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Small Government – Good Government Summit Presentation in Bratislava

Join us at the summit to explore competitiveness, economic growth, and prosperity strategies for small government success. Learn from Hon. Maurice McTigue and discover the keys to effective governance.

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Small Government – Good Government Summit Presentation in Bratislava

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  1. Small Government – Good Government Summit Sponsored by Institute for Economic & Social Studies Slovak Association for a Knowledge Society Bratislava, November 2nd 2010

  2. Governing for Competitive Advantage, Economic Growth & Prosperity Presentation by Hon. Maurice McTigue Mercatus Center George Mason University, USA

  3. Congratulations • I am full of admiration for the achievements of the Slovak Republic since the creation of the Republic just 17 years ago. • Your current efforts are pulling your country back from the brink of economic disaster and in the worst economic climate the world has experienced for 80 years.

  4. Patience • When embarking on creating a MARKET ECONOMY through major reforms there is often pressure to change course, my advice DON’T. • Slovakia is showing signs of recovering more rapidly than other countries in the Euro-zone. Often the hardest part is waiting for results. • The message is Slovakia generally has a good strategy, it is economically sound, it is supported by the financial markets, keep on course despite the impatience of the media, the public and opponents.

  5. GDP (Current $US (Billions))

  6. GDP Growth (annual %)

  7. GNI Per Capita, Atlas Method (Current $US)

  8. Reform Tools Accountability & Transparency • The more open and transparent government activities are to public scrutiny, the more confidence the public will have in government • The greater the transparency of government processes and procedures, the harder it is for bad policy to be implemented. • Transparency is the best protection against corruption

  9. The Prosperity Equation • CAPITAL – JOBS - PROSPERITY • Capital investment leads to • Increased job creation is followed by • Prosperity • Capital migrates to the friendliest environment • Capital and jobs are extremely mobile • The solution: Create the most attractive climate for investment

  10. Why is Economic Recovery Slow? • ANSWER: UNCERTAINTY • Investment is not yet happening in the large economies because the new regulatory climate is uncertain. • As a result, job growth is still slow. • The governments around the World need to act on improving the investment climate. • DO NOT ATTEMPT TO CHANGE COURSE NOW!

  11. Ireland’s Results • GDP growth: from 0.4% to 10% pa • Debt: from 118% of GDP to 24% • Unemployment down from 15.7% - to 3.5% • Second highest per capita income in Europe • Population growth from 2.6 million to 3.4 million

  12. Ireland Revenue & Fiscal Results • Revenue results • Personal income tax revenue up 5-fold • Corporate tax revenue up 600% • Capital gains tax revenue up 40% • Deficit of 14% of GDP • Surplus of 5% of GDP • The secret: Grow the economy to solve fiscal problems • How: Attract investment capital

  13. Competitiveness Strategies • Many countries with flat taxes - most in Eastern Europe • Georgia wiped out 85% of regulations/permits • Deregulating labor markets • Dramatically reducing corporate tax rates zero to 10%, removing tax complexity • Government policy is becoming a major competitiveness issue

  14. World Bank, Ease of Doing Business Index, 2007-2010 Note: **Rank from 1 – 183, with first place being the best. A high ranking on the ease of doing business index means the regulatory environment is conducive to the operation of business. The rank from 2010 examines the months between June 2008 - May 2009.

  15. Capital Friendly EnvironmentsEase of Doing Business 2010

  16. Caution & Encouragement • Keep out of “Think Big” projects • Job Creation schemes – a private company employing people – best job scheme • Tax Reform – Simplify the System • Beware of Government Overload • Do not declare success to early • Change & reform is never finished!

  17. Preventing Future Fiscal Crisis • Independent Auditor General – no more funny accounting • Fiscal Responsibility Act – NZ • Budget Honesty Act – Australia • Code of Fiscal Stability – UK • Government Accountability & Transparency Act – Canada • The Maastricht Treaty – European Community • Financial Transparency Legislation

  18. Brought to you by the Mercatus Center's Government Accountability Project www.mercatus.org

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