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'Doing Business' Rankings Stimulating Reform

Posted by: Mark Marich on September 10, 2009 Source: Policy Dialogue on Entrepreneurship

The overview of the Doing Business Report 2010 is now available. Since 2004, the World Bank’s Doing Business project has been tracking regulatory reforms in 10 areas of business regulation that record the time and cost to meet government requirements in starting and operating a business, trading across borders, paying taxes, and closing a business. Each year, Doing Business ranks 183 economies according to these 10 areas. These rankings have stimulated reforms to improve the overall ease of doing business by allowing policymakers to prioritize reforms and learn from global best practices.

Singapore is the world’s top economy in “ease of doing business” for the fourth consecutive year, followed by New Zealand and Hong Kong. For each economy, this index reflects its rankings on each of the 10 regulatory areas.

The U.S. remained ranked 4th in the 2010 ease of doing business list compared to its 2009 rank. The U.S. continues to rank first in the ease of employing workers, and among the top ten in the following areas: getting credit (4th), protecting investors (5th), ease of starting a business (8th), and enforcing contracts (8th).  It seems, however, to be lagging behind in the ease of paying taxes (61st), dealing with construction permits (25th), trading across borders (18th), and closing a business (15th). In the ease of paying taxes, the U.S. actually dropped from rank 54 last year. In the other areas for improvement, it has remained at similar rank levels. Will the U.S. implement reforms to defend its reputation as a business-friendly environment?

Other countries are taking action. The new report highlights the record level of business regulation reforms in 2008/09. Between June 2008 and May 2009, 287 reforms were recorded in 131 economies, 20% more than the year before. Two regions were particularly active. In Eastern Europe and Central Asia, 26 of the region’s 27 economies reformed business regulation in at least one regulatory area. In the Middle East and North Africa, 17 of 19 economies implemented reforms. In general, most of the pro-entrepreneurship action occurred in developing economies, particularly in low- and lower-middle-income economies. For the first time, a Sub-Saharan African economy, Rwanda, is the top reformer of business regulation, making it easier to start businesses, register property, protect investors, trade across borders, and access credit.

The financial crisis appears to have prompted governments to act in areas where regulatory reform may be more difficult and require more time. For instance, 18 economies reformed their bankruptcy regimes. “This number may increase in the future as economies face the need to deal with systemic distress. In times of recession, keeping viable companies operating as a going concern and preserving jobs becomes especially important. And the more quickly the assets of nonviable firms can be freed up, the easier it is to remobilize those assets,” reads the report.

World Bank's Doing Business 2010 briefings are taking place all over the world. In Washington, DC, a presentation of the new report hosted by U.S. Department of State, U.S. Agency for International Development, the World Bank and the IFC will take place on Thursday, September 17, 2009 at 3:00 p.m. at the Marshall Conference Center of the Department of State. Copies of the report will be available to participants. For more information about attending this event, you can email doingbusiness2010@gmail.com

 

Category:  General  Tags:  doing business

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