Room for improvement

Andres Oppenheimer has a recent article on endless litigation in Latin America.  Specifically, he looks at the World Bank’s Doing Business Report for 2014, which ranks 189 countries in terms of how difficult it is to do things like enforce contracts.

The ranking shows that Latin America as a whole has some serious room for improvement.  As Oppenheimer reports, “it shows that it’s easier to enforce a contract between two domestic private businesses in Communist China or corruption-ridden Russia than in Brazil, Mexico, Colombia, Argentina and virtually any other Latin American country.”

So let’s look at some specifics:

Contract enforcement: Russia 10, China 19, Argentina 57, Chile 64, Mexico 71, Venezuela 92, Ecuador 99, Peru and Uruguay 105, Panama 127, Brazil 121, Colombia 155 and Honduras 182.  I’m curious about Russia’s ranking of 10.  Does contract enforcement include extra-legal enforcement?

# of Days it takes to Enforce a Contract: Russia 270, Mexico 400, China 460, Peru 426, Chile 480, Argentina 590, Venezuela 610, Uruguay 725, Brazil 731, Colombia 1,288, and Guatemala 1,402.  My thoughts:  (1) way to go Mexico; and (2) same question w.r.t Russia–does this include knee-capping as a means of enforcement?

Average legal fees to enforce a contract (as a % of the total value of the contract): China 11, Russia 13, Brazil 16, Argentina 20, Chile 29, Mexico 31, Peru 36, Venezuela 44, Colombia 48, and Panama 50.  The Panamanian score surprises me for some reason.  Mexico isn’t too hot on this ranking either.  I’ll shut up now about Russia.

Not surprisingly, East Asian countries are leading the way in contract enforcement.  Oppenheimer notes that:

“In Singapore and South Korea, once chaotic and corruption-ridden countries, it only takes an average of 150 and 230 days, respectively, to enforce a contract, according to the report. In the United States, it takes an average of 370 days. 

Asian countries such as Malaysia are creating groups of judges who are highly specialized in commercial litigation and can thus do their jobs faster and better.

South Korea also has sped up litigation considerably by creating e-courts, where lawsuits are filed electronically. Virtually all court procedures can be done online 24 hours a day, 7 days a week. South Korea launched its electronic case filing system in 2010, and about half of its civil cases are currently e-filed, saving a lot of time and money, Lobet said. By conducting litigation electronically, South Korea uses less paper, eliminates the need for storage space, and — most importantly — makes it easier to access documents.”

We debate how replicable the East Asian miracle is in development.  A lot of elements of the miracle are indeed hard (or impossible) to transplant, but I would think that following the East Asian lead on these kind of issues would be both do-able and advisable.

2 thoughts on “Room for improvement

  1. Color me suspicious of the metric here. Especially since Chile ranks behind Argentina–care to invest in an oil well in Kirchnertopia? I’m guessing there something else (the degree of socialism) responsible for slow growth in Latin America.

    Especially when I read;

    ‘If you are suing a supplier for not delivering goods that you have already paid for, your money is tied up and cannot be used for other purposes. ‘

    Talk about an unlikely possibility, it’s usually, by a wide, wide margin, the other way around; suppliers extend credit for goods shipped and have trouble getting paid.

  2. It is obvious that there is always room for improvement; we just need to make sure we keep putting in 100% effort to make things work out well. I am trading and for me there is so much room for improvement especially with help of OctaFX broker, as they got sensational demo contest in Southampton Supreme, it is rocking with having 400 dollars plus having extra opportunity to win unlimited prizes, so that is very much more scenario to have.

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