TUNESS Chart of the Week (TCW), Friday Feb 22, 2013
Beyond the present political instability and the security issues that have recently hampered the economic conditions in the region, we focus this week on some key indicators of the business environment that play a major role in shaping the confidence of internal and external investors. We study a sample of countries composed of Tunisia and other countries of the region that, considering their geographical locations, remain Tunisia’s direct competitors to attract foreign investments and external capital flows in the international markets.
The first indicator, Business Freedom Index, which measures the efficiency of the government regulation in terms of facilitating the procedures of starting, operating and closing business (e.g., time required, administrative procedures, minimum capital and cost incurred), confirms the leading position of Tunisia in its region over the last period. This position was further fostered since the revolution as a result of the set of measures adopted to encourage the private initiatives and to regain investors’ confidence by removing some of unjustified legal and/or financial barriers that have for long time limited the capacity and thus the willingness of economic agents to turn their innovative ideas into profitable projects. Despite these continuing efforts to encourage the business initiatives, Tunisia like other countries from the region, continue to suffer from the heavy burden of corruption practices that are very often widely tolerated within the society and with a dramatic impact in terms of erosion of the economic freedom and the introduction of “hidden” costs incurred by potential investors. Undoubtedly, one of the big challenges facing our country over the short run is the ability to fight those fraudulent practices (regardless of their nature; petty, grand or systematic corruption). Government along with local actors of the civil society should lead any efforts aiming at increasing domestic awareness of the threat posed by this phenomenon through concrete campaigns to spot and curb those practices. The long term economic development of the country and the social peace within the society will largely depend on the success of those efforts.
(Chart prepared by TUNESS Research Team), Data source: Heritage Foundation Database.