With everyone searching for big solutions to the current economic problem - might I suggest that politicians and regulators would do well to 'think small' instead.
They could usefully start by looking at how the regulations they have developed impact on small and medium businesses which make over 98% of all enterprises in any economy. With research showing that countries with burdensome regulation have larger informal sectors, higher unemployment rates and slower economic growth, it might be sensible to explore ways of removing any unnecessary barriers to business success.
ACCA believes a 'think small first' approach should be adopted by governments when designing regulations. Poorly designed regulations can impose unnecessary costs on small business which, in turn, cuts their competitiveness and limits the opportunities for the positive contribution that they can make towards countries' economic development. Governments should therefore seek to adequately understand the overall effect that regulation has on small business and be brave enough to not intervene at all where appropriate.
I would really like to have your comments on what current regulation most irks you, and which you would like to see relaxed or removed.
I don't fully understand how "bailing out" inefficient players in the banking and auto industry will make businesses any better or more responsible. Perhaps, not bailing out the "big four" auto industry will make goverment subsidized transportation more competitive and widely used. Same goes for the banking industry. Not bailing out models of financing that are ineffective could make alternative models such as Islamic banking more wide-spread.
It seems that bailing out on large scale industries that have rendered themselves incompetent and uncompetitive goes against the core mechanisms of free-market economy.
Posted by: Fatema N. | 13 February 2009 at 23:27