A report compares business environment in 22 cities in Bulgaria, Hungary and Romania with 187 other economies
A report published today by the World Bank, in cooperation with the European Commission's Directorate-general for Regional and Urban Policy, analyses 22 cities in Bulgaria, Hungary and Romania benchmarking them against their performance when it comes to business regulations and their enforcement in five areas, namely starting a business, dealing with construction permits, getting electricity, registering property and enforcing contracts. It also compares the situation in those cities, including the three capitals, with 187 other countries and provides recommendations and good practices for improving business environment.
The report is the first of the series "Doing Business in the European Union 2017" and is result of the joint work of the World Bank and the Commission, with the national authorities of the countries concerned.
It highlights, in particular, how the regulatory systems and business governance are key for enabling job creation and sustainable and equitable growth. Furthermore, it clearly shows that those factors should be analysed and addressed not only at national but also at regional and local level. The most marked differences in performance within each country are in areas where local authorities have the most autonomy in developing and implementing regulations, such as construction permitting, getting electricity and enforcing contracts. European Structural and Investment Funds play an important role in the process. On the one hand, they can be used by the authorities to address the bottlenecks identified in the report. On the other, improved local governance and business environment also lead to improving how investments are planned, managed and delivered.
Regional Policy Commissioner Corina Creţu said: "Through this report, the Commission and the World Bank join again their forces in creating an enabling business environment as an important part of the competitiveness and growth agenda in the EU regions. It shows how important is to focus on creating the right conditions while relying on local potential and assets. Such an approach based on the territorial level is at the heart of the report on strengthening innovation in Europe's regions due next week."
One of the most important features in the report is that each city can compare with and learn from its peers in other Member States but also from other cities within its own country. One of the champions is Romania’s capital of Bucharest which outperforms its smaller peers in most areas measured, dealing efficiently with a much higher demand for business services. Yet size not always matters: smaller cities in Bulgaria and Hungary are more business-friendly as they vie to compete with their respective capitals of Sofia and Budapest. Each of the three countries covered has cities that outperform the European Union average in at least one area: Varna and Pleven in Bulgaria in starting a business, Pecs and Szeged in Hungary in dealing with construction permits, all Hungarian cities and Oradea in Romania in registering property, and most of the cities analysed in enforcing contracts. Conversely, no city is close to the EU average in getting electricity. It also emerges that the differences in regional and local capacity are also important when assessing the quality of governance in relation to economic and social development or to manage the support from cohesion policy.
The Commission is currently cooperating with the World Bank under the subnational strand of Doing Business in 7 Member States: Bulgaria, Czech Republic, Hungary, Portugal, Romania and Slovakia and Croatia. Similar reports were done in the past for other countries (Italy, Spain and Romania), on their own initiative. This report may constitute a valuable input to the country reports within the European Semester and is closely linked with the Lagging Regions initiative, launched by Commissioner Creţu in June 2015 to examine the factors that hold back growth and investment in the low-income and low-growth regions of the EU (the lagging regions) and complementary to the ongoing work on strengthening innovation in Europe's regions.