Ease of Doing Business Index
The Ease of Doing Business Index is an index created by the World Bank.[1] Higher rankings indicate better, usually simpler, regulations for businesses and stronger protections of property rights. Research shows that the effect of improving these regulations on economic growth is very strong.
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Methodology
The index is based on the study of laws and regulations, with the input and verification by more than 3,500 government officials, lawyers, business consultants, accountants and other professionals who routinely advise on or administer legal and regulatory requirements.
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. A nation's ranking on the index is based on the average of 10 subindices:
- Starting a business - Procedures, time, cost and minimum capital to open a new business
- Dealing with licenses - Procedures, time and cost of business inspections and licensing (construction industry)
- Hiring and firing workers - Difficulty of hiring index, rigidity of hours of index, difficulty of firing index, hiring cost and firing cost
- Registering property - Procedures, time and cost to register commercial real estate
- Getting credit - Strength of legal rights index, depth of credit information index
- Protecting investors - Indices on the extent of disclosure, extent of director liability and ease of shareholder suits
- Paying taxes - Number of taxes paid, hours per year spent preparing tax returns and total tax payable as share of gross profit
- Trading across borders - Number of documents, number of signatures and time necessary to export and import
- Enforcing contracts - Procedures, time and cost to enforce a debt contract
- Closing a business - Time and cost to close down a business, and recovery rate [2]
Looking at one example, Australia, the best performing nation on the first subindex "Starting a business", there are 2 procedures required to start a business and taking on average 2 days to complete. The official cost is 1.8% of the Gross National Income per capita. There are no minimum capital required. In Guinea-Bissau, the second worst performing nation on the first subindex, there are 17 procedures required to start a business taking 233 days to complete. The official cost is 261.2% of the gross national income per capita. A minimum capital of 1,028.9% 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.
Research and influence
More than 200 academic papers have used data from the index.[3] The effect of improving regulations on economic growth is 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. [4]
The various subcomponents 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. In 2005 there were 213 reforms in 112 economies. The 10 top reformers were Georgia, Romania, Mexico, China, Peru, France, Croatia, Guatemala, Ghana, and Tanzania. Several nations did the opposite. They include Bolivia, Eritrea, Hungary, Timor-Leste, Uzbekistan, Venezuela and Zimbabwe.[5]
The correlations between the subindices are low, which suggest that countries rarely score universally well or universally badly on the indicators. In other words, there is usually much room for partial reform even in the best ranking nations.[6]
Somewhat similar annual reports are the Indices of Economic Freedom and the Global Competitiveness Report. They, especially the later, 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.
Ranking
Detailed descriptions of all nations can be found at: http://www.doingbusiness.org/ExploreEconomies/ Click on "Details" for more information on specific required procedures.
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Lists of countries with rankings (* includes map)Geography
Area* • Coastline • Highest point • Compactness • Coast/area ratio • Northernmost point
Demographics
Population* (graphical • by density) • Population growth •Life expectancy* • Infant mortality rate* • Fertility rate* • Birth rate* • Death rate* • Murder rate • Human Development Index* • Income equality* • Literacy rate* • HIV/AIDS adult prevalence rate* • People living with HIV/AIDS* • Unemployment rate* • Population living in poverty* • Immigrant population • Suicide rate
Economy
GDP : nominal* (per capita*) • PPP* (per capita* • per capita per hour) • past GDP : (nominal • PPP) • Current account balance* • Imports* • Exports* (per capita) • Agricultural output* •Debt : external* • public* • Consumption : electricity* • natural gas*
Politics and society
Political rights and civil liberties* • Press freedom* • Capital punishment* • Homosexuality law* • Abortion law* • Date of independence •Perception of corruption* • Ease of doing business* • Economic freedom* •Economic competitiveness* •Bribe Payers Index
Military
Military expenditures* • Number of active troops* • Conscription* • Possession of nuclear weapons* • UN peacekeepers currently deployed
Environment
Carbon dioxide emissions* (per capita*) • GDP per emissions* (per capita)
Categories
Business law | Administrative law | Economic policy