At its core, regulation is about the freedom to do business. All too often, however, regulation misses its goal and one inefficiency replaces another, especially in the form of government intrusion in business activity. By documenting changes in regulation in 12 areas of business activity in 190 economies, from Afghanistan to Zimbabwe, Doing Business analyses regulation that encourages efficiency and supports the freedom to do business.
DOING BUSINESS 2020, a World Bank Group flagship publication launched on 24 October 2019, is the seventeenth in a series of annual studies measuring the regulations that enhance business activity and those that constrain it. The data collected by Doing Business address three questions about governments.
- When do governments change regulation with a view to developing their private sector?
- What are the characteristics of reformist governments?
- What are the effects of regulatory change on different aspects of economic or investment activity?
Answering these questions adds to our knowledge of development.
Governments of 115 economies around the world launched 294 reforms during the past year to make doing business easier for their domestic private sector, paving the way for more jobs, expanded commercial activity, and higher incomes for many. Business-friendly environments are associated with lower levels of poverty; improved regulatory efficiency can also stimulate entrepreneurship, start-ups, innovation, access to credit, and investment.
The ten economies where business climates improved the most were Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China, India, and Nigeria. The ten economies scoring the highest on the ease of doing business rankings were New Zealand, Singapore, Hong Kong SAR China, Denmark, Republic of Korea, United States, Georgia, United Kingdom, Norway, and Sweden. Top performers typically had online business-incorporation processes, electronic tax-filing platforms, and online procedures for property transfers.
At the same time, 26 economies took steps that posed new obstacles to business activity. Many of these increased the costs of doing business. An entrepreneur's experience differs wildly in high-performing and low-performing economies. For example, it takes nearly six times as long, on average, to start a business in the economies ranked in the bottom 50 than in economies ranked in the top 20. Transferring property in the 20 top economies requires less than two weeks, compared to three months in the bottom 50. Obtaining an electricity connection in an average bottom-50 economy takes twice as long as in an average top-20 economy; the cost of such a connection is 44 times higher when expressed as a percentage of income per capita.
Starting a business, dealing with construction permits, getting electricity, and paying taxes were areas with the most active reform over this period. Reforms in dealing with construction permits and getting electricity have jumped in recent years. Many of the 37 economies that made construction permitting simpler streamlined interactions with agencies for preapproval and inspection. To connect businesses with the power grid more efficiently, 16 economies invested substantially in modernising electrical infrastructure.
Since its inception in 2003, more than 3,500 business reforms have been carried out in 186 of the 190 economies Doing Business monitors.
The Doing Business report would not be possible without the help of over 48,000 local experts in the 190 economies covered by the report who have provided the data on a pro bono basis over the past 16 years. Doing Business collects the data every year by sending questionnaires to its network of experts. The Doing Business team then analyses 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 the full list of Doing Business reports visit: HTTPS://WWW.RUSSELLBEDFORD.COM/LATEST/PUBLICATIONS/DOING-BUSINESS-GUIDES/
About the author
Olga Kuzmina is a co-author of the World Bank Group’s annual Doing Business report. She manages external relations with respondents, and knowledge management within the team.
For more information on the Doing Business project, please visit WWW.DOINGBUSINESS.ORG
AUTHOR: Olga Kuzmina, Washington DC, USA