TOP IMPROVERS IN 2017
Governments in 119 economies carried out 264 business reforms in the past year to create jobs, attract investment and become more competitive, says the World Bank Group’s latest Doing Business 2018: Reforming to Create Jobs report.
This year marks the 15th Doing Business report. Since the inception of the project in 2003, the global business regulatory environment has changed dramatically. Governments around the world have embraced and nurtured advances in information technology to reduce bureaucratic hurdles and increase transparency.
Today, in 65 of the 190 economies covered by Doing Business, entrepreneurs can complete at least one business incorporation procedure online, compared with only nine of the 145 economies measured in Doing Business 2004. Furthermore, in 32 economies it is now possible to initiate a commercial dispute online. This kind of progress can also be observed in the other areas measured by Doing Business.
Marking its 15th anniversary, the report notes that 3,188 business reforms have been carried out since it began monitoring the ease of doing business for domestic small and medium enterprises around the world.
“Job creation is one of the transformational gains that countries and communities can achieve when the private sector is allowed to flourish. Fair, efficient and transparent rules, which Doing Business promotes, improve governance and tackle corruption,” said World Bank Chief Executive Officer Kristalina Georgieva.
, with Sub-Saharan Africa implementing 83 reforms, a record for a second consecutive year for the region, and South Asia implementing a record 20 reforms. A large number of reforms centered on improving access to credit and registering a new business, with 38 reforms each, as well as facilitating cross border trade, with 33 reforms.
In its annual ease of doing business rankings, New Zealand, Singapore and Denmark retained their first, second and third spots, respectively, 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.
“As we celebrate the 15th anniversary of Doing Business, it is particularly gratifying to see that many of the reforms are being carried out in economies and sectors where they are most needed. We look forward to continuing to shine a light on the real hurdles faced by entrepreneurs, both women and men, and celebrating policy change successes,” said Rita Ramalho, Acting Director of the World Bank’s Global Indicators Group, which produces the report.
WHERE IS BUSINESS REGULATION BETTER?
Although the economies with the most business friendly regulation in this year’s ease of doing business ranking are relatively diverse, the economies within the top 20 share some common features. Thirteen of the top 20 are OECD high-income economies; four are from Europe and Central Asia and three from East Asia and the Pacific. Eighteen of the top 20 are classified as high-income economies.
BUSINESS REGULATION IMPACT ON EMPLOYMENT AND POVERTY
Many factors explain poverty. These can include vulnerability to natural disasters, remoteness and quality of governance etc. Reforming in the areas measured by Doing Business can be particularly beneficial to employment creation when those reforms take place in the areas of starting a business and labor market regulation.
Across economies there is a significant positive association between employment growth and the distance to frontier score. While this result shows an association, and cannot be interpreted in a causal fashion, it is reassuring to see that economies with better business regulation, as measured by Doing Business, also tend to be the economies that are creating more job opportunities.
When it comes to unemployment, the expected opposite result is evident.
LIKE THE “WORLD CUP”
Throughout the 15 years of Doing Business, Djankov said that the biggest impact is that countries would compete on it. “That’s a component that in a way that most of our analytical and theoretical work we hadn’t thought of.”
He added that in addition to good policy, once you start ranking countries and comparing them, natural competition like a “World Cup” or the “Olympics” comes about.
Top image: Employees of Careem working closely together in their office space in Dubai, United Arab Emirates on May 14, 2017. Photo © Dominic Chavez/International Finance Corporation