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Ease of Doing Business
by David Stanowski
26 November 2007


Is there a sign at the Galveston city limits that reads, "BUSINESS NOT WELCOME HERE"? Or, is it simply that the "soil", on The Island, is no longer "fertile" enough to allow businesses to flourish? These are the questions that MUST be answered!

Every year, the World Bank conducts an extensive survey of business conditions in 178 countries. This survey, called "The Ease of Doing Business", allows the countries who are ranked poorly to see their specific problems, which gives them the chance to make corrections and improvements. It is also a rating system for international businesses and investors considering which countries are acceptable for new ventures and investments.

For the most part, the scores on this survey are based on how the government either assists or impedes business, in its jurisdiction; although the affect and influence of the financial and legal systems also play a role.

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Obviously, there is a strong correlation between a high ranking on this survey, and a prosperous economy. In fact, this survey is one of the best ways to identify why many countries have weak economies. The U.S. has not ranked number one, for many years, due to the escalation of anti-business practices, by government at all levels, and the affect of civil suits on the business community. The latest survey placed the U.S. at number three; behind Singapore and New Zealand.

The available data shows that the Galveston economy has been performing at a very tepid pace compared to the average level for the State of Texas, and the national economy. Therefore, it is highly probable that the City of Galveston would not rank well on this survey. However, this is the exact reason that a survey like this should be conducted in this city! Doing so would serve as a diagnostic blueprint of the problems and deficiencies that impede local business formation and growth.

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A local organization could do this survey themselves, without the need to pay someone else another $100,000 consulting fee. They could ask the World Bank for a little assistance, or simply design a similar survey on their own.


"The Ease of Doing Business" survey looks at an economy, and its interaction with the government, and the financial and legal systems in ten categories, with several sections in each:

1. STARTING A BUSINESS
  • Number of procedures required
  • Time required
  • Cost
  • Minimum Capital required
2. OBTAINING LICENSES AND PERMITS
  • Number of procedures required
  • Time required
  • Cost
3. EMPLOYING WORKERS
  • Difficulty of hiring 
  • Difficulty of finding qualified workers
  • Rigidity of hours/work rules
  • Difficulty of firing
  • Firing costs
4. REGISTERING PROPERTY
  • Number of procedures required
  • Time required
  • Cost
5. GETTING CREDIT
  • Information needed
  • Legal rights
6. PROTECTING INVESTORS
  • Disclosure rules
  • Director liability
  • Shareholder suits
  • Investor Protection
7. PAYING TAXES
  • Number of payments
  • Time required
  • Total tax rate
8. ENFORCING CONTRACTS
  • Number of procedures
  • Time required
  • Cost
9. CLOSING A BUSINESS
  • Recovery rate (cents on the dollar)
10. TRADING ACROSS BORDERS
  • Documents for export
  • Time required for export
  • Costs for exports
  • Documents for import
  • Time required for import
  • Costs for imports

An "Ease of Doing Business" survey designed for the City of Galveston would probably need to revise the World Bank survey in some ways. Many local businesses may not be concerned about export and import issues, for example.

The survey could include a classification of each business by organizational type, i.e. sole proprietorship, partnership, corporation, or LLC, and record whether they offer medical insurance, and pension plans to the owners and employees.

Finally, every national chain, with a store in Galveston, could be asked what it is like doing business in Galveston versus their other locations.
 

For more information on the Galveston economy:
 
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