Reducing bureaucracy and corruption affecting small and medium enterprises
QueryWhat are the main tools/levers to help reduce the impact of bureaucratic corruption on small and medium size enterprises? Does removing bureaucratic discretion help (e.g.publishing fixed rates for taxes and duties, simplifying business registration procedures, conducting routine transactions electronically rather than in person)? Please cite country examples where possible.
1. The links between corruption and bureaucracy
2. Main trends in reducing bureaucracy
3. Country studies: Portugal and Georgia
This answer draws on a previous Transparency International Helpdesk answer produced in 2012 on the linkages between bureaucracy and corruption.
Excessive bureaucracy imposes a disproportionate bureaucratic burden on small and medium size enterprises, creating both incentives and opportunities for bribery and corruption. This can manifest itself in the form of excessive or overly rigid administrative procedures, requirements for unnecessary licences, protracted decision-making processes involving multiple people or committees and a myriad of specific rules that slow down business operations. Countries across the world have made use of a variety of tools to reduce bureaucracy and limit corruption opportunities affecting small and medium size enterprises. This includes one-stop shops, the use of data-sharing and standardisation, common commencement dates for new rules, as well as simplification of administrative procedures, and tailored guidance to SMEs. ICTs and E-government have also been used to improve administrative regulations and most importantly improve transparency and accountability. While in some countries such reforms are part of broader anti-corruption strategies, in others bureaucratic reform primarily aims at promoting growth, attract investments, and increase competitiveness. This answer analyses the case of Portugal which implemented extensive and ambitious reforms aimed at reducing bureaucracy, and the case of Georgia, which is often referred to as a best practice example in reducing red tape and curbing bureaucratic corruption.
Author(s): Maira Martini, Transparency International, firstname.lastname@example.org
Reviewed by: Marie Chêne, Transparency International, email@example.com Robin Hodess, Ph.D, Transparency International, firstname.lastname@example.org
Publication date: 8 April 2013