Measuring and Evaluating Business Regulation: The OECD IRI Methodology

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Measuring and Evaluating Business Regulation
The OECD IRI Methodology
South East Europe Investment CommitteeWorking
Group on Regulatory Reform Second Working Group
Meeting3 April 2008 Vienna, Austria
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Outline

• Overview OECD Private Sector Development
  Division/ Investment Compact for South East
  Europe
• The OECD Investment Reform Index (IRI)
  MethodologyA Methodology for Measuring the
  Business Climate
• Investment Reform Index (IRI)Indicators
  Results
• SME Policy IndexIndicators Results

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OECD Private Sector Development
Division/Investment Compact for South East Europe

• Overview

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OECD Private Sector Development Division
Overview OECD Private Sector Development
Division/Investment Compact for South East Europe

• Newly created division under the OECD Directorate
  for Financial and Enterprise Affairs, responding
  to the growing demand for private sector
  development policy advice in non-OECD economies
• Target increase sustainable growth and
  employment through better business climate
  policy in emerging economies
• Approach horizontal regional programmes for
  national capacity building and regional peer
  review
• Investment Compact for South East Europe? 2006
  Investment Reform Index (IRI), 2007 SME Policy
  Index
• MENA-OECD Investment Programme (Middle East and
  North Africa)
• To be established Central Asia and Black Sea
  (CABS) Programme
• Develop targeted policy advice for business
  climate reform based on analytical research, and
  assistance with reform implementationleverage
  OECD guidelines and good practice

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Investment Compact for South East Europe I/II
Overview OECD Private Sector Development
Division/Investment Compact for South East Europe
Structure and Organisation of the Investment
Compact
Current operational regional offices Bulgaria,
Croatia, Moldova Offices to be set up Serbia
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The OECD Investment Reform Index (IRI)
Methodology

• A Methodology for Measuring Business Regulation

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Approach
The OECD Investment Reform Index (IRI)
Methodology
Example SME Policy Index Dimension on Cheaper
and Faster Start-up
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Organisation
The OECD Investment Reform Index (IRI) Methodology

• Government and stakeholders are systematically
  involved in policy analysis

• OECC Core Team collects data and interviews OECD
  Experts to establish a preliminary level for each
  country in each policy dimension.
• Local consultants build from the first
  measurement by collecting primary data in the
  countries and conducting interviews with local
  experts and private sector representatives. The
  results are analysed by the OECD Core Team and
  incorporated into the level of progress.
• The Country Economic Team evaluate the latest
  measure. After consultation mechanisms are
  complete, all parties confirm a final
  measurement, which is published.

Country Economic Team
OECD Core Team
Private Sector Local Consultants
OECD Experts Local Experts
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Overview of Investment Reform Index and SME
Policy Index
Based on the OECD Policy Framework for
Investment, the IRI measures reform in 8 main
policy dimensions
The SME Policy Index measures reform in the 10
Dimensions of the European Charter for Small
Enterprises
Main focus of evaluation in 2006
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The OECD Investment Reform Index (IRI)

• Indicators on Regulatory Reform Results

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IRI Regulatory Reform
IRI Indicators on Regulatory Reform
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IRI Regulatory Reform
IRI results on Regulatory Reform

• SEE countries have designed and implemented
  regulatory reform programmes
• In most cases these are broad, long-term
  strategies aiming at continuously improving the
  regulatory environment.
• In the case of several countries, however, only a
  small number of donor-supported programmes exist.
• Regulatory Oversight Bodies have been established
• Regulatory bodies provide an objective and
  separate opinion from the entity preparing the
  draft legislation and are typically located at
  the centre of government
• However, some of these bodies are understaffed
  and lack the power to challenge draft legislation
• Regulatory Impact Analysis (RIA) is still in
  infancy stage
• When applied it is rarely used to change draft
  legislation
• Key issue in the region because many SEE
  countries require rapid and extensive adoption of
  EU regulations in order to comply with the aquis
  communautaire
• Serbia is ahead of its peers in systematically
  applying RIA to draft legislation
• Regulatory Transparency is improving with a
  number of new public-private forums
• Examples include Foreign Investors Councils or
  Business Advisory Councils
• Many companies interviewed (particularly small
  ones) still report that there is little or no
  meaningful dialogue with policy makers.

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IRI results on Regulatory Reform
Overall IRI Scores For Regulatory Reform
SEE Average

• There is a high degree of variation among SEE
  countries concerning regulatory reform.
• Bulgaria, Romania, and Serbia - and to a certain
  extent Moldova and Montenegro - are
• clearly ahead of their peers in the region. One
  reason is the lack of RIA in many of those
  countries.

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The OECD SME Policy Index

• Indicators Results

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SME Policy Index Cheaper and faster start-up and
Better legislation and regulation
SME Policy Index Indicators on Business Regulation
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SME Policy Index Cheaper and faster start-up and
Better legislation and regulation
SME Policy Index Results

• Good overall progress on company registration
• First priority systematically tackle issue of
  licences and permits
• Second priority further improve the notification
  phase and move to one-stop-shop system
• In the medium term develop electronic business
  registers
• Good progress in establishing institutional
  framework but less on regulatory reform
• Priorities
• Streamline legislation and regulations
• Develop the institutional and legal framework for
  regulatory impact analysis

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SME Policy Index Results
Dimension 2 Cheaper and Faster Start-Up
Average
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SME Policy Index Results
Dimension 3 Better Legislation and Regulation
Average
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Publication of SME Policy Index (June
2007)
Publication of IRI (November 2006)
For further information, please contact
anna.gumpert_at_oecd.org or jakob.fexer_at_oecd.org www
.investmentcompact.org