Tag Archives: Ease of Doing Business Index

06.25.2012 | India’s Planning Problems

India has a jute shortage that will affect a lot more than bags.

Our story began decades ago with India’s “license raj,” a bureaucratic reign (raj) that followed the British colonial raj. What to produce, who to hire, how much to pay, when to fire, you needed a license. While much of the license raj has been replaced by more of a market system, still, some of its remnants remain.

And that takes us to jute.

During the 1980s, the Indian government mandated that 100% of the wheat crop be packed in Indian-made jute bags. 250,000 factory workers make jute products and 5 million Indian farmers grow jute. The goal was Indian wheat, Indian jute, lots of production and lots of jobs.

The problem though, is that increases in wheat output have far exceeded jute production since 1990. By law, plastic bags can be used for 20% of the harvest in an emergency but no more. The rest has to be in jute. But there aren’t enough jute bags and packers add that some tear too easily.

You can see where we are going. With monsoon season starting, and a warehouse shortage also a problem, the wheat is going to spoil.

At #132 out of 183 nations in the World Bank’s Ease of Doing Business Index, India is still constrained by bureaucracy.

After reading about the jute bag shortage in WSJ.com, I went back to Timothy Taylor’s Teaching Company lecture on the license raj. His superb 36 lecture “America and the New Global Economy” course is a wonderful “listen” because of the stories he includes.

Posted by: adminEcon
Tags: Ease of Doing Business Index, Indian bureaucracy, Indian jute farmers, Indian malnutrition, Indian wheat crop, Indira Gandhi, jute shortages, license raj, socialism, wheat spoilage
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02.18.2012 | Doing Business in Greece

Sometimes getting 100 is not the best grade. In the World Bank’s Ease of Doing Business Index, 183 nations are ranked in terms of the friendliness of their regulatory environment. Greece is #100.

One feta cheese maker complained to The Economist last year about a rule requiring him to publish his balance sheet in 3 different newspapers when he could just use the internet. Others protest the limited number of licenses in professions ranging from architecture to long haul trucking that make them almost impossible to enter.

The NY Times Magazine tells us, though, that adversity can be inspirational. Whether looking at an all-natural mattress manufacturer, a wine entrepreneur emphasizing value, or a recently fired civil servant who started an herb business, you would see an upside to the Greek calamity.

Similarly, the Chinese see investment opportunities in Piraeus, Greece’s main port and Qatar has started directing $5 billion toward revitalizing Greece’s tourism infrastructure. Some European investors have even begun planning upscale Florida-like retirement communities on Greek islands.

Our bottom line: If businesses can freely function, when an economy contracts, as opportunities surface, investment will start to become more attractive.

The Economic Lesson

Focusing on creating and running a local business, the Ease of Doing Business Index has 10 topics. For starting a business, it looks at the number of procedures, how long it takes to accomplish them and their cost. Other topics include enforcing contracts, dealing with construction permits, and trading across borders.

Among the 183 nations that participate in the Index, Germany is 19, Portugal is 30 and Spain, 44. At 87, Italy is much further down the list.

An Economic Question: Looking at your country in the Ease of Doing Business Index, note examples of regulations that constrain business activity.

Posted by: adminEcon
Tags: Ease of Doing Business Index, entrepreneur, euro zone, Greece, regulation
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