Ease of doing business index
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The ease of doing business index is an index created jointly by Simeon Djankov, Michael Klein and Caralee McLiesh, three leading economists at the World Bank Group. The origins of the idea are described in a 2016 Journal of Economic Perspectives article. The academic research for the report was done jointly with professors Edward Glaeser, Oliver Hart and Andrei Shleifer.[1] Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights. Empirical research funded by the World Bank to justify their work show that the economic growth impact of improving these regulations is strong.[2]
World Bank's Ease of Doing Business index map for 2020
  ≥ 85.0
  ≤ 25.0
  Data unavailable
The report is, above all, a benchmark study of regulation. The survey consists of a questionnaire designed by the Doing Business team with the assistance of academic advisers. The questionnaire centers on a simple business case that ensures comparability across economies and over time. The survey also bases assumptions on the legal form of the business, size, location, and nature of its operations.[3] The ease of doing business index is meant to measure regulations directly affecting businesses and does not directly measure more general conditions such as a nation's proximity to large markets, quality of infrastructure, inflation, or crime.
The next step of gathering data surveys of over 12,500 expert contributors (lawyers, accountants, etc.) in 190 countries who deal with business regulations in their day-to-day work. These individuals interact with the Doing Business team in conference calls, written correspondence, and visits by the global team. For the 2017 report, team members visited 34 economies to verify data and to recruit respondents. Data from the survey is subjected to several rounds of verification. The surveys are not a statistical sample, and the results are interpreted and cross-checked for consistency before being included in the report. Results are also validated with the relevant government before publication. Respondents fill out written surveys and provide references to the relevant laws, regulations, and fees based on standardized case scenarios with specific assumptions, such as the business being located in the largest business city of the economy.[3]
A nation's ranking on the index is based on an average of 10 subindices:
The Doing Business project also offers information on the following datasets:
For example, according to the Doing Business (DB) 2013 report, Canada ranked third on the first subindex "Starting a business" behind only New Zealand and Australia. In Canada, there is 1 procedure required to start a business which takes on average 5 days to complete. The official cost is 0.4% of the gross national income per capita. There is no minimum capital requirement. By contrast, in Chad which ranked among the worst (181st out of 185) on this same subindex, there are 9 procedures required to start a business taking 62 days to complete. The official cost is 202% of the gross national income per capita. A minimum capital investment of 289.4% of the gross national income per capita is required.
While fewer and simpler regulations often imply higher rankings, this is not always the case. Protecting the rights of creditors and investors, as well as establishing or upgrading property and credit registries, may mean that more regulation is needed.
In most indicators, the case study refers to a small domestically-owned manufacturing company—hence the direct relevance of the indicators to foreign investors and large companies is limited. DB uses a simple averaging approach for weighting sub-indicators and calculating rankings. A detailed explanation of every indicator can be found through the DB website and a .xls archive that simulates reforms.
Some caveats regarding the rankings and main information presented have to be considered by every user of the report. Mainly:
The Doing Business report is not intended as a complete assessment of competitiveness or the business environment of a country and should rather be considered as a proxy of the regulatory framework faced by the private sector in a country.
The Doing Business report has its origins in a paper first published in the Quarterly Journal of Economics by Simeon Djankov, Rafael La Porta, Florencio Lopez-de-Silanes and Andrei Shleifer called "The Regulation of Entry" in 2002. The paper presented data on the regulation of entry of start-up firms in 85 countries covering the number of procedures, official time, and official cost that a start-up must bear before it could operate legally. The main findings of the paper were that: "Countries with heavier regulation of entry have higher corruption and larger unofficial economies, but no better quality of public or private goods. Countries with more democratic and limited governments have lighter regulation of entry." The paper became widely known because it provided quantitative evidence that entry regulation benefits politicians and bureaucrats without adding value to the private sector or granting any additional protection.[4]
Several countries have launched reforms to improve their rankings.[5][6] These efforts are motivated to a great scope by the fact that the World Bank Group publishes the data, and hence coverage by the media and the private sector every year. Also, Doing Business highlights every year the successful reforms carried out by each country. The Regulation of Entry was published, Simeon Djankov and Andrei Shleifer have published nine other academic studies, one for each set of indicators covered by the report.
Over 18 years, 2003 to 2020, the reports recorded nearly 5,000 regulatory reforms implemented by 190 economies.
In 2014 Doing Business covered regulations measured from June 2012 through May 2013 in 189 economies.
In 2015, Doing Business covered regulations measured from June 2013 through June 2014 in 189 economies.[7] For the first time this year, Doing Business collected data for 2 cities in 11 economies with more than 100 million inhabitants. These economies include Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation, and the United States. The added city enables a sub-national comparison and benchmarking against other large cities.
Research and influence
As stated in the report, "Empirical research is needed to establish the optimal level of business regulation—for example, what the duration of court procedures should be and what the optimal degree of social protection is. The indicators compiled in the Doing Business project allow such research to take place. Since the start of the project in November 2001, more than 3,000 academic papers have used one or more indicators constructed in Doing Business and the related background papers by its authors."[8] An example of such empirical research is a paper on business regulation and poverty, published in Economics Letters.
More than 3,000 academic papers have used data from the index.[9] The effect of improving regulations on economic growth is claimed to be very strong. Moving from the worst one-fourth of nations to the best one-fourth implies a 2.3 percentage point increase in annual growth. Another 7,000 working papers in economics and social science departments use the data from the Doing Business report. The 2016 Nobel Prize Winner in Economics Oliver Hart is among the authors of such papers.
The various sub-components of the index in themselves provide concrete suggestions for improvement. Many of them may be relatively easy to implement and uncontroversial (except perhaps among corrupt officials who may gain from onerous regulations requiring bribes to bypass). As such, the index has influenced many nations to improve their regulations. Several have explicitly targeted to reach a minimum position on the index, for example, the top 25 list. To consider the element of corruption and transparency in the economy, the index has also been combined with the Corruption Perceptions Index in the annual Best European Countries for Business publication.[10]
Somewhat similar annual reports are the Indices of Economic Freedom and the Global Competitiveness Report. They, especially the latter, look at many more factors that affect economic growth, like inflation and infrastructure. These factors may however be more subjective and diffuse since many are measured using surveys and they may be more difficult to change quickly compared to regulations.
A November 2017 EconTalk podcast explains the lasting influence in academia and policy circles of the Doing Business report.
Doing Business Report
The Doing Business Report (DB) is an annually published report which was developed by a team led by Djankov in 2003. It has been elaborated by the World Bank Group since 2003 every year that is aimed to measure the costs to firms of business regulations in 190 countries. The study has become one of the flagship knowledge products of the World Bank Group in the field of private sector development and is claimed to have motivated the design of several regulatory reforms in developing countries. The study presents every year a detailed analysis of costs, requirements, and procedures a specific type of private firm is subject in all countries, and then, creates rankings for every country. The study is also backed up by broad communication efforts, and by creating rankings, the study spotlights countries and leaders that are promoting reforms.[11]
The DB has been widely known and used by academics, policy-makers, politicians, development experts, journalists, and the business community to highlight red tape and promote reforms. As stated by the IEG study from the World Bank:
"For country authorities, it sheds a bright, sometimes unflattering, light on regulatory aspects of their business climate. For business interests, it has helped to catalyze debates and dialogue about reform. For the World Bank Group, it demonstrates an ability to provide global knowledge, independent of resource transfer and conditionality. The annual exercise generates information that is relevant and useful".
According to the DB, the regulation does matter for the development of the private sectors, and several reforms are suggested across the report to promote the development of the private sector and enable the business environment. Some highlighted findings of the DB are:
In 2017, the study contains quantitative measures of regulations for starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, taxes, trading across borders, enforcing contracts, getting an electricity connection, and closing a business. As stated in the introduction of the study, "A fundamental premise of DB is that economic activity requires good rules. These include rules that establish and clarify property rights and reduce the costs of resolving disputes, rules that increase the predictability of economic interactions, and rules that provide contractual partners with core protections against abuse."
Doing Business is a controversial study, with passionate critics and devoted fans. As recognized by the Independent Evaluation Group of the World Bank, some have questioned the reliability and objectivity of its measurements while others doubt the relevance of the issues it addresses or fears it may unduly dominate countries reform agendas at the expense of more crucial development objectives. Attention given to the indicators may inadvertently signal that the World Bank Group values less burdensome business regulations more highly than its other strategies for poverty reduction and sustainable development.
Several limitations are present in the DB studies and have to be kept in mind when using the study:
Related studies
Published now for seventeen years, the DB has originated a growing body of research on how performance on DB indicators, and reforms generated by the reports, related to specific development desirable outcomes. As stated by the DB 2010, about "405 articles have been published in peer-reviewed academic journals, and about 1143 working papers are available through Google Scholar".
DB has been widely used as a study to measure competitiveness. However, regulation rather than competitiveness is the main objective in the DB. Other studies that are also used to measure competitiveness and recognized as business enabling environment ranking systems are the Global Competitiveness Index, the Index of Economic Freedom, and the Global Entrepreneurship Monitor, among others.[12]
2018 manipulation scandal
On 12 January 2018, Paul Romer, the World Bank's chief economist, announced that past releases of the index would be corrected and recalculated going back at least four years. Romer apologized to Chile, saying that the former director of the group responsible for the index had repeatedly manipulated its methodology, unfairly penalizing the country's rankings during the administration of left-wing President Michelle Bachelet. In response, Bachelet announced that Chile would formally request a complete investigation by the World Bank.[13][14]
2020 data irregularities
Several major newspapers – including the Financial Times, The Economist, and The Wall Street Journal – report that the data of China, Azerbaijan, United Arab Emirates, and Saudi Arabia among others were suspected to be “inappropriately altered” in the 2020 Doing Business publication.[15][16][17] In light of the data irregularities found in both the 2018 and 2020 reports, the World Bank announced on 27 August 2020 that it would pause the Doing Business publication while it conducts a review of data changes for the last five reports and an internal audit of data integrity.[18]
On December 16, 2020 the World Bank released 3 reports about the conclusions of the reviews examining the data irregularities:[19] On April 27, 2021 World Bank chief economist Carmen Reinhart announced the next report will be released on May 18, 2021.
These reviews found that, while the specific issues uncovered in this breach had been addressed, a culture where management pressured experts to manipulate data persisted: "The DB team members reported undue pressure, both directly and indirectly by Bank management to manipulate data in 2017 during the 0818 production process and in 2019 during the 0820 production process. The lack of a safe speak-up environment within the DB team led to a fear of retaliation for those who would escalate and report pressures to manipulate data. This contributed to the compromise of data integrity in the DB report."[20] These reports also found that over half of Doing Business staff interviewed admitted to manipulating data.[21]
The most recent rankings come from the "Doing Business 2020" report. Ranking of economies was introduced in the "Doing Business 2006" report.[22]
New Zealand has topped the Ease of Doing Business rankings in 2017, 2018, 2019, and 2020.
Singapore topped the Ease of Doing Business rankings in 2007–2016.[23] Based on Singapore's experience, IDA International is collaborating with public agencies in several countries in the areas such as ICT strategy, national Infocomm planning and solutions implementation that can help increase the ease of doing business. One interesting fact is that although richer countries on average are ranked higher than poor countries, there are some remarkable exceptions, particularly oil-rich countries. For example Kuwait (ranked 83), Qatar (ranked 77), Oman (ranked 68) Saudi Arabia (ranked 62). Compare to lower-income countries: India (ranked 63), Kenya (ranked 56), Colombia (ranked 67), Uzbekistan (ranked 69). Notable exceptions are Norway (ranked 9) and the United Arab Emirates (ranked 16).[24]
Very Easy New Zealand111122333322221
Very Easy
Very Easy
 Hong Kong
Very Easy
Very Easy
 South Korea
Very Easy United States686877444543333
Very Easy
Very Easy United Kingdom8977681077456669
Very Easy
Very Easy Sweden1012109811141314141817141314
Very Easy Lithuania111416212024172727232628261615
Very Easy Malaysia12152423181861218212320242521
Very Easy
Very Easy Australia1418141513101110151099986
Very Easy
Very Easy United Arab Emirates161121263122232633403346687769
Very Easy North Macedonia171011101230252322383271759281
Very Easy
Very Easy Latvia191919142223242521242729222426
Very Easy Finland20171313109121111131614131413
Very Easy
Very Easy Germany222420171514212019222525202119
Very Easy Canada232218221416191713788744
Very Easy Ireland24231718171315151097781011
Very Easy Kazakhstan252836354177504947596370716386
Very Easy
Very Easy
Very Easy
Very Easy
Very Easy
Very Easy
Very Easy
Very Easy
Very Easy Azerbaijan342557656380706766543833969998
Very Easy
Very Easy
Very Easy Slovenia3740373029*51333537425354556163
Very Easy
Very Easy
Very Easy Poland403327242532455562707276747554
Very Easy
 Czech Republic
Very Easy
Very Easy Bahrain436266636553464238282018N/AN/AN/A
Very Easy
Very Easy
Very Easy
Very Easy Armenia474147383545373255484344393446
Very Easy Moldova48474444526378838190941039210383
Very Easy Belarus493738374457635869685885110129106
Very Easy Montenegro505042514636445156667190817092**
Very Easy Croatia5158514340658984808410310697124118
Very Easy Hungary525348414254545451464741456652
Very Easy
Easy Mexico6054494738*39534853355156444373
Easy Bulgaria6159503938*38586659514445465462
 Saudi Arabia
 Puerto Rico
Easy Brunei6655567284*101597983112968878N/AN/A
Easy Oman687871667066474749576557495551
Easy Uzbekistan6976748787141146154166150150138138147138
Easy Jamaica717570676458949088817563635043
Easy Luxembourg72666359615960565045645042N/AN/A
Easy Costa Rica74676162588310211012112512111711510589
Easy Jordan7510410311811311711910696111100101807874
Easy Qatar778383836850484036503937N/AN/AN/A
Easy Kyrgyzstan8070777567102687070444168949084
Easy Mongolia817462645672767686736058524561
Easy Kuwait839796102101*861048267746152404647
 South Africa
Easy Bosnia and Herzegovina90898681791071311261251101161191059587
Easy El Salvador9185739586109118113112868472697176
 San Marino
Easy Saint Lucia93939186771006453525336343427N/A
Easy Philippines951241139910395108138136148144140133126113
Easy Guatemala969897888173799397101110112114118109
Easy Togo97137156154150149157156162160165163156151149
Medium Samoa989087899667615760615764614139
Medium Sri Lanka99100111110107998581891021051021018975
Medium Seychelles10096959395858074103951111049084N/A
Medium Fiji1021011019788*81626077625439363134
Medium Tonga1039189857869576258715243475136
Medium Trinidad and Tobago1051051029688*796669689781806759N/A
Medium Tajikistan106126123128132166143141147139152159153133N/A
Medium Vanuatu1079490849476748076605960625849
 Côte d'Ivoire
Medium Dominica111103981019197*7768658883747772N/A
 Antigua and Barbuda
 Dominican Republic
Medium Palestine117116114140129143138135131135139131117127125
Medium Bahamas11911811912110697*847785776855N/AN/AN/A
 Papua New Guinea
Medium Paraguay1251131081061009210910310210612411510311288
Medium Argentina12611911711612112412612411311511811310910177
Medium Iran127128124120118130152145144129137142135119108
 Saint Vincent and the Grenadines
Medium Nigeria13114614516916917014713113313712511810810894
Medium Honduras133121115105110104*127125128131141133121111112
Medium Guyana134134126124137123115114114100101105104136105
Medium Belize135125121112120118106105939980785956N/A
Medium Solomon Islands136115116104112879792749610489796953
Medium Cape Verde137131127129126122121122119132146143132125N/A
 Saint Kitts and Nevis
Medium Zimbabwe140155159161155171170173171157159158152153126
Medium Nicaragua142132131127125119124119118117117107936759
Medium Palau14513313013613611310011111612097918262N/A
Medium Grenada146147142138135126107100739291847073N/A
Below Average
Below Average
Below Average
Below Average
 Burkina Faso
Below Average
Below Average Marshall Islands1531501491431401391141011061089893898748
Below Average
Below Average
Below Average
Below Average
Below Average Micronesia15816015515114814515615014014112712611210656
Below Average Ethiopia15915916115914613212512711110410711610297101
Below Average Comoros160164158153154159158158157159162155146144N/A
Below Average
Below Average
Below Average
 Sierra Leone
Below Average Kiribati164158157152149134122117115937979736045
Below Average
Below Average Burundi166168164157152152140159169181176177174166143
Below Average
Below Average Bangladesh1681761771761741731301291221071191101078865
Below Average
Below Average São Tomé and Príncipe170170169162166153169160163178180176163169123
Below Average Sudan171162170168159160149143135154154147143154151
Below Average
Below Average
Below Average Guinea-Bissau174175176172178179180179176176181179176173N/A
Below Average Liberia175174172174179174144149151155149157170N/AN/A
Below Average
Below Average
Below Average
 Equatorial Guinea
Below Average Haiti179182181181182180177174174162151154148139134
Below Average
Below Average Timor Leste181178178175173172172169168174164170168174142
Below Average
Below Average
 Democratic Republic of Congo
Below Average
 Central African Republic
Below Average South Sudan185185187186187186186N/AN/AN/AN/AN/AN/AN/AN/A
Below Average Libya186186185188188188187N/AN/AN/AN/AN/AN/AN/AN/A
Below Average
Below Average
Below Average Eritrea189189189189189189184182180180175173171170137
Below Average
* – same rank is for multiple jurisdictions
** – the State Union of Serbia and Montenegro
Note: Rankings at the time of annual report publication. Rankings are subject to revision.
The Doing Business methodology regarding labor regulations was criticized by the International Trade Union Confederation because it favored flexible employment regulations.[25] In early reports, the easier it was to dismiss a worker for economic reasons in a country, the more its rankings improved. The Employing Workers index was revised in Doing Business 2008 to be in full compliance with the 188 International Labour Organization conventions. It has subsequently been removed from the rankings. The ITUC debuted the Global Rights Index in 2014 as a response to the Doing Business report.[26]
In 2008 the World Bank Group's Independent Evaluation Group, a semi-independent watchdog within the World Bank Group, published an evaluation of the Doing Business index.[27] The report, Doing Business: An Independent Evaluation, contained both praise and criticism of Doing Business. The report recommended that the index be clearer about what is and is not measured, disclose changes to published data, recruit more informants, and simplify the Paying Taxes indicator.
In April 2009 the World Bank issued a note with revisions to the Employing Workers index.[28] The note explained that scoring for the "Employing Workers" indicator would be updated in Doing Business 2010 to give favorable scores for complying with relevant ILO conventions. The Employing Workers indicator was also removed as a guidepost for Country Policy and Institutional Assessments, which help determine resources provided to IDA countries.
A study commissioned by the Norwegian government suggests an uncertainty in the ability of the indicators to capture the underlying business climate, and a general worry that many countries may find it easier to change their ranking in Doing Business than to change the underlying business environment.[29]
In 2013, an independent panel appointed by the President of the World Bank issued a review expressing concern about the potential for the report and index to be misinterpreted, and the narrowness of the indicators and information base. It recommended that the report be retained, but that the aggregate rankings be removed and that a peer-review process is implemented. Regarding the topics of Paying Taxes and Employing Workers, it noted that "The latter has already been excluded from the report's rankings. While there is a persuasive case for paying attention to these aspects of doing business, the Bank will need to carefully consider the correct way to assess the regulation and legal environment of these areas if these indicators are to be retained."[30]
In 2018, another independent evaluation was commissioned by the World Bank Group. The evaluation praised the Doing Business report for its objectivity and focus on regulatory reform. It suggested adding peer-reviewed research papers behind every set of indicators. Subsequently the World Bank has added one such research article, underlying the indicator on property registration.
See also
  1. ^ "Doing Business - Measuring Business Regulations - World Bank Group". Doing Business. 30 December 2011. Retrieved 20 May 2013.
  2. ^ "Doing Business report series – World Bank Group". Doingbusiness.org. Retrieved 20 May 2013.
  3. ^ a b "Improvements made to methodology this year - Doing Business - World Bank Group". www.doingbusiness.org. Retrieved 14 January 2017.
  4. ^ Djankov, Simeon, et al., "The Regulation of Entry", The Quarterly Journal of Economics, Vol.CXVII February 2002, Issue I
  5. ^ "Time to make in India?". The Economist. 25 September 2014. ISSN 0013-0613. Retrieved 14 January 2017.
  6. ^ "Ranking the rankings". The Economist. Retrieved 14 January 2017.
  7. ^ "Doing Business 2015, World Bank. Published: October 29, 2014".
  8. ^ Ease of doing business, Page 111.
  9. ^ "Doing Business and related research - World Bank Group". Doingbusiness.org. Retrieved 20 May 2013.
  10. ^ "Best European Countries for Business 2020". EuCham - European Chamber. Retrieved 30 January 2021.
  11. ^ World Bank: "Doing Business 2010", World Bank Group, 2010, U.S.A.
  12. ^ Snodgrass, Donald, "Alternative Business Enabling Environment Rankings. A Review", USAID / Business Growth Initiative, USAID
  13. ^ "Chile slams World Bank for bias in competitiveness rankings". Reuters. 2018.
  14. ^ Zumbrun, Josh; Talley, Ian (12 January 2018). "World Bank Unfairly Influenced Its Own Competitiveness Rankings". The Wall Street Journal.
  15. ^ "World Bank suspends its business climate index over data irregularities". Financial Times. 28 August 2020.
  16. ^ "The World Bank's business-rankings mess". The Economist. 3 September 2020.
  17. ^ Zumbrun, Josh (27 August 2020). "World Bank Halts Report on National Competitiveness Rankings Amid Concerns of Data Manipulation". The Wall Street Journal.
  18. ^ "Doing Business – Data Irregularities Statement". The World Bank. 27 August 2020.
  19. ^ a b c World Bank. "World Bank Group Statement on Doing Business Corrections and Findings of Internal Audit".
  20. ^ a b World Bank Group. "Data Integrity in Production Process of the Doing Business Report : Assurance Review".
  21. ^ World Bank Group. "Data Integrity in Production Process of the Doing Business Report : Assurance Review". Out of the 15 staff in the DB team interviewed by GIA, 9 staff indicated that they had been directly or indirectly pressured to manipulate data. Out of the 9 staff who reported being pressured, 8 staff said they manipulated data
  22. ^ "Doing Business 2018 - Equal Opportunity for All - World Bank Group". www.doingbusiness.org.
  23. ^ "Singapore Tops World Bank Survey". Bloomberg. Retrieved 23 August 2011.
  24. ^ "Rankings". World Bank. Retrieved 9 June 2019.
  25. ^ "ITUC-CSI-IGB – International Trade Union Confederation". Ituc-csi.org. 14 December 2006. Retrieved 27 June 2012.
  26. ^ Tamara Gausi (21 May 2014). New Global Index Elevates Workers' Rights over "Doing Business". Equal Times. Retrieved 30 May 2014; see also: ITUC Global Rights Index: The world's worst countries for workers.
  27. ^ "Doing Business – Doing Business: An Independent Evaluation". Web.worldbank.org. 26 June 2008. Archived from the original on 16 January 2011. Retrieved 14 February 2012.
  28. ^ "EWI Revisions". Doingbusiness.org. Retrieved 27 June 2012.
  29. ^ "Be careful when Doing Business" (PDF). Archived from the original (PDF) on 26 July 2011. Retrieved 27 June 2012.
  30. ^ "Archived copy" (PDF). Archived from the original (PDF) on 2 August 2018. Retrieved 25 September 2013.
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