U.S. CHAMBER OF COMMERCE

Why a Rule of Law Coalition for Business?

U.S. CHAMBER OF COMMERCE 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

U.S. CHAMBER OF COMMERCE 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

U.S. CHAMBER OF COMMERCE The Five Factors

U.S. CHAMBER OF COMMERCE 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

U.S. CHAMBER OF COMMERCE 1.Transparency – Laws and regulations applied to business must be readily accessible and easily understood; 2.Predictability – Laws and regulations must be applied in a logical and consistent manner; 3.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; 4.Enforceability/Accountability – Investors must be confident that the law will be upheld and applied equally to government as well as private actors; 5.Due Process – When disputes inevitably arise, they must be resolved in a fair, transparent, and pre-determined process. The Five Factors

U.S. CHAMBER OF COMMERCE Defining Rule of Law for Business

U.S. CHAMBER OF COMMERCE Defining Rule of Law for 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.

U.S. CHAMBER OF COMMERCE Measuring Rule of Law for Business

U.S. CHAMBER OF COMMERCE Measuring Rule of Law for 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.

U.S. CHAMBER OF COMMERCE Quantifying the Intangibles

U.S. CHAMBER OF COMMERCE Quantifying the Intangibles The Rule of Law and Business Developing a Global Business Rule of Law “Dashboard” – Key Findings and Data

U.S. CHAMBER OF COMMERCE Quantifying the Intangibles: Building the GBRLD: Mapping, Extracting and Combining Indicators – a 3 step process Mapping What is the purpose of the index? What does it measure? How does it measure it – what is the methodology used? Scoring system – are scores/indicators weighed? If so how? What is the country coverage? Extracting Identify RoL indicators Identify the relevant RoL business indicators Extract indicators from Index with any internal weighting system intact Combining Prior to combination all scores from existing indices must be standardized into a percentage Group indicators from separate indices together into 1 metric/overall measure

U.S. CHAMBER OF COMMERCE Expected Findings

U.S. CHAMBER OF COMMERCE Main Findings Indices Mapped 12 indices/measures mapped and surveyed: 1.World Economic Forum: The Global Competitiveness Report The World Justice Project: Rule of Law Index Transparency International: Global Corruption Barometer 4.Transparency International: Bribe Payers Index 5.Transparency International: Corruption Perceptions Index 6.Transparency International: Putting Corruption Out of Business Survey 7.Freedom House: Freedom in the World 8.Heritage Foundation: Index of Economic Freedom Global Integrity: Global Integrity Index 10.World Bank, Worldwide Governance Indicators 11.The World Bank and the International Finance Corporation, Doing Business Millennium Challenge Corporation: Selection Criteria and Methodology

U.S. CHAMBER OF COMMERCE Expected Findings Indices and Indicators: No of RoL Business Indicators, % of Available Indicators

U.S. CHAMBER OF COMMERCE 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

U.S. CHAMBER OF COMMERCE Next Steps…

U.S. CHAMBER OF COMMERCE Thank You!