Critical:

•    Pro-business reforms in Rwanda attracting record levels of foreign investment.
•    A potential free trade agreement between Russia and the Ukraine. 
•    Ninth Annual Bastiat Prize Competition.

Criticised:

•    Ridiculous trade rules harming the world’s poorest.
•    The current lack of economic incentives to prevent shared resource depletion.

Our daily round-up of what other think-tanks and commentators are saying on the big issues:

Don’t fear the trade deficit: Dan Ikenson on how imports raise real incomes.

Over at Aidwatch, the World Bank’s approach to improving health systems is failing. 

Rather than waiting for protracted international negotiations, Rwanda is continuing to implement its own reforms to improve domestic business conditions and to become one of the world’s most business-friendly economies.  This was bolstered by recent news that it will now take just one hour to set up a new business, at very little cost.  The rewards of freeing up business continue to be significant: foreign investment has increased five-fold in the last few years and growth remains strong, in spite of the global contraction.  Rwanda is now considered the 5th best economy in Africa in which to “do business”.

This very good news can be immediately contrasted with Rwanda’s monolithic neighbour in East Africa.  For instance, 149 days and almost four year’s average wages are required to register a business in Democratic Republic of Congo.  The DRC, like many other African countries, can learn from the emerging economic success story that is Rwanda.

However, despite the positives there is much room for improvement. A recent World Bank appraisal of the East African Community (EAC) found that practices varied greatly within the region. For example, in Rwanda (as with 12 other sub-Saharan African economies) there is still no procedure for dealing with bankruptcy. Positive reforms require independent and transparent institutions, including an independent judiciary capable of dealing with insolvency. Limiting the role of the increasingly powerful President, Paul Kagame, is equally important to quell legitimate fears about corruption and mismanagement.  In both regards Rwanda has a long way to go.  

Yet the potential of continuing on the path of reform is tantalising: If the best practices were adopted across the East African Community its members (Kenya, Tanzania, Burundi, Rwanda, Uganda) would collectively rank 12th in the world in terms of business-friendly conditions—better than, say, Japan or Sweden.  Mauritius and Botswana have proven African economies can compete internationally.  Entrepreneurs across Africa must be allowed to prove that they are capable of following suit, but they will only be able to do so if their governments implement the right series of reforms.

Here's a proposal that really would ease the ongoing tension between Ukraine and Russia.  And what's more, it's being suggested by Vladimir Putin.  If the free trade agreement he wants Russia to sign with Ukraine actually liberalises two-way trade between these huge countries, it would represent the best sign yet that Eastern Europe will become peaceful and prosperous.  Here's hoping it can happen, quickly.

Signs that the looming collapse in government-to-government aid spending will actually help contribute to better circumstances in poorer countries.  As we have written before, aid can actually lead to governments in poor countries delaying badly needed reform.  Without budget support, maybe African governments will do what is in their own self-interest and begin to implement business friendly measures to encourage growth?