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Why a Rule of Law Coalition for Business?

Why a Rule of Law Coalition for Business?. Why a Rule of Law Coalition for Business?. The field of rule of law is very broad Business has specific needs that may be lost in a broader rule of law application

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Why a Rule of Law Coalition for Business?

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  1. Why a Rule of Law Coalition for Business?

  2. Why a Rule of Law Coalition for Business? • The field of rule of law is very broad • Business has specific needs that may be lost in a broader rule of law application • Rule of law disputes tend to be highly politicized, company or industry-specific, and isolating – requiring business to speak with a collective voice

  3. The Link to Corruption How to fight corruption? • Deterrence – Punishing corruption through penalties applied to providers and demandeurs • Prevention – Transparency, process, and automation measures that reduce the opportunities for corruption by systematically reducing discretion exercised by public officials

  4. The Five Factors

  5. The Five Factors Five factors related to the rule of law determine the ability of business to make rational investment and operating decisions, and thereby have a reasonable expectation of returning a profit in any given market

  6. The Five Factors Transparency – Laws and regulations applied to business must be readily accessible and easily understood; Predictability – Laws and regulations must be applied in a logical and consistent manner; Stability – The state’s rationale for the regulation of business must be cohesive over time, establishing an institutional consistency across administrations, and free from arbitrary or retrospective amendment; Enforceability/Accountability – Investors must be confident that the law will be upheld and applied equally to government as well as private actors; Due Process – When disputes inevitably arise, they must be resolved in a fair, transparent, and pre-determined process.

  7. Defining Rule of Lawfor Business

  8. Defining Rule of Lawfor Business Rule of law for business exists where strong, efficient government institutions are accountable for the issuance, enforcement, and adjudication of market-governing rules through transparent, predictable, and pre-determined processes that maximize legal certainty for all aspects of economic activity.

  9. Measuring Rule of Lawfor Business

  10. Measuring Rule of Lawfor Business Some Measurable Elements Suggested by Definition • Strength of government institutions; • Degree of governmental efficiency; • Existence and strength of internal checks and balances; • Legal basis for rulemaking authority; • Governmental capacity for legal and regulatory enforcement; • Access to and reliability of review and appeal processes.

  11. Quantifying the Intangibles

  12. Quantifying the Intangibles The Rule of Law and Business Developing a Global Business Rule of Law “Dashboard” – Key Findings and Data

  13. Quantifying the Intangibles:Building the GBRLD: Mapping, Extracting and Combining Indicators – a 3 step process

  14. Expected Findings

  15. Main Findings Indices Mapped • 12 indices/measures mapped and surveyed: • World Economic Forum: The Global Competitiveness Report 2012-13 • The World Justice Project: Rule of Law Index 2012-13 • Transparency International: Global Corruption Barometer • Transparency International: Bribe Payers Index • Transparency International: Corruption Perceptions Index • Transparency International: Putting Corruption Out of Business Survey • Freedom House: Freedom in the World • Heritage Foundation: Index of Economic Freedom 2013 • Global Integrity: Global Integrity Index • World Bank, Worldwide Governance Indicators • The World Bank and the International Finance Corporation, Doing Business 2013 • Millennium Challenge Corporation: Selection Criteria and Methodology

  16. Expected Findings Indices and Indicators: No of RoL Business Indicators, % of Available Indicators

  17. Expected Findings Main Findings I: Qualitative Each index/survey seeks to measure different things: RoL, economic competitiveness, rate of corruption, governance etc. Overall some indices have a greater degree of focus and specificity of RoL business issues e.g. WEF, World Justice, GII and Doing Business But business related RoL indicators often lost in translation/overlooked as they are only a small part of overall findings Lack of specificity or focus on business related indicators is not a weakness or criticism of existing indices – not the purpose of the individual index to measure this Extracting and combining key indicators on RoL business issues into GBRLD reveals data/results that are often lost in a bigger index/survey But there are limitations – new and more detailed RoL business indicators included in existing indices would strengthen overall body of research

  18. Next Steps…

  19. Thank You!

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