Supporting Business Environment Reforms: Practical Guidance for Development Agencies

This document provides practical guidance to development agencies to support business environment reforms in developing and transition countries. Business environment reform promotes competitive market development and enhances the effectiveness of other development interventions. However, in many developing and transition countries, the business environment is hostile to market-led growth. To aid the business environment reform process, the guide recommends that development agencies should:

• Adopt a systemic approach to reform;
• Respond to the political economy of reform;
• Ensure domestic ownership and oversight of reform efforts;
• Work with the government as lead agent;
• Strengthen role and capacity of key stakeholders;
• Focus on private sector needs through private-public dialogue;
• Sequence reforms;
• Address the implementation gap;
• Communicate effectively;
• Ensure donor coordination;
• Align reforms with national development plans;
• Balance national and international expertise.

Finally, development agencies can become effective catalysts for business environment reform, supporting partner governments in developing countries to generate economic growth and further reduce poverty on a large scale.