Guillotine Approach

The guillotine concept involves that each ministry lists of business regulations / licenses and then those that cannot be justified for retention within a certain timescale would be automatically rescinded.

Many developing countries face an enormous task of reviewing and updating the legacy of laws, rules, and other instruments dating back decades that imposes huge administrative, legal, and political costs, and takes a long time. The guillotine approach is a comprehensive approach to reviewing, streamlining, eliminating and updating regulations without the need for lengthy and costly legal action on each regulation. It provides both a quick fix to the most critical problems of inefficient and anti-market regulations, and a permanent system for quality control of new business regulations to avoid re-occurrence of the same problems. It can be used to improve future legal security by establishing a central electronic regulatory registry with positive security.

Examples:

• Used in Sweden in the 1980s.
• Mexico used the guillotine in the 1990s to eliminate 47% of government formalities and create its famous Federal Registry of Formalities and Services.
• As part of its economic recovery after the financial crisis of 1997, Korea used the guillotine to review 11,000 business regulations and eliminate 50 percent in less than a year.

In its economic transition, Hungary used the guillotine effectively in reviewing, eliminating, and replacing regulations not consistent with a market economy.

• In China, before its accession to WTO, it eliminated over 8,000 pieces of regulation that were not compatible with WTO rules.
• Moldova adopted the Regulatory Guillotine by law in January 2005 and is reviewing hundreds of regulations used in burdensome business inspections.
• Ukraine's State Committee on Regulatory Policy and Entrepreneurship announced similar and rapid reforms in June 2005.
• Macedonian Prime Minister Buckovski committed in April 2005 to adopt a guillotine law and regulatory impact analysis, with input from Jacobs and Associates working with FIAS.
• With assistance from FIAS, Kenya has adopted the guillotine approach to review business licenses and fees.

Regulatory Guillotine, Jacobs and Associates
(Regulatory Guillotine™ is a trademark of Jacobs and Associates in the United States and Europe.)

The Regulatory Guillotine in Three Transition and Developing Countries©, Scott Jacobs and Irina Astrakhan, Jacobs and Associates, 2006.
This paper provides the first evaluation of how the guillotine was used in 2005 in Moldova, Ukraine, and Kenya to launch bold and top-down reforms to the existing stock of regulations, and to lay the foundations for continued, sustainable improvement in how governments regulate.