Reducing economic uncertainty

The level of business uncertainty in developing countries is often much higher than in developed economies. Uncertainty encourages companies to build up inventories and cash balances, while discouraging innovation and investment. While a certain amount of uncertainty is unavoidable, governments can reduce it by providing information on their own intentions and the economy in general, by making regulations less arbitrary, and by providing guarantees and insurance. Consultation between business and government can be encouraged by creating a forum for public and private participants to meet and air their views.