Editorial: Kicking off

Author: | Published: 16 Jul 2018
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The football World Cup is now in full swing. At the time of writing the winning country is still to be determined though every member of the IFLR team has their favourite.

While the major football event can have a positive impact on the hosting nation's economy, tourism and even morale, other factors are equally as important.

Enter the World Bank's Ease of Doing Business index, which ranks countries according to their level of regulatory difficulty when it comes to starting and operating a local firm. The world's largest financial markets – the US, the UK, Hong Kong and Singapore – all feature in the top 10, though not necessarily in that order. China, another strong player, is at the 78th spot, while France and Germany, two contenders for the EU financial centre crown after Brexit and two favourites to win the World Cup, feature somewhere in the latter parts of the top 40. Football giants such as Brazil and Spain don't fare so well either.

Now, there is not necessarily any strong correlation between a country having leading financial market expertise and it being a jurisdiction where it's easy for a business to settle and prosper – the link is even more tenuous, to say the least, when it comes to football prowess. After all, the country that tops the 190-state ranking is New Zealand, which doesn't necessarily have a reputation for being a global financial hotspot.

According to the index, the US scores impressively on how easy it is to enforce contracts and insolvency processes (its Chapter 11 bankruptcy process is one of the most well-known and wide-ranging in the world) and the strength of its minority investor protection. The UK doesn't fare so well, even though it is a jurisdiction of choice for many commercial and financial disputes, and the use of English law is so widespread it's become standard to use it in most financial contracts. The UK scheme of arrangement, which is particularly favoured by companies going insolvent, is worth mentioning too. Its widespread use has triggered a number of national translations including in Spain and the Netherlands.

China, one of the two major financial centres in Asia, scores poorly in many respects. This is likely due to the complex layers of rules, regulations and administrative processes – and a lack of openness to international investors though this is being worked on – that prevent businesses from growing roots easily. For instance, the PRC is at the 119th and 97th ranks when it comes to protecting minority investors and trading across borders, respectively.

All in all, the ease of doing business shortlist would likely look very different from the football one. Take your pick on the one you prefer.

Enjoy the issue,

Amélie Labbé
Managing editor