Document: Unpacking the Business Investment Climate (BIC)

Improving the Business and Investment Climate (BIC) in developing countries has become a popular concept amongst donor agencies, as can be seen in the decision of the “Donor Committee on Small Enterprise Development” to dedicate its yearly conference to “Reforming the Business Environment” this year. Most past donor efforts to increase the global competitiveness of developing economies have not been able to outweigh the negative effects of disadvantageous legal, political and institutional frameworks that characterize many regions of the world, especially Subsahara Africa. The new or relatively new BIC focus is based on the donor community’s hope to improve the outreach and structural impact of donor interventions in the area of private sector development by consequently influencing these hindering framework conditions to economic growth. For this purpose, donors have recently come up with a number of concepts for defining and understanding the Business and Investment Climate, and numerous approaches and instruments are available nowadays for assessing it. Nevertheless, literature and guidelines on how to design interventions beyond the assessment phase are still rare. This article aims at contributing to the further practical elaboration of the BIC approach by asking two questions: “Which interventions make sense with regard to which BIC elements?” nd “What contributions can local level interventions ake to improving a country’s BIC?”