Economic Freedom and Entrepreneurship: The Ease of Doing Business in East Europe

It is with great pleasure that I have looked at the newest edition of the Doing Business report. After all, I was curious how my new region ‐ I came from Asia in September 2014 to this part of the world – would fare. The good news is that 20 of the 21 economies located in my new region show upward trends as regards the ease of doing business (total number of economies 189). But whereas three of the top ten come from Asia, the first economy from East and Southeast Europe comes in at position 15. I admit that I was quite surprised to find Georgia occupying that position. This was unexpected. Even more surprised was I by the next two candidates: Macedonia on position 2 (overall 30) and Montenegro in position 3 (overall position 36). Coming from Thailand I knew that Montenegro would issue nationality documents and passports to billionaires in dire straits.

Another surprise was Bulgaria (4th in Eastern Europe, 38th overall), the poorest EU member state. Of course Bulgaria was far behind the Baltic states but it ranks ahead of “old European member states” such as Belgium (42), Italy (56), Luxemburg (59) and Greece (61). So doing business is not that difficult in the poorest EU‐member state. Romania, however, number 6 in East and Southeast Europe, is only ranked 48 overall. It is to be hoped that the new government will learn from the lessons of successful economies and reduce the barriers for people, who want to create jobs and wealth in the seventh largest state in the EU. That the authoritarian states Belarus and Russia would rank 57 and 62 was no surprise.

Croatia in position 65 needs urgent reforms as the youngest EU‐member. Paying taxes has become more costly and cumbersome in Croatia. In dealing with construction permits Croatia ranks 178 and in registering property at 92; both areas indicate that the issuing of permits and the administration of property rights could be modernized. I would say urgent reforms across the board are also needed in Serbia (91), Ukraine (96) and Bosnia‐Herzegovina (107). At the tail end of the region, in positions 20 and 21, we find Uzbekistan (141 overall) and Tajikistan (166). All the economies at the end of the ranking can benefit from a wealth of experience of other economies and concrete examples on how to tackle the specific problem areas.

The Doing Business 2015 Report also outlines the changes in methodology and the coming improvements to the index. Of course this will add to its complexity and will make it more challenging to interpret the outcomes of the research. What is clear, however, is the following:
governments play a key role in reducing the hurdles entrepreneurs face in opening, operating and closing businesses. These hurdles impose costs on the wider community and prevent job and wealth creation. Let us work with enlightened governments who care about their citizens for regulatory reforms to free its entrepreneurs.