The World Bank’s Doing Business report rates 189 economies on their “ease of doing business”. A high ranking (1 is the highest ranking, out of 189) means that a country’s regulatory environment is conducive to doing business. The ranking is an aggregate score based on 10 topics which themselves comprise a number of indicators. The topics have equal weighting and are shown here, with a short description of what they cover (source: Doing Business):
- Starting a business – this concerns the number of procedures required to set up a business, the time it takes, the cost and minimal capital required.
- Dealing with construction permits – this looks at the number of procedures that are needed for the building of a warehouse. Procedures refer to any interaction between a company and external bodies.
- Getting electricity – this refers to the amount of time it takes to obtain permanent electricity connection, and it is a median measure.
- Registering property – this concerns the length of time it takes to register a property; again it is a median measure.
- Getting credit – this indicator refers to the number of individuals and companies that are listed by a private credit body with information on their credit histories.
- Protecting minority interests – this indicator concerns shareholder rights and their involvement in major company decisions.
- Paying taxes – this is the total tax and contributions of a company that are due in the second year of business.
- Trading across borders – this concerns the speed with which goods can be imported.
- Enforcing contracts – this indicator looks at how long it takes to settle disputes.
- Resolving insolvency – this looks at the cost of resolving bankruptcies.
The other important score to keep an eye on is the DTF score, or “distance to frontier” score. This score quantifies the distance between an economy’s performance and the best performance out of all the economies across all of the indicators for the ten aforementioned topics. The DTF score is out of 100; where 100 represents the best performance and 0 represents the worst performance. In short, it tells you how far an economy is from the best performance at that time. By contrast, the ease of doing business ranking simply compares economies with each other. Tracking the DTF score over a number of years will show the extent to which the regulatory environment for entrepreneurs has changed in absolute terms; whereas the ease of doing business score will simply show the extent the environment has changed relative to other countries.
on top are the top ten economies for doing business showing the ease of Doing Business ranking and the DTF score.
• Ease of doing business ranking: 1 • DTF score: 88.27
2. New Zealand
• Ease of doing business ranking: 2 • DTF score: 86.91
3. Hong Kong, SAR China
• Ease of doing business ranking: 3 • DTF score: 84.97
• Ease of doing business ranking: 4 • DTF score: 84.20
5. Korea, Rep.
• Ease of doing business ranking: 5 • DTF score: 83.40
• Ease of doing business ranking: 6 • DTF score: 82.40
7. United States of America
• Ease of doing business ranking: 7 • DTF score: 81.98
8. United Kingdom
• Ease of doing business ranking: 8 • DTF score: 80.96
• Ease of doing business ranking: 9 • DTF score: 80.83
• Ease of doing business ranking: 10 • DTF score: 80.66
Let us know your thoughts in the comments below!