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  2. 2. © 2013 International Bank for Reconstruction and Development / The World Bank1818 H Street NWWashington, DC 20433Telephone: 202-473-1000Internet: www.worldbank.orgSome rights reserved.1 2 3 4 15 14 13 12A copublication of The World Bank and the International Finance Corporation.This work is a product of the staff of The World Bank with external contributions. Note that The World Bankdoes not necessarily own each component of the content included in the work. The World Bank thereforedoes not warrant that the use of the content contained in the work will not infringe on the rights of thirdparties. The risk of claims resulting from such infringement rests solely with you.The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views ofThe World Bank, its Board of Executive Directors, or the governments they represent. The World Bank doesnot guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, andother information shown on any map in this work do not imply any judgment on the part of The World Bankconcerning the legal status of any territory or the endorsement or acceptance of such boundaries.Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges andimmunities of The World Bank, all of which are specifically reserved.Rights and PermissionsThis work is available under the Creative Commons Attribution 3.0 Unported license (CC BY 3.0) Under the Creative Commons Attribution license,you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes,under the following conditions:Attribution—Please cite the work as follows: World Bank. 2013. Doing Business in Italy 2013: SmarterRegulations for Small and Medium-Size Enterprises. Washington, DC: World Bank Group.License: Creative Commons Attribution CC BY 3.0Translations—If you create a translation of this work, please add the following disclaimer along with theattribution: This translation was not created by The World Bank and should not be considered an official WorldBank translation. The World Bank shall not be liable for any content or error in this translation.All queries on rights and licenses should be addressed to the Office of the Publisher, The World Bank,1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: and Layout: Corporate Visions, Inc.
  4. 4. ii DOING BUSINESS IN ITALY 2013 THE DOING BUSINESS WEBSITE Doing Business in Italy 2013 report Download reports Access to Doing Business reports as well as Current features subnational and regional reports, reform case News on the Doing Business project studies and customized economy and regional profiles Doing Business reforms Short reform summaries Subnational and regional projects Differences in business regulations at the subnational and regional level Methodology and research The methodology and research papers Reports underlying Doing Business Law library Online collection of laws and regulations relating to business and gender issues Business Planet Interactive map on the ease of doing business
  5. 5. ContentsDoing Business in Italy 2013 is a new subna- more than 50 economies benchmarked Executive summary 1tional report of the Doing Business series. It in other subnational Doing Business stud- About Doing Business andmeasures business regulations and their en- ies. All data and reports are available at Doing Business in Italy 2013 8forcement across 4 indicators in 13 Italian cit- Bari (Apulia), Bologna (Emilia-Romagna), Starting a business 19Cagliari (Sardinia), Campobasso (Molise), Doing Business investigates the regulations that enhance business activity and those that Dealing withCatanzaro (Calabria), L’Aquila (Abruzzo), constrain it. Regulations affecting 5 stages construction permits 26Milan (Lombardy), Naples (Campania),Padua (Veneto), Palermo (Sicily), Potenza of the life of a business are measured at the Registering property 32(Basilicata), Rome (Latium), and Turin subnational level in Italy: starting a business, dealing with construction permits, registering Enforcing contracts 36(Piedmont) and the indicator trading acrossborders in 7 ports: Cagliari (Sardinia), property, trading across borders and enforc- Trading across borders 42Catania (Sicily), Genoa (Liguria), Gioia Tauro ing contracts. These indicators were selected(Calabria), Naples (Campania), Taranto because they cover areas of local jurisdiction(Apulia), Trieste (Friuli-Venezia Giulia). The or practice. The indicators are used to ana- Data notes 48cities were selected by the Department for lyze economic outcomes and identify whatPlanning and Coordination of Economic reforms have worked, where and why. The City tables 58Policy (DIPE) of the Presidency of the Council data in Doing Business in Italy 2013 are current Indicator tables 61of Ministers of the Italian Republic. The cities as of June 1st, 2012.can be compared against each other, and List of procedures:with 185 economies worldwide. This project is the result of collaboration of starting a business 64 the Government of the Italian Republic’s Department for Planning and Coordination List of procedures:Comparisons with other economies are of Economic Policy of the Presidency of the dealing withbased on the indicators in Doing Business 2013:Smarter Regulations for Small and Medium-Size Council of Ministers (DIPE) with the Global construction permits 71Enterprises, the tenth in a series of annual Indicators and Analysis Department of the List of procedures:reports published by the World Bank and World Bank Group. registering property 91the International Finance Corporation. Theindicators in Doing Business in Italy 2013 are Indicator details—also comparable with over 350 cities from enforcing contracts 98 Indicator details— trading across borders 99 Acknowledgments 100
  6. 6. 1Executive summaryIn the 1950s and 60s, Italy successfully Since 2011, Italy’s government has takenmade the transition from a rural economy far-reaching measures to restore confi-with a large agricultural sector, to one dence, stabilize the fiscal situation andwhere industry and manufacturing are remedy structural weaknesses. Under thethe engines of growth.1 However, over auspices of the “Europe 2020 Strategythe past two decades, Italy’s growth rate for Intelligent, Sustainable and Inclusivelagged behind other EU countries, such as Growth,” Italy’s “Stability Program” andGermany and France. The current global “National Reform Program” focus on fis-crisis originated abroad, but longstanding cal consolidation, on the one hand, andstructural weaknesses have exacerbated promoting growth, on the other.6 Theits effects inside Italy and triggered the fiscal consolidation measures includeworst recession in decades. Since 2008, adjusting taxation to increase taxes onItaly’s economy has shrunk by more than consumption and property while reduc-5%. Today, unemployment is at 10.7% ing taxes on business activity and work.and youth unemployment has hit a record The debt reduction strategy is to rein in34.5%.2 And despite the government’s spending in the medium term.prudent fiscal policy, Italy’s public debt-to-GDP ratio is among the highest of the However, the heart of Italy’s problem wasOECD high-income economies, while and is how to get back to more buoyantits private debt levels remain relatively economic growth. At a time of crisis, thismoderate.3 The International Monetary growth cannot come from an unsustain-Fund (IMF) expects the Italian economy able expansion of public spending andto contract by another 2.3% in 2012 and there is also recognition of the limits ofby 0.7% in 2013—with growth returning, prolonged austerity. There is, in fact,albeit only moderately, in 2014.4 greater acceptance among policymakers and the business community that growthItaly’s ranking on the World Economic has to come from boosting total-factorForum (WEF)’s “competitiveness index” productivity. This means increasingis 21st out of the 27 EU member states.5 efficiency, productivity and competitive-Italy’s main strengths are well-developed ness by allowing more competition in theenterprise clusters, a broad presence in product and services markets, encourag-the value chain, corporate activity spread ing small and medium-size firms to investamong many firms and high firm-level more on innovation, further liberalizinginnovation. However, the WEF report the economy, reforming the labor marketrecognizes that Italy’s potential is not and creating a flexible and simple fiscalfully realized due to weak competition, system that is transparent and efficient inburdensome government regulations and its Without reforms to addressthese structural gaps and obstacles to Four national action plans—“Save Italy”competitiveness, Italy’s growth is likely to (Salva Italia7), “Grow Italy” (Cresciremain sluggish over the medium term. Italia8), “Simplify Italy” (Semplifica Italia9) and the “Cohesion Action Plan” (Piano di Azione Coesione10)—started to
  7. 7. 2 DOING BUSINESS IN ITALY 2013 tackle structural weaknesses, cut red tape, electronic submission of applications for FIGURE 1.1 Comparing the regions of the improve the business environment and business start-up and construction proj- center-north to the south with respect to population, number of unlock competitiveness. ects. Furthermore, a single interface for active firms and contribution to customs services was created, making it gross national income The “Save Italy” decree, adopted at the easier for businesses to manage customs end of 2011, aimed to ensure financial sta- % documents.12 A new tax framework for 80 bility, growth and social justice. Among businesses13 reduces the tax burden on other things, it introduced regulations to 70 capital investments to encourage eco- free up the establishment and opening 60 nomic growth. The decrees also allow for hours of commercial businesses and substitutive powers that come into effect 50 reduce restrictions on business activities. in the event of non-action by an adminis- 40 The powers of Italy’s Antitrust Authority tration (silence-is-consent rules). 30 were strengthened, extending the range 20 of administrative acts it can scrutinize. Finally, the “Cohesion Action Plan” is 10 A “companies’ court” (Tribunale delle expected to lead to a more efficient ab- 0 Imprese) was set up with the aim of re- sorption and management of EU funds, in Share of Share of Share of ducing the long delays for commercial particular in the south of Italy. Specifically, total GNI active total enterprises population dispute resolution. In addition, new the plan aims to set the stage to resume Center-North bankruptcy procedures were put in place, public investment in infrastructure and South similar to Chapter 11 in the United States, improve the quality of services and edu- Source: Atlante delle Competitività, Unioncamere Nazionale to protect entrepreneurs under strain and cation in the south. Any strategy to over- and Istituto Guglielmo Tagliacarne, 2010. facilitate the continuation of their busi- come economic lags and deep-rooted ness activities. weaknesses that have accumulated over the years must pay particular attention to depending on where they establish their The “Grow Italy” and “Simplify Italy” the untapped growth potential of Italy’s businesses. This study benchmarks 13 decrees aimed to encourage private south (known as the Mezzogiorno). While cities and 7 ports on 5 Doing Business entrepreneurship; facilitate access to Italy’s center-north is characterized by topics. The summary results for starting markets; create an environment more well-developed industrial, service and in- a business, dealing with construction conducive to domestic and foreign invest- frastructure networks, the south is marred permits, registering property and enforc- ment; promote innovation, efficiency and by a partial and outdated infrastructure ing contracts across the 13 cities are pre- transparency in Public Administration; network and an old and inefficient indus- sented in table 1.1. The results for trading and accelerate the adoption of informa- trial system. The south has traditionally across borders in the 7 ports measured tion and communication technologies. contributed less to the national economy, are presented in table 1.2. Specific measures under the “Grow as evidenced by a number of indicators.14 Italy” and “Simplify Italy” decrees include Some observations should be made. GDP per capita in the north, for example, abolishing minimum fees for professional First, no city does equally well in all areas. is €29,527—almost twice as high as in services and encouraging an increase In fact, each Italian city ranks in the top the south (€17,417).15 The Mezzogiorno in the number of notaries and pharma- third on at least 1 indicator18 and in the has 35% of the population, 33% of ac- cies operating in the country. A detailed bottom third on at least 1 other indica- tive firms and generates 24% of total package of measures was introduced tor. Bologna, for example, ranks first on gross national income (GNI). Meanwhile, to reduce the administrative burden on dealing with construction permits and the center-north is home to 65% of the citizens and businesses—including the registering property but lags behind population, 67% of firms and generates speedier issuance of vital records—across other cities on enforcing contracts. In and 76% of GNI (figure 1.1).16 Italy. The establishment of start-ups that Turin, enforcing contracts is easier than incorporate as “simplified limited liability elsewhere, but starting a business and WHAT DOES DOING BUSINESS registering property are ranked below companies” is being encouraged, includ- IN ITALY 2013 MEASURE? most other cities. Catanzaro is on top of ing a €1 minimum capital requirement Doing Business tracks business regula- the ranking for starting a business, but for people under age 35. One-stop shops tions that affect small and medium-size performs poorly when it comes to dealing for “productive activities” (SUAP)11 across domestic limited liability companies.17 with construction permits. These results the country make it easier for entrepre- Rome represents Italy in the annual Doing can guide policy makers to areas where neurs to interact with their respective Business publication, which compares 185 improvements are possible without major municipalities. For instance, these one- economies worldwide. But entrepreneurs legislative changes. Cities can share ex- stop shops are increasingly enabling the in Italy face different local practices periences and learn from each other.
  8. 8. EXECUTIVE SUMMARY 3 TABLE 1.1 Doing Business in Italy 2013—where is it easier? TABLE 1.2 Ease of trading across borders Ease of Transshipment and Ease of dealing with Ease of Ease of Gateway ports regional ports starting a construction registering enforcing City business permits property contracts Rank City Rank City Bari, Apulia 6 9 7 13 1 Genoa, 1 Catania, Liguria Sicily Bologna, Emilia-Romagna 4 1 1 11 2 Trieste, Friuli 2 Taranto, Cagliari, Sardinia 11 2 6 5 Venezia Giulia Apulia Campobasso, Molise 13 8 3 5 3 Naples, 3 Gioia Tauro, Campania Calabria Catanzaro, Calabria 1 10 5 7 4 Cagliari, L’Aquila, Abruzzo 9 3 9 8 Sardinia Milan, Lombardy 8 3 7 10 Source: Doing Business database Naples, Campania 12 11 3 2 Padua, Veneto 2 5 12 12 outperforms the average EU economy Palermo, Sicily 5 12 2 9 on 1—registering property—where it is Potenza, Basilicata 3 13 11 3 considered a good-practice economy Rome, Latium 7 6 13 4 worldwide (figure 1.2). Registering Turin, Piedmont 10 7 9 1 property takes only 3 procedures, 24 Source: Doing Business database days and costs 4.5% of property value. Meanwhile, in the average EU economy, itSecond, for dealing with construction insurance—and finance. Second are takes 5 procedures, 28 days and 4.6% ofpermits, there is a negative and sig- the transshipment and regional ports, property value.nificant correlation with regional GDP.19 which mainly focus on transshipmentWealthier cities tend to have a more activities—whereby containers are The good news is that the regulatoryefficient construction permitting process. shipped and reloaded onto a different environment for entrepreneurs in ItalyWith regards to the other indicators, the vessel at a hub port—and on regional is improving—and the pace of change iscorrelation between income levels and trade. Regional ports play a key role in picking up. Relative rankings only tell partrankings is not significant.20 supplying area markets and connecting of the story. While the ease of doing busi- local entrepreneurs to national markets. ness compares economies with one an-Third, population size is not significantly For regional ports, the share of imported other, the distance to the frontier measurecorrelated with rankings across the vari- and exported containers compared to benchmarks economies to the frontier inous indicators. In some cases, smaller cit- the total number of containers handled regulatory practice, measuring the abso-ies perform better than their larger neigh- is significantly lower than in gateway lute distance to the best performance onbors. For example, it is easiest to start a ports. Among the gateway ports, Genoa each indicator. When compared acrossbusiness in Catanzaro and more difficult tops the ranking, thanks to the relatively years, the distance to frontier measurein Naples. Such results could be partially fast port and terminal handling time for shows how much the regulatory environ-attributed to smaller application volumes exports. Among the transshipment and ment has changed since 2005 in absolutein Catanzaro, compared to its larger, more regional ports, Catania is more efficient, terms. The results also show that Italy ispopulous neighbor. On the other hand, mainly thanks to rapid port and terminal closing the gap to the economies withlarge cities benefit from economies of handling operations for imported goods the most efficient practices on severalscale and they may have more resources (table 1.2). indicators. The largest strides took placeat their disposal to invest in administra- in starting a business, paying taxes andtive modernization than their smaller enforcing contracts (figure 1.3). ITALY’S PERFORMANCE ANDneighbors. IMPROVEMENTS AS MEASURED Since 2005 Italy has implemented aWith regards to trading across borders, BY DOING BUSINESS total of 14 institutional or regulatorythe 7 ports covered in this analysis fall Italy, represented by Rome, ranks 73 out reforms in all areas measured by Doinginto 2 distinct categories. First are the of 185 economies on the ease of doing Business—except dealing with construc-gateway ports, which typically handle business, according to Doing Business tion permits and trading across borders.large cargo volumes and service long in- 2013: Smarter Regulations for Small and Five years ago, the authorities startedternational supply chains. Gateway ports Medium-Size Enterprises—behind many to simplify business start up through aalso provide trade-related services—such EU economies, which together average single online filing system—which wasas distribution centers, warehouses and a ranking of 40 globally. Out of the 5 improved further in subsequent years, indicators covered in this report, Italy
  9. 9. 4 DOING BUSINESS IN ITALY 2013 FIGURE 1.2 Italy’s performance according to Doing Business 2013: Smarter Regulations for Small and Medium-Size Enterprises NEW HONG KONG NEW UNITED ARAB EASIEST (1) SINGAPORE ZEALAND SAR, CHINA ICELAND GEORGIA MALAYSIA ZEALAND EMIRATES SINGAPORE LUXEMBURG JAPAN EU 31 40 39 36 average 49 47 54 62 74 69 74 55 Italy 62 68 73 72 84 103 107 104 131 MOST DIFFICULT (185) 160 Ease of Starting a Dealing with Getting Registering Getting Protecting Paying Trading Enforcing Resolving doing business business construction electricity property credit investors taxes across borders contracts insolvency permits Note: Italy and other economies are represented by their largest business city and their rankings are based on Doing Business 2013: Smarter Regulations for Small and Medium-Size Enterprises. Source: Doing Business database. reducing requirements, time and cost. with fast and efficient response times. Registering Property Effective 2008, the corporate income tax Compared globally, it would rank 79 out The requirements to initiate the prop- rate was reduced from 33% to 27.5% and of 185 economies on the ease of starting erty transfer are identical throughout the the social security tax rate also dropped. a business as measured by Doing Business. country. These include obtaining an en- Enforcing a contract became faster, after ergy certificate for the building (ACE), as the civil procedure code was streamlined, Dealing with well as using a notary to execute the deed timeframes shortened and hearings construction permits of sale. The registration process itself condensed. It is easier to comply with the formali- varies depending on the city. In Bologna, ties to build a warehouse and connect Palermo, Milan, Naples, Rome and Turin, COMPARING REGULATIONS it to utilities in Bologna and Cagliari and 1 single electronic transmission registers IN 13 CITIES AND 7 PORTS more difficult in Potenza and Palermo. the building simultaneously with the Tax The number of requirements to build Agency (Agenzia delle Entrate) and the Starting a business a warehouse and hook it up to utilities Land Agency (Agenzia del Territorio).  In Since 2010, businesses across Italy must varies. In Cagliari, where the one-stop all other cities, the notary must first register through the single online filing shop for “productive activities” issues complete the online registration with the system known as ComUnica,21 managed the construction permit together with Tax Agency and then visit the property by the chambers of commerce. Thanks the preliminary clearances from the fire registry at the Land Agency to submit to ComUnica, starting a business now department, the health agency and oth- paper copies of the deed of sales (atto requires just 6 procedures in all cities but ers, it takes 11 steps. In Naples, where 3 di vendita) and transfer note (nota di 1.22 In Milan, Padua or Rome, an entrepre- different organizations are involved in trascrizione). neur can complete start-up requirements the water and sewerage connections, it in just 6 days, while in Naples it takes takes 15 steps. It takes about 5 months Thanks to the advanced digitization of 16 days. The time differences are due to to complete the process in Milan, but Italy’s professional services and public how fast the agencies linked by ComUnica more than 10 months in Catanzaro and agencies, registering property is also fast. respond. For example, in Milan, Padua, Palermo. The main delay is obtaining the Through the online platform Notartel, Rome or Bologna, the company registrar building permit (permesso di costruzione) notaries can access the land registry, ca- of the chamber of commerce processes from the municipality. In Catanzaro and dastre and company registrar databases applications in 1 day, while in Naples or Palermo, this step alone requires more online and carry out the necessary due L’Aquila it takes 5 days, on average. The than 6 months. The same process takes diligence in a matter of minutes before cost varies from 12.2% of income per half that time in Naples, Campobasso, they draft, execute and register the deed capita in Bari to 16.8% in Milan. In ad- and Potenza—and only 30 days in Milan. of sale. As a result, in Bologna, Naples, dition to start-up costs, limited liability There are also large variations in costs and Palermo, registering property takes companies must deposit the equivalent across cities. These stem mainly from just 13 days—faster than in Japan. On of 9.7% of income per capita as paid-in local building permit fees (contributo di the other hand, registering property is minimum capital.24 Catanzaro, the top costruzione), which constitute 87% of the expensive. Over 92% of the overall cost ranked city in starting a business within total cost. is composed of fees and duties set at Italy, combines low professional fees the national level—most important of
  10. 10. EXECUTIVE SUMMARY 5which are the registration tax (3% of FIGURE 1.3 Reforms improved various days (as in Bologna, Naples and Palermo)property value) and the cadastral tax (1% regulatory processes since 2005 and the cost to 4.3% of property valueof property value). The remaining 8% Distance to frontier (as in Catanzaro) would allow “Italiana” (percentage points)are professional service fees—including to rank 26 globally—near Finland and 100notary charges and the fees for the energy Starting a business ahead of Austria and the Netherlands. Ifcertificate, ACE. the municipality of “Italiana” improved 80 the efficiency of Cagliari’s one stop shopEnforcing Contracts for “productive activities”, allowed for aEnforcing a contract takes the same num- fast-tracked substitute for the buildingber of steps in the 13 courts measured, 60 Paying taxes permit as in Milan and lowered its fees asbut there are time and cost variations. in Naples, it would take 11 steps over 151Enforcing contracts is less difficult in days and cost 45.1% to obtain a construc-Turin, where it takes 855 days and costs 40 Enforcing contracts tion permit. That would imply a jump of22.3% of the claim value. It is most dif- 30 70 positions in the global rank, movingficult in Bari, where it takes more than Italy from 103 (as represented by Rome) 0twice as long (2,022 days) and costs 2005 2006 2007 2008 2009 2010 2011 2012 to 33 (as represented by “Italiana”), same34.1% of the claim value. While the high as Luxembourg and ahead of Finland and Note: The distance to frontier measure shows how far onnumber of cases can explain long waits average Italy is from the best performance achieved by any Spain. In contract enforcement, Turin has economy on any Doing Business indicator since 2005. Theto some extent, variations among cities measure is normalized to range between 0 and 100, with successfully reduced pending cases andalso show that courts can use tools to 100 representing the best performance (the frontier). sped up civil proceedings by establishingspeed things up. Effective tools include Source: Doing Business database. clear guidelines on case managementcase management systems, information and tracking judges’ performance. Othertechnology and specializing judges by cities should follow suit. However, the LEARNING FROM EACH OTHERsubject matter. The national government adoption of Turin’s practices would still As this study shows, local requirementsand local courts have launched a number leave “Italiana” lagging behind other or practices drive notable differences inof initiatives to speed up civil proceedings economies in contract enforcement. The procedures, time and cost across recent years. same is true for the starting a business On all indicators, there are good practices indicator. Looking beyond Italy’s bordersTrading across Borders to be found in Italian cities and regions. to regional and even global good practicesAmong the gateway ports, Genoa is the Reform-minded local governments can is another tool to identify more efficienttop performer. Through its port, a con- use Doing Business indicators to motivate practices. That could allow Italian au-tainer can be exported in 18 days at a cost and sustain reform efforts. There is no thorities to formulate policies aimed atof $940. Importing a container through need to reinvent the wheel: it is sufficient making additional improvements in thesethe port of Genoa takes 17 days and costs to start by introducing improvements al- indicators for cities across Italy.$935. Among the transshipment and re- ready successfully implemented in othergional ports, Catania is the most efficient: cities (table 1.3). Peer-to-peer learning Benchmarking exercises like Doingit takes 19 days and $1,020 to export a events can facilitate knowledge shar- Business motivate governments tocontainer while importing a container ing and provide opportunities for local improve business regulation. Theytakes 16 days and costs $1,040. On aver- authorities to bring their concerns to the uncover bottlenecks and identify whereage, Italian entrepreneurs need to submit attention of the national government and policymakers can look for good practices.4 documents, spend 19 days and pay to push the reform agenda for the country Comparisons between cities in the same$1,006 to export a standardized container as a whole. country can be even stronger drivers ofof cargo. To import, Italian entrepreneurs reform because it is more difficult for A hypothetical city (“Italiana”) adoptingneed, on average, to submit 4 documents, local governments to justify why doing existing good practices on starting a busi-wait 17 days and spend $1,131. Italy fares business in their city or region is more ness, dealing with construction permits,well compared to the EU average on the burdensome than in neighboring cities. registering property, and enforcing con-number of documents required to trade Sharing a national legal framework fa- tracts, would rank 56 on the global Doingbut it performs worse on costs and time. cilitates the implementation of good local Business ranking. That is 17 positionsOn average, in the EU it takes 5 docu- practices. National governments can also ahead of Italy’s current ranking accord-ments, 11 days and $1,072 to import and 4 use Doing Business data to monitor how ing to Doing Business 2013. In registeringdocuments, 11 days and $1,004 to export. efficiently local branches of agencies property, reducing the requirements to 3 implement national regulation. procedures (as in Bologna, Milan, Naples, Palermo, Rome and Turin), the time to 13
  11. 11. 6 DOING BUSINESS IN ITALY 2013 TABLE 1.3 Good practices in Italian cities compared internationally from a reform champion—whether the Italian best Italy’s performance president, minister or mayor—is central Doing practices compared in Doing Business to success. Moreover, consistent reform- Business internationally 2013* indicator Best practices within Italy (global rank) (global rank) ers are inclusive—involving all relevant Starting a Number of procedures 6 procedures (Bari, stakeholders, including the private sector, business to start a business Bologna, Cagliari, and institutionalizing the reform effort. Catanzaro, L’Aquila, Milan, Naples, Padua, Palermo, Potenza, Payoffs from business reforms can be Rome, Turin) large. Saving time and money are often the Days to start a 6 days (Milan, Padua, 78 84 immediate benefits for firms. In Mexico, business Rome) local one-stop shops cut the time to start Cost to start a 12.2% of income per business capita (Bari) a business from 58 to 13 days, on average. Minimum capital 9.7% of income per A recent study reports the payoffs: the requirement capita (all cities) number of new firm registrations rose by Dealing with Number of procedures 11 procedures 5%, employment increased by 2.2%, and construction to comply with (Cagliari, Rome) permits formalities to build a prices fell by nearly 1% because of the warehouse competition from new entrants.26 In India, Days to comply with 151 days (Milan) the progressive elimination of the License 33 103 formalities to build a warehouse Raj—a system of central controls on entry Cost to comply with 45.1% of income per and production—led to a 6% increase in formalities to build a capita (Naples) new firm registrations. In addition, highly warehouse productive firms entering the market in Registering Number of procedures 3 procedures property to register property (Bologna, Milan, India experienced larger increases in real Naples, Palermo, output than less productive ones.27 Rome, Turin) 26 39 Days to register 13 days (Bologna, Maintaining the momentum for reform property Naples, Palermo) will be important to help Italy address Cost to register 4.3% of property property value (Catanzaro) its stagnant productivity and entrenched Enforcing Number of procedures 41 procedures (all structural weaknesses. Removing need- contracts to enforce a contract cities) lessly bureaucratic regulations and red Days to enforce a 855 days (Turin) 123 160 tape reduces the cost for Italian firms contract to do business and thus enhances their Cost to enforce a 20.5% of claim value competitiveness abroad. Improvements contract (Potenza) in the regulatory framework—as captured Ease of doing business (Hypothetical city of “Italiana”) 56 73 *Represented by Rome. by the Doing Business indicators—can be Source: Doing Business database a powerful tool to enhance efficiency, boost productivity and help establish a more solid foundation to restore eco- Consistent reformers have a long-term the United Kingdom, a program running nomic growth. The economies that have agenda and continuously push forward. from 2005 to 2010 reduced the burden managed to increase their footprint in the They stay focused by setting specific of regulatory compliance by a quarter, global marketplace are also countries that goals and regularly monitor progress. The saving firms £3.5 billion ($5.53 billion).24 have made sustained efforts to create top-ranked economy globally on the ease New initiatives are under way.25 an environment that is more conducive of doing business, Singapore, introduces for private sector development. More ef- business reforms every year. Other poli- Cumulative business reforms across a ficient and transparent rules have been an cymakers—such as the Dutch Advisory range of topics produce the best results. integral part of these efforts. Board on Administrative Burden and the Cooperation across different govern- UK Better Regulation Executive—rou- ment agencies, at both local and national tinely assess existing regulation and levels, is necessary for wide-ranging manage the flow of new regulation. In reforms. Political will and vision coming
  12. 12. EXECUTIVE SUMMARY 7 12. To be completed by July 2014. government introduced a new type ofNOTES 13. The new tax framework is called limited liability company with a symbolic1. In 1861 nearly two-thirds of the minimum capital requirement of €1, the “Aid for Economic Growth” (ACE). total labor force worked in agriculture, società responsabilità limitata semplificata while the remaining workers were 14. Cities of the center-north: Rome, (SRLS). The implementing regulations equally distributed between industry Bologna, Milan, Padua and Turin. concerning the SRLS were not issued and services. Although until World Cities in the south: Bari, Cagliari, as of June 2012. In the meantime, the War I the exodus from agriculture was Catanzaro, Campobasso, L’Aquila, authorities were discussing the possibil- limited, the 1930s and World War II Naples, Palermo and Potenza. ity of creating yet another legal form. years witnessed a significant shift of the 15. Social Cohesion Database, http://dati 24. For more information, please visit: labor force towards the non-farm sectors, and by 1951 agriculture’s share stood at 16. “Atlante delle Competitività,” 43 percent. Finally, by 1973 the services 25. Other initiatives include: 1) Scrutinizing Unioncamere Nazionale and Istituto sector had become dominant (at 46 the entire stock of inherited regulations. Guglielmo Tagliacarne. 2010. percent), and it has continued to increase The UK has more than 21,000 regula- 17. In addition to limited liability companies, tions and statutory instruments on the in importance since then. Broadberry, there are several other forms of incorpo- Steven, Claire Giordano and Francesco books, spanning virtually the entire ration in Italy. Sole proprietors are also an spectrum of economic activity and Zollino, 12–15 October 2011. “A Sectoral important part of the business landscape. Analysis of Italy’s Development, 1861- imposing a huge cost on business. 2) The 18. Except Bari. “one in, one out” system which requires 2011.” Economic History Working Papers (Quaderni di Storia Economica) 20, Bank of 19. Given the limited number of observa- government departments to assess the Italy, Rome. tions, cross-section size correlations net cost to business of complying with are computed using Spearman and any new regulation that is proposed (an2. “IMF (International Monetary Fund). Kendall nonparametric rank correlation “in”). These calculations are validated Italy: Selected Issues. IMF Country Report coefficients. Kendall and Spearman by the independent Regulatory Policy No. 12/167. July 2012. non-parametric correlation coefficients Committee. If a new regulation means a3. OECD (Organisation for Economic cost to business, a deregulatory measure between the time, procedures, rank Co-operation and Development). OECD to deal with construction permits and (an “out”) must be found that reduces Economic Surveys: Italy. May 2011. Paris: regional income per capita is negative the net cost by at least the same amount. OECD. and significant at the 5% level. 3) Review and sunset clauses for new4. IMF. World Economic Outlook. October regulations. This means that policy 20. There are no significant correlations for 2012. sub-indicators or rankings for register- makers must review the relevance of5. World Economic Forum. The Europe 2020 ing property, enforcing contracts and new regulations after a maximum of 7 Competitiveness Report: Building a More starting a business, except for time to years and justify their continuation rather Competitive Europe. 2012. Geneva: World start a business. For starting a busi- than simply leaving them on the statute Economic Forum. ness, there is a positive and significant books. Source: World Bank. 2011. Doing6. “National Reform Programme.” Section correlation between the time to start a Business 2012: Doing Business in a More III, 2012 Economic and Financial Document. business and income levels. Lower times Transparent World. Washington, DC: 18 April 2012. Available at http:// to start a business are associated with The World Bank Group. higher income per capita. The analysis is 26. Bruhn, Miriam. 2008. “License to Sell: nrp2012_italy_it.pdf. complete using Kendall and Spearman The Effect of Business Registration7. Decreto Legge No. 201 of 4 December non-parametric correlation coefficients. Reform on Entrepreneurial Activity in 2011, converted into Law No. 214/2012. 21. Short for Comunicazione Unica. Mexico.” Policy Research Working Paper 4538. Washington, D.C.: World Bank.8. Decreto Legge No. 1 of 24 January 2012 22. Campobasso is the only city where and converted into Law No.27/2012. the entrepreneur must still personally 27. Aghion, Philippe, Robin Burgess, Stephen submit a paper copy of the Segnalazione J. Redding and Fabrizio Zilibotti. 2008.9. Decreto Legge No. 5 of 9 February 2012, Certificata di Inizio Attività to the “The Unequal Effects of Liberalization: converted into Law No. 35/2012 municipal one-stop shop for “productive Evidence from Dismantling the License10. The “Cohesion Action Plan” was Raj in India.” American Economic Review activities” (SUAP). developed jointly with the European 98 (4): 1397–412. Commission following the Area meeting 23. Doing Business considers the most com- on October 26, 2011. mon type of limited liability company, which is the società a responsabilità11. Sportello Unico della Attivita Produttiva, limitata (SRL). In January 2012, the SUAP.
  13. 13. 8 About Doing Business and Doing Business in Italy 2013 The private sector provides an estimated of their life cycle. The results for each 90% of jobs in developing economies.1 economy can be compared with those for Where government policies support a 184 other economies and over time. dynamic business environment—with firms making investments, creating jobs Over the years the choice of indicators for and increasing productivity—all people Doing Business has been guided by a rich have greater opportunities. A growing pool of data collected through the World body of evidence suggests that policy Bank Enterprise Surveys. These data makers seeking to strengthen the private highlight the main obstacles to business sector need to pay attention not only to activity as reported by entrepreneurs in macroeconomic factors but also to the well over 100 economies. Among the quality of laws, regulations and insti- factors that the surveys have identified as tutional arrangements that shape daily important to businesses have been taxes economic life.2 (tax administration as well as tax rates) and electricity—inspiring the design of This year the tenth global Doing Business the paying taxes and getting electricity report was published. When the first indicators. In addition, the design of the report was produced, in 2003, there Doing Business indicators has drawn were few globally available and regularly on theoretical insights gleaned from updated indicators for monitoring such extensive research literature.3 The Doing microeconomic issues as business Business methodology makes it possible regulations affecting local firms. Earlier to update the indicators in a relatively efforts from the 1980s drew on percep- inexpensive and replicable way. tions data, but these expert or business surveys focused on broad aspects of the The Doing Business methodology is also business environment and often captured responsive to the needs of policy makers. the experiences of businesses. These sur- Rules and regulations are under the direct veys also lacked the specificity and cross- control of policy makers—and policy country comparability that Doing Business makers intending to change the experi- provides—by focusing on well-defined ence and behavior of businesses will transactions, laws and institutions rather often start by changing rules and regula- than generic, perceptions-based ques- tions that affect them. Doing Business tions on the business environment. goes beyond identifying that a problem exists and points to specific regulations Doing Business seeks to measure business or regulatory procedures that may lend regulations for domestic firms through an themselves to regulatory reform. And objective lens. The project looks primar- its quantitative measures of business ily at small and medium-size companies regulation enable research on how spe- in the largest business city. Based on cific regulations affect firm behavior and standardized case studies, it presents economic outcomes. quantitative indicators on the regulations that apply to firms at different stages The first Doing Business report covered 5 topics and 133 economies. Doing
  14. 14. ABOUT DOING BUSINESS 9Business in 2013 covers 11 topics and 185 sample size of experts in order to improve FIGURE 2.1 What are SMART businesseconomies. Ten topics are included in the accuracy. The local expert respondents regulations as defined by Doing Business?aggregate ranking on the ease of doing play a vital role in corroborating the Doingbusiness, and 9 in the distance to frontier Business team’s understanding and inter- STREAMLINED—regulationsmeasure.4 The project has benefited from pretation of rules and laws. that accomplish the desiredfeedback from governments, academics, outcome in the most efficient waypractitioners and reviewers.5 The initial Data of the second type serve as inputs Sgoal remains: to provide an objective into indicators on the complexity and MEANINGFUL—regulationsbasis for understanding and improving cost of regulatory processes. These indi- that have a measurable positivethe regulatory environment for business. cators measure the efficiency in achiev- impact in facilitating ing a regulatory goal, such as the number M interactions in the marketplace of procedures to obtain a building permitWHAT DOING BUSINESS IN or the time taken to grant legal identity ADAPTABLE—regulationsITALY 2013 COVERS to a business. In this group of indicators that adapt to changes in theThe foundation of Doing Business is the environmentnotion that economic activity, particu- cost estimates are recorded from official fee schedules where applicable. Time Alarly private sector development, benefits estimates often involve an element of RELEVANT—regulations that arefrom clear and coherent rules: Rules that judgment by respondents who routinely proportionate to the problem theyset out and clarify property rights and are designed to solve administer the relevant regulations orfacilitate the resolution of disputes. And undertake the relevant transactions. Rrules that enhance the predictability of These experts have several rounds ofeconomic interactions and provide con- TRANSPARENT—regulations interaction with the Doing Business team, that are clear and accessible totractual partners with essential protec- anyone who needs to use them involving conference calls, written cor-tions against arbitrariness and abuse. respondence and visits by the team until TWhere such rules are reasonably efficient there is convergence on the final design, are transparent and accessible To construct the time indicators, a regula- Note: Developed by Doing Business, this definition of SMARTto those for whom they are intended tory process such as starting a business business regulations guides its measurement of regulations.and can be implemented at a reason- is broken down into clearly defined stepsable cost, they are much more effectivein shaping the incentives of economic and procedures (for more details, see WHAT DOING BUSINESS INagents in ways that promote growth and the discussion on methodology in this ITALY 2013 DOES NOT COVER chapter). Here Doing Business builds ondevelopment. The quality of the rules also The Doing Business data have key limita- Hernando de Soto’s pioneering work inhas a crucial bearing on how societies tions that should be kept in mind by those applying the time-and-motion approachdistribute the benefits and bear the costs who use them. in the 1980s to show the obstacles to set-of development strategies and policies. ting up a garment factory on the outskirts Limited in scopeDoing Business is about smart business of Lima.6 The Doing Business indicators are limitedregulations, not necessarily fewer regula-tions (figure 2.1). in scope. In particular: Doing Business in Italy 2013 is a subna- tional Doing Business report (box 2.1) Doing Business in Italy 2013 does notIn constructing the indicators the Doing and as such captures several important measure all 11 indicators covered in theBusiness project uses 2 types of data. dimensions of the regulatory environ- global Doing Business report. The reportThe first come from readings of laws and ment as they apply to local firms in 13 covers only those 5 areas of businessregulations in each economy. The Doing cities and 7 ports in Italy. It provides regulation that are either the prov-Business team, in collaboration with local quantitative measures of regulations for enance of the local governments orexpert respondents, reads the civil law to 5 indicators: starting a business, dealing where local differences exist—startingfind the number of procedures necessary with construction permits, registering a business, dealing with constructionto resolve a commercial sale dispute property, trading across borders, and permits, registering property, tradingbefore local courts. And it plumbs other enforcing contracts (table 2.1.). across borders and enforcing contractslegal instruments for other key piecesof data used in the indicators, several (table 2.1).of which have a large legal dimension. Doing Business in Italy 2013 does notmea-Indeed, about three-quarters of the data sure the full range of factors, policies andused in Doing Business are of this factual institutions that affect the quality of thetype, reducing the need to have a larger business environment in an economy or
  15. 15. 10 DOING BUSINESS IN ITALY 2013 Limited to standardized BOX 2.1 COMPARING REGULATIONS AT THE LOCAL LEVEL: SUBNATIONAL DOING case scenarios BUSINESS REPORTS Subnational Doing Business reports expand the indicators beyond the largest busi- A key consideration for the Doing Business ness city in an economy. They capture local differences in regulations or in the imple- indicators is that they should ensure mentation of national regulations across cities within an economy (as in Colombia) comparability of the data across a global or region (as in South East Europe). Projects are undertaken at the request of central set of economies. The indicators are governments, which often contribute financing, as in Mexico. In some cases local gov- therefore developed around standardized ernments also provide funding, as in the Russian Federation. case scenarios with specific assumptions. Subnational indicators provide governments with standard measures, based on laws Doing Business recognizes the limitations and regulations, that allow objective comparisons both domestically and internation- ally. As a diagnostic tool, they identify bottlenecks as well as highlight good practices of the standardized case scenarios and that are easily replicable in other cities sharing a similar legal framework. assumptions. But while such assump- Governments take ownership of a subnational project by participating in all steps of tions come at the expense of generality, its design and implementation—choosing the cities to be benchmarked, the indicators they also help ensure the comparability that can capture local differences and the frequency of benchmarking. All levels of of data. For this reason it is common to government are involved—national, regional and municipal. see limiting assumptions of this kind in Subnational projects create a space for discussing regulatory reform and provide economic indicators. Inflation statistics, opportunities for governments and agencies to learn from one another, through the report and through peer-to-peer learning workshops. Even after the report is launched, for example, are often based on prices of knowledge sharing continues. In Mexico 28 of 32 states hold regular exchanges. a set of consumer goods in a few urban Repeated benchmarking creates healthy competition between cities to improve areas, since collecting nationally repre- their regulatory environment. The dissemination of the results reinforces this process sentative price data at high frequencies and gives cities an opportunity to tell their stories. Fifteen economies have requested may be prohibitively costly in many 2 or more rounds of benchmarking since 2005 (including Colombia, Indonesia and countries. Nigeria), and many have expanded the geographic coverage to more cities (including Russia). In Mexico each successive round has captured an increase in the number of states improving their regulatory environment in each of the 4 indicator sets includ- Some Doing Business topics include com- ed—reaching 100% of states in 2011. plex and highly differentiated areas. Here Since 2005 subnational reports have covered 335 cities in 54 economies, includ- the standardized cases and assumptions ing Brazil, China, the Arab Republic of Egypt, India, Kenya, Morocco, Pakistan and the are carefully considered and defined. For Philippines.1 example, the standardized case scenario This year studies were updated in Indonesia, Kenya, Mexico, Russia and the United usually involves a limited liability company Arab Emirates. Studies are ongoing in 23 cities and 4 ports in Colombia and 15 cities or its legal equivalent. The considerations and 3 ports in Egypt. In addition, 3 regional reports were published: in defining this assumption are twofold. Doing Business in OHADA, comparing business regulations in the 16 member states First, private limited liability companies of the Organization for the Harmonization of Business Law in Africa (Benin, Burkina Faso, Cameroon, the Central African Republic, Chad, the Comoros, the Republic of are, empirically, the most prevalent busi- Congo, Côte d’Ivoire, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Mali, Niger, ness form in many economies around Senegal and Togo). the world. Second, this choice reflects Doing Business in the East African Community, covering 5 economies (Burundi, Kenya, the focus of Doing Business on expanding Rwanda, Tanzania and Uganda). opportunities for entrepreneurship: inves- Doing Business in the Arab World, covering 20 economies (Algeria, Bahrain, the tors are encouraged to venture into busi- Comoros, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Mauritania, Morocco, ness when potential losses are limited to Oman, Qatar, Saudi Arabia, Sudan, the Syrian Arab Republic, Tunisia, the United Arab Emirates, West Bank and Gaza, and the Republic of Yemen). their capital participation. 1. Subnational reports are available on the Doing Business website at The Doing Business indicators assume subnational. that entrepreneurs have knowledge of and comply with applicable regulations. its national competitiveness. It does not, Even within the relatively small set of In practice, entrepreneurs may not know for example, capture aspects of security, indicators included in Doing Business, the what needs to be done or how to comply the prevalence of bribery and corruption, focus is deliberately narrow. For example, and may lose considerable time in trying market size, macroeconomic stabil- the indicator on starting a business does to find out. Or they may deliberately avoid ity (including whether the government not cover all aspects of commercial compliance altogether—by not register- manages its public finances in a sus- legislation. ing for social security, for example. Where tainable way), the state of the financial regulation is particularly onerous, levels of system or the level of training and skills informality tend to be higher (figure 2.2). of the labor force.