Ease of doing business index


The ease of doing business index is an index created jointly by Simeon Djankov and Gerhard Pohl, two leading economists at the Central and Eastern Europe sector of the World Bank Group. The academic research for the report was done jointly with professors Oliver Hart and Andrei Shleifer. Higher rankings 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. An example of such empirical research is a paper on , published in Economics Letters.
"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."

Methodology

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. 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 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.
A nation's ranking on the index is based on the average of 10 subindices:
The Doing Business project also offers information on following datasets:
For example, according to the Doing Business 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 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 weighing 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 :wikt:caveat|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 of 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.

History

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.
Several countries have launched reforms to improve their rankings. 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. Since The Regulation of Entry was published, Simeon Djankov and Andrei Shleifer have published eight other academic studies, one for each set of indicators covered by the report.
In 2013, Doing Business covered regulations measured from June 2011 through May 2012. Over the previous decade, the reports recorded nearly 2,000 regulatory reforms implemented by 180 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. 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

More than 3,000 academic papers have used data from the index. 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. 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.
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 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.
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, regulation does matter for the development of the private sectors, and several reforms are suggested across the report in order 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."

Evaluation

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 fear 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.
According to Snodgrass, several limitations are present in the DB studies and have to be kept in mind when using the study:
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".
The DB has acknowledged the limitation of getting data from one city to give information and a ranking valid for all the country. Several regional and sub-national studies have been carried out using the Doing Business methodology to assess variations within countries and regions across different cities, including sub-national studies for countries like Brazil, Mexico, and Colombia, and regional studies for the Caribbean, the Arab World, Bulgaria, and other south eastern European countries. All studies are available from the DB website.
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.

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 apologised to Chile, saying that the former director of the group responsible for the index had repeatedly manipulated its methodology, unfairly penalising 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.

Ranking

The most recent rankings come from the "Doing Business 2020" report. Ranking of economies was introduced in the "Doing Business 2006" report.
New Zealand has topped the Ease of Doing Business rankings in 2018, 2019 and 2020.
Singapore topped the Ease of Doing Business rankings in 2007–2016. 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, Qatar, Oman Saudi Arabia. Compare to lower income countries: India, Kenya, Colombia, Uzbekistan. Notable exceptions are Norway and the United Arab Emirates.
ClassificationJurisdiction202020192018201720162015201420132012201120102009200820072006
Very Easy111122333322221
Very Easy222211111111112
Very Easy345453222234457
Very Easy433334555665578
Very Easy554545788161923302327
Very Easy686877444543333
Very Easy76916241589161211151837100
Very Easy8977681077456669
Very Easy978696966810101195
Very Easy1012109811141314141817141314
Very Easy111416212024172727232628261615
Very Easy12152423181861218212320242521
Very Easy132025493228201923201724273223
Very Easy1418141513101110151099986
Very Easy151315111119161625334661504735
Very Easy161121263122232633403346687769
Very Easy171011101230252322383271759281
Very Easy181612121617222124172422171716
Very Easy191919142223242521242729222426
Very Easy20171313109121111131614131413
Very Easy212726464926181817191213151820
Very Easy222420171514212019222525202119
Very Easy232218221416191713788744
Very Easy24231718171315151097781011
Very Easy252836354177504947596370716386
Very Easy26212320191213149151411101212
Very Easy272622192121302932322827253032
Very Easy283135405162921121201231201201069679
Very Easy293934343429272420181512121110
Very Easy303028323333524444496249383930
Very Easy3146787884*90969191798983839391
Very Easy323231292731383429263131313544
Very Easy334360695555697171657359579193
Very Easy342557656380706766543833969998
Very Easy354954525340353834292930292629
Very Easy363833312620292826272121161517
Very Easy3740373029*51333537425354556163
Very Easy3829415662463252455867139150158139
Very Easy393429252325313030314848374042
Very Easy403327242532455562707276747554
Very Easy413530273644756564637475565241
Very Easy423632282827283131303026212224
Very Easy436266636553464238282018
Very Easy444843485991938692898894866892**
Very Easy4542393329*37494648414236323637
Very Easy464552424342363328252219192018
Very Easy474147383545373255484344393446
Very Easy48474444526378838190941039210383
Very Easy493738374457635869685885110129106
Very Easy505042514636445156667190817092**
Very Easy5158514340658984808410310697124118
Very Easy525348414254545451464741456652
Very Easy536069687571879794114128128129115102
Easy5457534547643936403740
Easy555245363748737272565547484978
Easy56618092108136129121109989582728368
Easy5744406066758698117119113
Easy585146504556657387807865538270
Easy595655574841343739434940332825
Easy6054494738*39534853355156444373
Easy6159503938*38586659514445465462
Easy629292948249262212111316233838
Easy6377100130130142134132132134133122120134116
Easy647176808396112137152145142145139128124
Easy656464555747404143473535281922
Easy6655567284*101597983112968878
Easy676559535434434542393753667966
Easy687871667066474749576557495551
Easy6976748787141146154166150150138138147138
Easy7069688290789999987893929110499
Easy717570676458949088817563635043
Easy72666359615960565045645042
Easy73737291109114120128129121122129123135115
Easy74676162588310211012112512111711510589
Easy7510410311811311711910696111100101807874
Easy766858545035424341365662586571
Easy778383836850484036503937
Easy788088777460515046556973888058
Easy79726761606172781001091099610010980
Easy8070777567102687070444168949084
Easy817462645672767686736058524561
Easy8263655897*68908582828286136120117
Easy839796102101*861048267746152404647
Easy848282747343413935343432352928
Easy8587859897*111839484769010011610267
Easy867979706952556161727781658157
Easy878681717274565954524538514840
Easy888484768094103102
Easy8981757371125141148142142126124119138104
Easy90898681791071311261251101161191059587
Easy9185739586109118113112868472697176
Easy92889379769381
Easy93939186771006453525336343427
Easy941101051079910810510810711612312111110055
Easy951241139910395108138136148144140133126113
Easy969897888173799397101110112114118109
Easy97137156154150149157156162160165163156151149
Medium989087899667615760615764614139
Medium99100111110107998581891021051021018975
Medium10096959395858074103951111049084
Medium1019594909282888990124114109986485
Medium1021011019788*81626077625439363134
Medium1039189857869576258715243475136
Medium104107106109101*88988778696651434233
Medium1051051029688*796669689781806759
Medium106126123128132166143141147139152159153133
Medium1079490849476748076605960625849
Medium108136147144138128*110107105838577767460
Medium10911111013314116417115714513313213412711096
Medium110122139142142147167177167169168161155141145
Medium111103981019197*7768658883747772
Medium11299154171171155160171170158163153146161
Medium113112107113104897163576450424133
Medium11412012812213111212810911094106114126165141
Medium11510299103938411711610891869799117103
Medium11612712211512215013212012312211211111810772
Medium117116114140129143138135131135139131117127125
Medium118114120108114*70676463679287879482
Medium11911811912110697*847785776855
Medium12010810911914513311310410110310295845764
Medium1211171121111051101231231241181151089576
Medium122106104100114*128*13613614313813012312411497
Medium123141140147153161178166154152157149162146132
Medium124109125123116120116130126127129125122121119
Medium1251131081061009210910310210612411510311288
Medium12611911711612112412612411311511811310910177
Medium127128124120118130152145144129137142135119108
Medium1281291321171191069188
Medium129123118114117115135139130130138136128123107
Medium1301301291251111038275757570665485
Medium13114614516916917014713113313712511810810894
Medium132143144150160168176176173173174172169160150
Medium133121115105110104*127125128131141133121111112
Medium134134126124137123115114114100101105104136105
Medium135125121112120118106105939980785956
Medium136115116104112879792749610489796953
Medium137131127129126122121122119132146143132125
Medium138135138137133127139146139126135141134140110
Medium13914013413412412110196958776676444
Medium140155159161155171170173171157159158152153126
Medium141144137132139131145134127128131127130142140
Medium142132131127125119124119118117117107936759
Medium143142133126123104*11111510411310899858695
Medium144138135131127135137133138147145135145143133
Medium14513313013613611310011111612097918262
Medium146147142138135126107100739291847073
Medium147139136135128116959579858769605331
Below Average148145143141143*146155151146153156166158155146
Below Average149153151155158151174175175170172169151137129
Below Average150156152149157157162155153149161150140131111
Below Average151151148146143*167154153150151147148161 163154
Below Average152148150160168176173167159165166160157148127
Below Average1531501491431401391141011061089893898748
Below Average154154141139134148159163165171167165164159147
Below Average155149146145151138150147149146140130131113
Below Average156152153163165169175178179179173171166157144
Below Average157157166156163154153152148136136132125116128
Below Average15816015515114814515615014014112712611210656
Below Average15915916115914613212512711110410711610297101
Below Average160164158153154159158158157159162155146144
Below Average161161162167164163148142137140134144149149131
Below Average162165165158156162161164158161155146142122
Below Average163163160148147140142140141143148156160168136
Below Average164158157152149134122117115937979736045
Below Average165172171170167177182
Below Average166168164157152152140159169181176177174166143
Below Average167166163166172158168161161168171164154152130
Below Average1681761771761741731301291221071191101078865
Below Average169169167164162144163170156156158151144132
Below Average170170169162166153169160163178180176 163169123
Below Average171162170168159160149143135154154147143154151
Below Average172171168165161156151165164166153152141145114
Below Average173167183183177183164168160 167160162159162122
Below Average174175176172178179180179176176181179176173
Below Average175174172174179174144149151155149157170
Below Average176179174173175175165144134144143137137130121
Below Average177173175182181181179172172163169168167156135
Below Average178177173178180165166162155164170165165150
Below Average179182181181182180177174174162151154148139134
Below Average180180179177176178185183181177179178175171148
Below Average181178178175173172172169168174164170168174142
Below Average182181180180183185189184183183178175173172152
Below Average183184182184184184183181178175182181178175155
Below Average184183184185185187188185182182183180177167153
Below Average185185187186187186186
Below Average186186185188188188187
Below Average1871871861791701371331189910599981139890
Below Average188188188187186182181180177172177174172164120
Below Average189189189189189189184182180180175173171170137
Below Average190190190190

* – same rank is for multiple jurisdictions
** – the State Union of Serbia and Montenegro
Note: Rankings at time of annual report publication. Rankings are subject to revision.

Criticism

The Doing Business methodology regarding labor regulations was criticized by the International Trade Union Confederation because it favored flexible employment regulations. 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.
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. 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. 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 alleges methodological weaknesses, 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.
In 2013, an independent panel appointed by the President of the World Bank and headed by Trevor Manuel of South Africa, 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 be 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."
In 2018, another was commissioned by the World Bank Group. The evaluation praised the Doing Business report for its objectivity and focus on regulatory reform.