Monday, February 15, 2016



For the productivity week to be celebrated in February 2016, the theme chosen is


Some of the relevant material is posted in a blog on Industrial Engineering

Theme paper released by NPC

Importance of Ease of Doing Business

Reducing the Waste of Time, Resources and Energy of Enterpreneurs in Starting a Business 

Re-engineering Business Startup Process - Role of Productivity Specialist and Industrial Engineers

For an economy’s success or failure, the nuts and bolts that hold the economy together and the plumbing that underlies the economy are also an important contrbuting variables.

The laws that determine how easily a business can be started and closed, the efficiency with which contracts are enforced, the administration process pertaining to a variety of activities—such as getting permits for electricity and doing the paperwork for exports and imports—are all examples of the nuts and bolts. Their malfunctioning can thwart an economy’s progress and make  policy instruments, such as good fiscal and monetary policies, less effective.

Creating an efficient and inclusive ethos for enterprise and business is in the interest of all societies. An
economy  that facilitates entrepreneurship and creativity among individuals, and provides an enabling
atmosphere for people to realize their full potential, can enhance living standards and promote growth and
shared prosperity.

After decades of debate there is now some convergence in economics about the roles of the market and the state. To leave everything to the free market can lead to major economic malfunction and elevated levels of poverty. Moreover, there is a logical mistake that underlies the market fundamentalist philosophy. To argue that individuals and private businesses should have all the freedom to pursue what they wish and that government should not intervene overlooks the fact that government is nothing but the outcome of individual actions. Hence the edict is internally inconsistent. Fortunately, market fundamentalism has, for the
most part, been relegated to the margins of serious policy discourse.

Turning to the other extreme, it is now widely recognized that to have the state try to do it all is a recipe for economic failure  and cronyism. In any national economy there are too many decisions to be made, and too great a variety of skills and talents scattered through society, for any single authority to take effective charge.

It i now agreed  that government should intervene in the market to help the disadvantaged, to keep inequality within bounds, to provide public goods and to create correctives for market failures such as those stemming from externalities, information asymmetries and systemic human irrationalities. Government also has the
critical responsibility to provide a nimble regulatory setup that enables ordinary people to put their skills and talents to the best possible use and facilitates the smooth and efficient functioning of businesses and markets.

Promoting a well-functioning, competitive private sector is a major undertaking for any government, especially for one with limited resources and technical capabilities. It requires long-term
comprehensive policies targeting macroeconomic stability; investment in infrastructure, education and health; and the building of technological and entrepreneurial capacity. A well-functioning political system—one in which the government is perceived to be working in the public interest while managing scarce  and creativity—both of which are within the power of governments to do—can set an economy on the path to greater
prosperity and development. There is compelling evidence that excessively burdensome regulations can lead to large informal and less-productive sectors, less entrepreneurship and lower rates of employment and growth.

ƒ Doing Business measures business regulations that affect domestic small and medium-size firms in 11 areas
across 189 economies. Ten of these areas—starting a business, dealing with construction permits, getting
electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency—are included in the ease of doing business ranking. The 11th  measure is labor market regulation, which is not included in the ranking process by World Bank tam for the year 2015 report.

Cumbersome procedures involved in starting businesses in formal manner result in waste of energy, resources and time of entrepreneurs. Hence less number of formal entrepreneurs are developed in the system. As competition is the basic variable that increases social benefit, any system that discourages entrepreneurship results in less social benefit.

Productivity specialist can analyse the business starting up procedures in the 10 areas highlighted by World Bank and redesign the processes that reduce complexity and compliance burden. Industrial Engineering discipline attempted to reduce waste in office procedures through O & M studies. Subsequently, industrial engineers also developed expertise in reducing waste in information systems. Reengineering movement is also industrial engineering activity that recognized the possibility of radical improvement by special study and understanding of the power of new technology and using the new technology in ways different from the present process steps.

The need to re-engineer business startup processes is highlighted by the World Bank. In India, Prime Minister Narendra Modi is taking up special drive to increase of ease of doing business in India. Time for the productivity specialists in various organizations to spare some time and come out with suggestions to improve present process as well as to institute radically new processes to make the startup process simple and motivating.

Let us rededicate to the cause of Productivity during the Productivity Week.

Narayana Rao K.V.S.S.

Source for the material on importance of ease of doing business

Full World Bank Report

Updated  9 Feb 2016, 3 Feb 2016

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