Following last week’s reporting of the main results of the World Economic Forum’s (WEF) Global Competitiveness Index for 2007-2008, several readers have requested me to provide further information. To interested readers I advise that the report is available for purchase from the Geneva-based WEF (online). The WEF website has lots of other related and useful information; the address is: www.wef.com
If I have interpreted the motive behind these requests correctly, persons seem to be particularly interested in accessing the full WEF list of the “most problematic factors for doing business,” as identified in its survey for purposes of categorising responses in Guyana. There are fourteen (14) such factors and these are listed in the schedule below, along with the scores for Guyana.
The Most Problematic Factors for Doing Business
(% of total responses) % of Response
Crime and theft 17.7
Access to financing 11.5
Corruption 10.3
Tax rates 9.4
Poor work ethic in national labour force 8.3
Inefficient government bureaucracy 8.2
Inadequate supply of infrastructure 8.1
Inadequately educated workforce 6.8
Policy instability 5.0
Tax regulations 4.6
Inflation 3.9
Government instability/coups 3.1
Foreign currency regulations 2.0
Restrictive labour regulations 1.1
Source: World Economic Forum (2007)
I have classified these individual problematic factors into five general “functional categories.” Firstly, four of them are directly related to what I term as “bureaucratic and regulatory provisions.” In the schedule these are government bureaucracy, tax, foreign currency and labour regulations. The percentage of responses these obtained are 8.2, 4.6, 2.0 and 1.1 respectively, for a combined total of 15.9 per cent. Second, put together “crime and theft” and “corruption” as one functional category account for 28 per cent. Thirdly, if strictly interpreted, “government policy issues,” as a functional category refers to policy instability and government instability. These accounted for 5.0 and 3.1 of the total responses respectively, for a combined total of 8.1. Fourth, the only category that may be classified as in some sense sociological is “work ethic.” This obtained 8.3 per cent of the responses. Finally, the remaining five problematic factors may be broadly classified as “economic.” These are access to finance, tax rates, infrastructure, education, and inflation. These scored 11.9, 9.4, 8.1, 6.8 and 3.9 respectively for a combined total of 40.1 per cent.
The prominent roles of “crime and theft” and “corruption” as problematic factors for doing business in Guyana complement the roles of criminal enterprises in the economy as well as the consideration that organized crime bosses are embedded among the ruling political elite. Further, it appears as if some of the other problematic factors could well have been indirectly affected by crime and corruption. Thus it is plausible that over the past decade, the “work ethic” in Guyana has been negatively impacted by these factors. In addition, given the poor wages and salaries, low incomes, as well as the slow growth *of GDP there is a strong temptation facing the average worker to engage in criminal excursions as a means of securing livelihoods. Indeed, even the “work ethic” of legitimate entrepreneurs and business persons would have been negatively impacted, especially when crimes against their businesses create losses and when illicit enterprises unfairly compete with them.
More broadly, in one way or another I would argue that the two problematic factors, “crime and theft” and “corruption” are related to three items of note: 1) the extensive underground economy, 2) the role of organized crime in it, and 3) the consequent spread of money laundering in the economy. I have already considered at some length the first two items and I plan to discuss in the next few weeks the third item: money laundering. Indeed following the recent public debate on this topic Guyanese do not seem to be either fully aware of the true nature of money laundering or the severe problems it poses for the Guyanese society.
Ease of doing business in Guyana: World Bank
It would be useful before concluding the discussion on “national competitiveness” if I briefly highlight the main results for Guyana in the World Bank’s recent survey of 178 countries on the “ease of doing business.” Although different in intent and design from the WEF’s “national competitiveness” focus, this survey offers meaningful comparisons.
The summary results for Guyana are shown in the schedule below:
Ease of Doing Business
Items 2008 Rank 2007 Rank Change in Rank
Doing Business 104 98 -6
Starting a Business 86 80 -6
Dealing with Licenses 69 70 +1
Employing Workers 71 71 0
Registering Property 53 55 +2
Getting Credit 158 156 -2
Protecting Investors 64 62 -2
Paying Taxes 100 96 -4
Trading Across Borders 101 93 -8
Enforcing Contracts 73 74 +1
Closing a Business 123 121 -2
Source: World Bank (2007).
As can be seen in the survey, Guyana ranked overall 104 out of 178 countries. Looking at the individual ten items that make up the measure of the “ease of doing business,” Guyana’s best ranking was in “registering property” (53) and its worst in “getting credit” (158). The overall rank in 2008 represented a fall in rank of six places compared with 2007, when Guyana’s overall rank was 98. The largest drop in the rankings (8 places) was for the item “trading across borders” where Guyana’s position fell from 93 to 101.
For six of the ten items Guyana was in the top half of the rankings (1-89) and the remaining four it was ranked at 100 or worse.
Guyana’s performance in this World Bank survey was more mixed than the WEF survey. There were some relatively good scores for individual items. The coverage of this survey was also greater – 178 countries as compared to 131 for the WEF’s Global Competitiveness Index.
As indicated above, next week I shall begin the discussion on money laundering.
