Ease of Doing Business Index

World map of the Ease of Doing Business Index, circa September 2009. Green nations rank higher, red nations lower. Grey represents nations lacking sufficient data. Each colour represents one quartile of the ranked nations.

The Ease of Doing Business Index is an index created by the World Bank. 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 effect of improving these regulations on economic growth is strong.

"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 800 academic papers have used one or more indicators constructed in Doing Business and the related background papers by its authors."

Methodology

The index is based on the study of laws and regulations, with the input and verification by more than 8,000 government officials, lawyers, business consultants, accountants and other professionals in 183 economies 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 construction permits - Procedures, time and cost to build a warehouse
• Employing workers - Difficulty of hiring index, rigidity of hours of index, difficulty of redundancy index, rigidity of employment index, redundancy costs
• 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, cost and time necessary to export and import
• Enforcing contracts - Procedures, time and cost to enforce a debt contract
• Closing a business - Index of recovery rate which is a function of time, cost and other factors such as lending rate and the likelihood of the company continuing to operate

For example, according to the Doing Business 2010 report, Australia ranked third on the first subindex "Starting a business" behind only New Zealand and Canada. In Australia there are 2 procedures required to start a business which take on average 2 days to complete. The official cost is 0.8% of the Gross National Income per capita. There is no minimum capital requirement. By contrast, in Guinea-Bissau which ranked among the worst (183rd out of 183) on this same subindex, there are 16 procedures required to start a business taking 213 days to complete. The official cost is 323.0% of the gross national income per capita. A minimum capital investment of 1006.6% 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 800 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.

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. Between June 2008 and May 2009, Doing Business recorded 287 reforms in 131 economies, 20% more than in the year before. The 10 top reformers were Rwanda, Kyrgyz Republic, Macedonia, Belarus, United Arab Emirates, Moldova, Colombia, Tajikistan, Egypt and Liberia.

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.

The annual Reformers' Club event brings together individuals from top reformer countries who have been instrumental in initiating and implementing business environment reform. These reformers are acknowledged for their success in improving the ease of doing business in their country. Presentations and case studies are available online.

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.

According to some critics, however, some of the research lacks the rigor of a coherent economic theory, contains unstated ideological biases, and too much of it is undertaken by individuals closely associated with the index and reforms, so it is not sufficiently independent to be fully credible. This blanket criticism is often offered by those with their own ideological bias.

Criticism

The Doing Business methodology regarding labor regulations has been criticized because of the support for flexible employment regulations. For instance, the easier it is to dismiss a worker for economic reasons in a country, the more one goes up in the rankings. The Employing Workers index was revised in Doing Business 2008 to be in full compliance with the 188 International Labour Organization conventions. A country can have all ILO conventions ratified and still rank #1 on the Ease of Employing Workers. As a further step, according to the Report 2010, Doing business plans to develop a new worker protection indicator, a process that will benefit from the advice of a working group with broad stakeholder representation. The ILO, which has leadership on the core labor standards, will serve as an essential source of guidance in this process.

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, titled Doing Business: An Independent Evaluation, contained both praise and criticism of Doing Business. The report recommended that Doing Business 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.

Ranking

The most recent rankings come from the "Doing Business 2012" report.

Singapore topped the ranking on Ease of Doing Business for the sixth year. 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.

2012 Rank	2011 Rank	2010 Rank	2009 Rank	Country/Region
1	1	1	1	Singapore
2	2	2	2	Hong Kong
3	3	3	3	New Zealand
4	5	4	4	United States
5	6	6	5	Denmark
6	8	10	10	Norway
7	4	5	6	United Kingdom
8	16	19	23	South Korea
9	15	14	11	Iceland
10	9	7	7	Ireland
11	13	16	14	Finland
12	11	13	15	Saudi Arabia
13	7	8	8	Canada
14	14	18	17	Sweden
15	10	9	9	Australia
16	12	13	16	Georgia
17	19	12	12	Thailand
18	21	23	21	Malaysia
19	22	25	27	Germany
20	18	15	13	Japan
21	24	27	29	Latvia
22	38	32	69	Macedonia
23	20	17	24	Mauritius
24	17	24	22	Estonia
25	33	46	61	Taiwan (Republic of China)
26	27	21	19	Switzerland
27	23	26	25	Lithuania
28	25	22	20	Belgium
29	26	31	31	France
30	31	48	48	Portugal
31	30	30	28	Netherlands
32	32	28	26	Austria
33	40	33	47	United Arab Emirates
34	29	29	30	Israel
35	34	34	32	South Africa
36	50	39	37	Qatar
37	42	53	57	Slovenia
38	28	20	18	Bahrain
39	43	49	40	Chile
40	37	40	36	Cyprus
41	36	56	65	Peru
42	39	37	49	Colombia
43	47	35	33	Puerto Rico
44	49	62	51	Spain
45	58	67	143	Rwanda
46	55	69	73	Tunisia
47	59	63	64	Kazakhstan
48	41	42	35	Slovakia
49	57	65	60	Oman
50	45	64	53	Luxembourg
51	46	47	41	Hungary
52	53	36	34	Saint Lucia
53	35	51	55	Mexico
54	52	45	39	Botswana
55	48	43	50	Armenia
56	66	71	77	Montenegro
57	64	50	44	Antigua and Barbuda
58	71	52	46	Tonga
59	51	44	42	Bulgaria
60	61	57	68	Samoa
61	72	77	83	Panama
62	70	72	72	Poland
63	67	92	87	Ghana
64	63	74	66	Czech Republic
65	88	83	76	Dominica
66	54	38	38	Azerbaijan
67	74	61	52	Kuwait
68	97	81	78	Trinidad and Tobago
69	68	58	82	Belarus
70	44	41	80	Kyrgyzstan
71	65	73	63	Turkey
72	56	55	45	Romania
73	92	91	88	Grenada
74	96	104	96	Solomon Islands
75	75	70	62	Saint Vincent and the Grenadines
76	60	59	58	Vanuatu
77	62	54	43	Fiji
78	69	66	54	Namibia
79	85	87	71	Maldives
80	84	103	110	Croatia
81	90	94	108	Moldova
82	82	82	89	Albania
83	112	96	94	Brunei
84	76	90	99	Zambia
85	77	68	59	Bahamas
86	73	60	56	Mongolia
87	80	78	74	Italy
88	81	75	67	Jamaica
89	102	105	97	Sri Lanka
90	124	114	109	Uruguay
91	79	89	86	China
92	89	88	90	Serbia
93	99	80	75	Belize
94	114	128	130	Morocco
95	87	76	70	Saint Kitts and Nevis
96	111	100	104	Jordan
97	101	110	117	Guatemala
98	78	93	91	Vietnam
99	105	99	103	Yemen
100	109	109	100	Greece
101	103	102	95	Papua New Guinea
102	106	124	122	Paraguay
103	95	111	105	Seychelles
104	113	108	101	Lebanon
105	83	85	85	Pakistan
106	108	98	93	Marshall Islands
107	116	123	123	Nepal
108	91	86	102	Dominican Republic
109	98	95	84	Kenya
110	94	106	116	Egypt
111	104	107	111	Ethiopia
112	86	84	81	El Salvador
113	115	118	112	Argentina
114	100	101	98	Guyana
115	93	79	79	Kiribati
116	120	97	92	Palau
117	119	113	107	Kosovo
118	117	117	113	Nicaragua
119	132	146	147	Cape Verde
120	123	120	118	Russia
121	125	121	120	Costa Rica
122	107	119	115	Bangladesh
123	122	112	106	Uganda
124	118	115	114	Swaziland
125	110	116	119	Bosnia and Herzegovina
126	127	129	127	Brazil
127	128	131	126	Tanzania
128	131	141	136	Honduras
129	121	122	129	Indonesia
130	130	138	133	Ecuador
131	135	139	137	West Bank and Gaza
132	134	133	132	India
133	137	125	121	Nigeria
134	144	143	138	Syria
135	154	154	149	Sudan
136	148	144	141	Philippines
137	140	134	144	Madagascar
138	147	145	139	Cambodia
139	126	135	140	Mozambique
140	141	127	125	Federated States of Micronesia
141	143	148	156	Sierra Leone
142	142	126	124	Bhutan
143	138	130	128	Lesotho
144	129	137	142	Iran
145	133	132	131	Malawi
146	153	156	162	Mali
147	139	152	164	Tajikistan
148	136	136	134	Algeria
149	146	140	135	Gambia
150	151	147	155	Burkina Faso
151	155	149	159	Liberia
152	145	142	145	Ukraine
153	149	161	158	Bolivia
154	152	157	152	Senegal
155	164	170	169	Equatorial Guinea
156	156	158	151	Gabon
157	159	162	153	Comoros
158	161	155	148	Suriname
159	165	166	161	Mauritania
160	167	160	168	Afghanistan
161	168	171	167	Cameroon
162	160	165	166	Togo
163	178	180	180	São Tomé and Príncipe
164	166	153	150	Iraq
165	171	167	165	Laos
166	150	150	146	Uzbekistan
167	169	168	163	Côte d'Ivoire
168	174	164	173	Timor-Leste
169	181	176	177	Burundi
170	158	163	157	Djibouti
171	157	159	160	Zimbabwe
172	163	169	170	Angola
173	173	174	174	Niger
174	162	151	154	Haiti
175	170	172	172	Benin
176	176	181	181	Guinea-Bissau
177	172	177	178	Venezuela
178	175	182	182	Democratic Republic of the Congo
179	179	173	171	Guinea
180	180	175	175	Eritrea
181	177	179	179	Republic of the Congo
182	182	183	183	Central African Republic
183	183	178	176	Chad

North Korea, Turkmenistan, Somalia, Libya, Cuba and the disputed territory Western Sahara are not ranked.

External links

• doingbusiness.org – Doing business map