Why I Envy the Scandinavian States

ezioman via Creative Commons

One day, two significant international institutions, each on the opposite side of the Atlantic, released two noteworthy publications on one common topic. And so, be it by chance or not, last week the World Bank in the USA and the Organisation for Economic Cooperation in Europe published their analyses evaluating the quality of regulatory policies. You might want to ask: so what? We’ll, let’s see.

It so often happens that regulation tends to cause some problems for entrepreneurs, hence it is good that this topic is being discussed on the international level. Nevertheless, no team (or in this case, two independent teams) of skilled analysts is ever a guarantee of a task well done. Just to illustrate, let’s take a look at Slovakia’s position in the newest World Bank’s Doing Business 2016 ranking. If you remember last year’s 37th place, and compare it to Slovakia’s 29th place this year, you will find to your (most likely) great surprise that the institution claims that our position has actually not changed since a bit. The solution to this little mystery can be found in the notes on methodology: it turns out that the way in which individual indicators are calculated was simply changed – thus the last year’s results were recalculated which in turn has caused the change from the 37th to the 29th place. So yes, it would seem that Slovakia still occupies the same spot in the ranking.

Leaving this small inconveniences aside, let’s focus on one peculiar thing that will strike you if you only as much as skim through the World Bank’s new ranking. Apparently, four Scandinavian countries hold the top 10 places. Denmark reached the 3rd place, Sweden, Norway and Finland the 8th, 9th and 10th, respectively. This only confirms that countries which are still seen as strong welfare states have considerably reformed and liberalized their business environment. And the OECD report will give provide us with more details as to how exactly have they reformed their regulations.

Denmark has been working on reforming regulations and simplifying the rules for businesses for the past 20 years. In 2012, they established a forum for better regulation, with representatives of employers and experts. Their suggestions must be reflected in the legislation. If the government does not incorporate the suggestions, they must thoroughly explain their reasons.

Next, Sweden has an independent board for better regulation, evaluating the quality of the government’s estimation of the impact of their legislation. In 2014 they created a calculator which makes it easier to estimate these impacts.

Furthermore, Norway is currently carrying out a program for improving the business environment which has as its goal lowering administrative costs by 25% by the year 2017.

Finally, Finland makes good use of websites and social media for consulting the public. At the same time their laws are increasingly being adopted only for a fixed term.

And what is keeping Slovakia from achieving top ranks in business environment rankings? From a total of 34 OECD countries, 29 of them have a minister for regulatory reform – Slovakia is not one of them. 33 OECD countries have a permanent institution for overseeing regulatory policy – Slovakia is not one of them. This uncompromising comparison is showing us two things. First, mere talking about change is not enough. Second, it would not hurt to follow a solution that is already working somewhere else.

Translated by Jakub Jablonický

Jan Oravec