25 May 2006

Regulations, and the ease of doing business

One big issue for governments everywhere (especially in a competitive and mobile global economy) is the maintenance of appropriate regulations to ensure that economic life is conducted with transparency, predictability and fairness. Further, regulations should not add too costly a burden to businesses, or the cost of creating new business activity becomes too great, and investors take their money elsewhere. Over-regulation can be a constraint on economic growth - besides just adding to people's everyday frustration with 'red tape'. The NZ government has recently announced a review of regulations governing business (see Beehive website link on the right).
Although the World Bank has rated NZ number 1 in the world on its 'ease of doing business' survey scale (click here to see their international rankings), the NZ Government has accepted that more needs to be done to streamline regulatory compliance for business.


At 11:14 AM, Anonymous Anonymous said...

Sorry for not commenting on this before, considering that the bulk of my job is in administering regulations which ultimately come from central govt. All I can say is, for NZ to rank first in the world, the rest of the world must be a helluva place to do business! I suspect that the burden falls heaviest on small businesses which don't have separate HR, Treasury, Payroll, Corporate etc divisions, but have to sit down and take care of the compliance requirements when they have closed their doors at the end of the day.Can't quote the stats, but I think that most NZ businesses are "small".
Another thing to take into account though, is that it seems regulation has had to step in because people cannot be relied upon as much as they used to, to be fair minded and reasonable in their dealings with their fellows. Of course I bame Rogernomics at least in part for this, and globalisation of values through crap american tv shows, to the lowest common denominator. People are becoming more litigious too, and that also has consequences for the regulatory environment we live and work in.
I feel better now thanks. I hope it provokes someone to respond. When I asked Grant to provide a forum for the class to discuss stuff in, I got the impression he wasn't greatly enthused to do too much because he considered they aren't worth the effort. Well, he has gone to the trouble of doing something worthwhile, and you, my fellow classmates, are proving him correct by not diving in. I hope, now that you have your first essay out of the way that you will feel inspired to contribute.
Warmest regards (I really do want to hear from more of you)

Mark V

At 8:58 PM, Blogger alberto said...

Government regulation also seems Keynesian. I agree that some areas, specially the one that produces bad externalities, must be regulated. But this effort will only work if the judiciary is ready to respond promptly and effectively.
Mark I have being trying to comment almost everything. Please do not regulate that. Just kiding.

At 9:08 AM, Anonymous Grant said...

Mark is right about most NZ businesses being small and hence any amount of regulation is a big burden, and the Minister's speech recognised this.
Alberto's point that regulation seems Keynesian is worth commenting on: Oddly enough, the neo-liberal programme of so-called 'deregulation' - which does promote competitive provision of services and less state monopoly - often results in more complex laws and regulations (to control the competitors), and/or a more litigious (and hence costly to business) environment. I can cite examples if you don't believe me! Mark's comments kind of hint at the same point.

At 10:25 PM, Blogger alberto said...

I agree with you Grant and that is why I emphasized the rule of the judiciary. In countries like mine big companies have a great influence in judicial decisions, through lobby or corruption.
I also think that the Third Way is more committed to regulations, specially using Agencies for each sector.
Neo-Liberals in my point of view tend to try to regulate losses and deregulate profits, this is specially true in the financial mkt.

Best Regards,


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