Approaches to Private Sector Development in Southeast Europe

1
Approaches to Private Sector Developmentin
Southeast Europe

• Dr. Khaled F. Sherif,
• Sector Manager,
• The World Bank

2
Barriers which add to costs for business in
Southeast Europe

• Weak financial sector
• Poor tax legislation
• Instability in policy decisions
• Poor institutional framework and enforcement
• Persistence of corruption, inefficiency and
  malfeasance of public sector institutions

3
Additional costs for business arise through

• Increased risk premiums
• Macroeconomic pressures and lower real sector
  growth
• Intensified distortions
• Lower performance standards
• Weaker environment for free and fair competition

4
Business environment weaknesses

• In Southeast Europe, one third of the economy
  remains informal
• Excessive number of registration procedures for
  business start-up
• Outmoded and excessive minimum capital
  requirements
• Too many procedures to enforce business contracts
• High costs of business closure

5
Measures to reduce the barriers

• Strategic medium-term macroeconomic development
  program needed for the region
• Market-based real sector framework
• Sound and modern financial sector regulations
• Civil service reform
• Modern business registration and exit procedures
• Professional accounting and audit procedures
• Stronger participation of specialized business
  associations, SROs

6
Reforms require

• Clearly defined short-, medium- and long-term
  goals and objectives
• Changes in the incentive structure, architecture,
  and institutional landscape
• Time, training and experience, particularly in
  judicial reform areas

7
Guidelines for improving the private sector
development

• Macroeconomic stability increases confidence
• Good governance is indispensable for both public
  and private sector effectiveness
• Human capital is central for development
• Sound infrastructure is a precondition for speed,
  efficiency and competitiveness.

8
Public sector reforms

• Public sector professionalism is closely linked
  to progress in private sector growth
• The World Bank has provided more than US 1
  billion assistance for civil service and public
  administration reforms
• Public sector today is much better equipped to
  provide fundamental government services that can
  promote private sector development