Better Regulation for Growth

Improving the Governance Framework for Investment



The overall objective of this joint initiative of the UK’s Department for International Development (DFID), the Dutch Ministry of Foreign Affairs and FIAS is to develop and disseminate practical and operational policy guidance that will help developing countries design and implement effective regulatory reform programs.

Regulation impacts growth and poverty
Regulatory risks and costs are key obstacles for doing business and attracting FDI. Flawed regulation translates into major constraints on growth, productivity and the formal economy. The potential impact of reform is significant. Countries can increase GDP growth rates by up to 2-5% by improving regulatory practices. Least developed countries have the most business unfriendly regulatory frameworks and therefore the most to gain from regulatory reform.

There is increasing focus and commitment to regulatory reform
One-off reforms rarely have long-lasting impact on the confidence of the private sector to invest in a country. Successful reforms are not just about cutting the immediate red tape and addressing the symptoms, but also addressing the causes or the institutional factors that led to these obstacles in the first place. The Doing Business surveys and numerous country level studies of the investment climate have raised awareness and created a momentum for regulatory reform in developing countries. Countries are now looking for solutions.

Existing approaches are geared to developed countries, but often not relevant for developing countries
Originally developed and implemented in OECD countries, a range of regulatory tools and practices are now promoted in developing countries. While conceptually relevant, there is a need for a cautious and context-driven implementation of the so-called “OECD Agenda” for regulatory reform. An increasing volume of work and literature is now being directed towards regulatory governance in developing countries. However, there is still a gap in terms of adapting approaches used in advanced economies, and in terms of providing operational guidelines to reformers.

Featured Articles and Presentations

• Review of the Dutch Administrative Burden Reduction Programme (2007)
• Better Regulation for Growth - Improving the Governance Framework for Investment
• Kenya's Radical Licensing Reforms 2005-2007 (presentation)
• Kenya's Radical Licensing Reforms 2005-2007 (paper)
• Better Regulation for Growth Overview Paper
• Regulatory Reform in Africa - Why it Matters

For more information about the BRG program, email: brg@regulatorygovernance.org.