# Source: Authors based on OECD, 2012a

# • _Other non-tariff measures (NTMs) and business climate_

Non-tariff measures (NTMs) and business climate/environment at large influence both the competitiveness of domestic companies and the attractiveness for foreign investors. In other words, they potentially affect a country’s participation in GVCs, whatever the governance structure of the GVC.

The _Doing Business_ (WB) and _Global Competitiveness_ (WEF), among others, provide a list of the measures that matter to the operation of business, as well as an indication of countries’ relative performance against selected criteria. The range of measures is very large, from the regulatory environment to the functioning of markets (e.g., state trading enterprises and government procurement). Considering that trade within GVCs is often associated with transfers of knowledge and technology, protection of intellectual property and competition is a tipping decision point for many industries. The cost of administrative burdens is also magnified through the lens of GVCs, where management coordination is a challenge per se.

Political stability, governance and corruption are also decisive factors in the decision to include a country in a GVC (see Figure 10 and Figure 11) This relates to security (including of assets and personnel) and predictability, which are the key drivers of intra-GVC trade and on-time delivery to the consumers. Within GVCs, suppliers are often expected to meet the lead firm’s CSR codes, raising a number of challenges for audit and execution in small developing countries’ firms (UNCTAD, 2012).

**Table 4. Improving the business environment: Policy objectives and performance indicators**

||**Policy objectives**|**Performance indicators**|
|---|---|---|
|**Inte**|**llectual property protection**|•<br>Ease of doing business index (IFC, WTI 3.1, WDI)|
|•|Improvement of IP regime and administration to comply with trade<br>agreements, to include patents, authors’ rights, geographical indications,<br>etc.|•<br>World governance indicators – corruption, rule of law,<br>government effectiveness, regulatory quality, political<br>stability (WTI 3.2)|
|•|Improvement of enforcement mechanisms and practices|•<br>Enabling Trade and Global competitiveness indexes|
|•|Promotion of IPRs and related training or technical assistance|–<br>Regulatory environment (WEF ETI, 8.01-08)<br>–<br>institutions: property rights, ethics and corruption,|
|**Com**|**petition, including privatizations and concessions**|undue influence, government inefficiency, security|
|•|Privatizations, concessions, and other forms of opening of sectors to<br>competition|(WEF GCI 1.01-1.16)<br>–<br>labor market efficiency (WEF GCI 7.01-7.09);|
|•|Elaboration and implementation of a competition framework, including<br>competition law, competition authority (e.g. independence, resources,<br>etc.), competition law enforcement (e.g. investigations, sanctions, etc.) and<br>related training or technical assistance|–<br>goods market efficiency (WEF GCI 6.01-6.16)<br>–<br>business sophistication: state of cluster development<br>(WEF GCI 11.03)<br>•<br>Enterprise ownership (government, private foreign, private<br>domestic) (ADI)|
|**Gov**|**ernment procurement**|•<br>Cost of business start-up procedure / procedures to|
|•|Adjustment of the laws pertaining to public procurement, including<br>transparency, selection criteria, national preference, etc.|register a business (WDI)<br>•<br>Time spent in meetings with tax officials / expected gifts /<br>informal payments to public officials (WDI)|
|**Corr**|**uption**|•<br>Firms using banks to finance investment (WDI)|
|•|Reforms aimed at fighting corruption in the public (e.g. customs) and<br>private sectors|•<br>Strength of legal rights index (WDI)<br>•<br>Time required to enforce a contract (WDI)|
|•|Promotion and adoption of relevant international instruments|•<br>Time required to obtain an operating license / register<br>property / start a business (WDI)|
|**Adm**|**inistrative burden**|•<br>Value of seized counterfeited goods (national statistics)|
|•|Administrative reforms towards simplification and reduction of<br>administrative procedures (e.g. guillotine reform), increase in transparency,<br>predictability, timeliness, and security of administrative decisions (e.g.<br>suppression of authorizations)|•<br>Number of registered trademarks, patents, etc. (WIPO,<br>WDI)<br>•<br>Number of competition investigations and sanctions<br>(national statistics)<br>|
|||•<br>Public procurement penetration ratio – Public imports /|
|**Oth**|**er constraints**|public demand % (national statistics)|
|•|Creation of export processing zones, business clusters, technology centers,<br>etc.|•<br>Security costs (ADI)|
|•|Revision of relevant labor regulations towards greater labor market<br>efficiency||
|•|Revision of regulations pertaining to the form of business operations and<br>partnerships (e.g. franchises, multi-sector partnerships, etc.)<br>Increasingsecurityof operations and staff against crime and violence||

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