report addresses the costs for companies to start, as well as the minimum capital required for a start-up. Of the countries ranked, the top five were Singapore, Hong Kong, New Zealand, the U.S. and Denmark.
"If we look at what these countries have in common, they usually have simple procedures that are fast and efficient," says Tea Trumbic, a private sector development specialist with the World Bank and co-author of the report.
She adds, "They also have very accessible information and what we've found is the use of technology and IT really helps to bring the...