Insight
Doing business: reforming to create jobs
January 2018
We have all heard the saying, “what gets measured gets done”. The World Bank Group’s Doing Business report has been measuring the ease of doing business for 15 years, with the goal of helping governments and other stakeholders improve the business climate for domestic small and medium enterprises. Doing Business measures the effectiveness and quality of regulations in 11 areas of key relevance during the lifecycle of a business. The report covers 190 economies, including some of the smallest and poorest jurisdictions for which little or no data are available from other sources. The Doing Business data are publicly available on the report’s website and its users include policy makers, think tanks, research organizations, private sector professionals, professors and students.
Over the past decade, governments have increasingly turned to Doing Business as a repository of actionable, objective data providing unique insights into good practices worldwide as they have come to understand the importance of business regulation as a driving force of competitiveness. Governments in over 60 economies have formed regulatory reform committees that use the Doing Business indicators as one input to inform their programs for improving the business environment.
The most recent report, Doing Business 2018: Reforming to Create Jobs, was launched on October 31, 2017. It finds that governments in 119 economies implemented 264 business reforms in the past year to improve the regulatory framework for entrepreneurs, to create jobs, attract investment and become more competitive. In its annual ease of doing business rankings, New Zealand, Singapore and Denmark retained their first, second and third spots, respectively. They were followed by Republic of Korea, Hong Kong SAR, China, United States, United Kingdom, Norway, Georgia, and Sweden. This year’s top 10 improvers, based on reforms undertaken, are: Brunei Darussalam (for a second consecutive year), Thailand, Malawi, Kosovo, India, Uzbekistan, Zambia, Nigeria, Djibouti, and El Salvador. For the first time, the group of top 10 improvers includes economies of all income levels and sizes, with half being top improvers for the first time: El Salvador, India, Malawi, Nigeria, and Thailand.
Fifteen years of Doing Business data allows a deep dive into what governments can do to enable entrepreneurship and create jobs. Since its inception, the report has recorded a total of 3,188 reforms in 186 of the 190 economies it now monitors. Rwanda has implemented the highest number of business reforms over the past 15 years, with a total of 52 reforms, followed by Georgia, which advanced this year into the top 10 ranked economies (47 reforms) and Kazakhstan and the Former Yugoslav Republic of Macedonia (41 reforms each). Easing the requirements for starting a business has seen the largest number of reforms, with 626 reforms recorded in the past 15 years. As a result, the time needed to start a new small or medium business has more than halved to an average of 20 days worldwide, compared with 52 days in 2003. In addition, in 65 economies, entrepreneurs can complete at least one business incorporation procedure online, compared with only nine in 2003. Similar progress is also seen in other Doing Business areas.
What motivates governments to reform? Doing Business data shows that governments tend to reform in times of fiscal crisis. For example, reforms in the area of resolving insolvency showed a spike in 2010/11, in the aftermath of the global financial crisis of 2008/09. How do reforms and regulations impact employment? Research using Doing Business data shows that economies that tend to perform well on the Doing Business index tend to also create more jobs. Economies with high unemployment could do well by improving their business regulations. A one-point improvement in the Doing Business “distance to frontier” score is associated with a 0.02 percentage point decline in unemployment growth rate. Governments learning from the experience of top performing economies is a key component of the impact of Doing Business research.
The Doing Business report would not be possible without the help of over 43,000 local experts in the 190 economies covered by the report who have provided the data on a pro bono basis over the past 15 years. Doing Business collects the data every year by sending questionnaires to its network of experts. The Doing Business team then analyzes the questionnaire responses, reviews relevant laws and regulations and corresponds with governments, World Bank Group regional staff and private sector experts to continue verifying the findings. Russell Bedford contributes global research expertise to the Doing Business project.
For more information on Doing Business, please visit www.doingbusiness.org