2.4 ACTION LINE 2.4: INSTITUTIONAL
- 2.4.4 EXPECTED
Institutional efficiency is as important as the
presence or absence of government institutions themselves. One way
to foster institutional efficiency in Bulgaria is to develop
uniform operating systems in all institutions.
In many cases, high quality legislation in Bulgaria
fails to have a positive impact on the relationships governed by
it. This is due primarily to inefficient and non-uniform
implementation by implementing agencies. One of the purposes which
the government must pursue is bringing uniformity and quality in
the implementation of laws.
Although Bulgaria is a small country, it sometimes
experiences problems with a lack of uniformity and coherence in its
legal system. For example, an investor who has to deal with real
estate, may be surprised to find that notaries in different parts
of the country interpret the same law in any number of ways. The
investor will also discover that the type and number of documents
required at different locations for what is otherwise an identical
transaction can vary enormously. A similar situation exists in
Bulgaria’s 29 district courts where the investor must go to
register his or her company.
This, of course, results in inefficiency of the
market and its agents. No entity can develop standard operating
procedures for standard types of transactions. What should be a
routine process, needs to be learned every time it is applied in
In a different situation, central government
institutions must often perform administrative functions related to
commerce. They grant import/export or trading licenses, give
permission, provide information, and exercise other forms of
control. These functions may be discretionary or non-discretionary.
Regardless, the applicant must furnish such an agency with
information and documents. The investor will sometimes be surprised
that when approaching the same agency for identical reasons, but on
different days, the requirements have changed. The change is not
because policy has changed or government employees are malicious,
but because there is no clear standard for some administrative
requirements. The obvious result is multiplication of the
applicant’s efforts and resources spent on obtaining approvals from
the central government.
A possible way of fighting internal and external
institutional inefficiency is the creation of standardized
operating procedures, including the creation of standardized forms.
As a result, the inefficiency due to difference in practice of
institutions performing identical functions in different venues
will be dramatically reduced. Also, the practice of all
institutions will become consistent and predictable. The overall
result will be that agents on the market will be able to develop
standard operating procedures equally workable at any point in time
and at any location. The social cost to transacting business will
Thr introduction of standardized forms and lists
will also help institutions to increase their internal efficiency.
It will take much less time for employees of a central government
institution to process documents when they are familiar with
standard forms. Standardization will also contribute to the
simplification of internal procedures.
2.4.4 EXPECTED RESULTS
The expected results are that the climate for doing
business will improve. SMEs will be a major beneficiary of such an
improvement. Increasing the efficiency of institutions will result
in decrease of transaction costs.