Simeon Djankov, Hero and Genius

Support for specific reforms

Some reforms require not only ideas and learning from other countries but also investment in setting up new agencies or upgrading old ones, buying new technologies, and paying higher salaries for specialized experts. An example is the setting up of specialized commercial courts. This reform takes 2-5 years and costs from $5 to $25 million, depending on whether new buildings have to be bought. The logic behind such courts is clear: specialization increases the expertise of judges and lawyers, and allows
the use of simplified civil procedures. Doing Business 2007 reports on the success of such courts in Ghana and Rwanda.43 Azerbaijan, Georgia and Egypt are setting up such courts too.
 
There are several other such reforms: setting up one-stop shops for business entry and licenses, establishing credit information bureaus, upgrading property registries, reforming customs and tax authorities. These require expertise as well as some investment (table 4).
 
Table 4: How much does a reform cost?
Topic $ million
Ease of doing business 59-165
Starting a Business 2-5
Dealing with Licenses 5-10
Employing Workers 5-10
Registering Property 5-20
Getting Credit 2-5
Protecting Investors 5-10
Paying Taxes 10-25
Trading Across Borders 10-40
Enforcing Contracts 10-30
Closing a Business 5-10
Source: Author’s estimates. The cost includes drafting of legal texts and public dialogue.
 
European donor agencies are the most successful supporters of such specific reforms. The Swiss have supported successful court and customs reform projects, the Norwegians successful property registries, the British excel at reforming tax authorities, the Swedish at business registries, the Icelanders reforms in small states. Choosing which type of reforms to support frequently depends on what the donor is good at: Norway has the world’s best property registry, Switzerland is known for efficient customs.