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| Why many poor countries remain poor |
| 2004-09-17 |
A new report from the World Bank, Doing Business in 2005, shows that poor countries impose on average three times the administrative costs and twice the number of bureaucratic procedures as rich countries. The current issue of The Economist picks out some of the striking contrasts. For example, registering property requires one step in Norway, but 16 in Algeria. Incorporating a business takes two days in Canada, but 153 in Mozambique. Sacking a worker in Guatemala costs a firm three years' worth of wages, compared with almost nothing in New Zealand
In Haiti, for example, it takes 203 days to register a company, which is 201 days longer than in Australia. In Sierra Leone it costs 1,268% of average income, compared with nothing in Denmark. To register in Ethiopia, a would-be entrepreneur must deposit the equivalent of 18 years' average income in a bank account, which is then frozen. In Lagos, Nigeria's commercial capital, recording a property sale involves 21 procedures and takes 274 days. Official fees amount to 27% of the value of the transaction. In Norway the task takes less than a day and costs only 2.5% of the price of the property.Hat tip to the Adam Smith blog. |
| Posted by:Anonymoose |
| #2 To register in Ethiopia, a would-be entrepreneur must deposit the equivalent of 18 years’ average income in a bank account, which is then frozen. And a resounding WTF?!? Sounds like a closed shop to me. A standardized set of government transaction proceedures needs to be established. Any country that wants to receive even one cent of foreign aid should have to implement these streamlined methods. The article essentially details the geography of corruption and graft that keeps these impoverished countries poor. Unless such steps are taken, we are essentially throwing our money away. None of these nations will ever scale the ladder of economic development and success so long as the game is rigged in such a ridiculous fashion. |
| Posted by: Zenster 2004-09-17 11:30:06 PM |
| #1 Great roundup, A-Moose. Thanks for the post. |
| Posted by: Barbara Skolaut 2004-09-17 10:24:46 PM |