Doing Business 2008: Making a Difference
Starting a business is not easy in the Democratic Republic of Congo. It takes 13 procedures and 155 days—and it costs five times the annual income per capita. The situation is even worse for women: they need the consent of a husband. And if you are a single woman, a judge decides whether you can become a businesswoman.
But many countries are making it easier to do business. The Doing Business 2008 report identifies 200 reforms in 98 countries between April 2006 and June 2007.
The top reformer was Egypt. Unhappy with its Doing Business ranking last year, the Egyptian government pulled out all stops. Its efforts cut deep—with reforms in five of the 10 areas studied by the report. It made the single fastest climb in the overall rankings on the ease of doing business.
Georgia, the top reformer last year, remains in the top 10 and continues to target better rankings each year. Its efforts are paying off: Georgia is now in the top 25 countries in overall rankings for the ease of doing business. Two African countries—Ghana and Kenya—also made this year's list of the top 10 reformers.
"Overall, Doing Business has had a powerful catalytic effect," says Simeon Djankov, the lead author of the report. "For example, in the past two years, we have recorded 413 reforms in the countries we study. We have been able to confirm at least 113 instances where Doing Business inspired or informed business regulatory reforms worldwide."
The Financial Times has noted that in publishing Doing Business, the World Bank Group is "producing a public good: measurements of regulatory performance that may become as indispensable to reformers and academics as national income accounts."
Business startup and investor returns
Doing Business is also analyzing the benefits of reform. "The report shows equity returns are highest in countries that are reforming the most," said Michael Klein, World Bank/IFC Vice President for Financial and Private Sector Development. "Investors are looking for upside potential, and they find it in economies that are reforming—regardless of their starting point," he added.
By far the fastest reforms are in Eastern Europe and Central Asia, which, as a region, surpassed East Asia this year in the ease of doing business. Estonia, the most business-friendly country of the former socialist bloc, ranks 17th on the ease of doing business. "The results show that as governments ease regulations for doing business, more entrepreneurs go into business," said Djankov. "Eastern Europe has witnessed a boom in new business entry, and many of the new companies are becoming global leaders, such as the Estonian-born software company Skype and the Czech car maker Skoda," he added.
Reforming business regulations benefits women
Doing Business is about studying obstacles to equal opportunity, and this year it began to look at this issue as it affects women. Initial findings indicate that higher rankings on the ease of doing business are associated with higher percentages of women among entrepreneurs and employees. Greater regulatory reform has especially large benefits for women, who often face regulations that may be aimed at protecting them but are counterproductive in effect, forcing them into the informal sector. There women have little job security and few social benefits.
The Doing Business project has committed to a two-year research program on reforms that improve the job and business opportunities for women.
Hitting the road
Doing Business does a simple but powerful thing: it systematically and objectively measures the time and cost involved in setting up, running, and closing a business in 178 countries around the world. With the publishing of the new report, the Doing Business team kicks off its annual road show visiting dozens of countries—and may be coming to a place near you.
Visit the Web site for more information on the project, to order copies of Doing Business 2008, and to generate your own reports using the latest Doing Business data: www.doingbusiness.org.
About Doing Business
A high ranking on the ease of doing business means that a government has created a regulatory environment conducive to operating a business, yet the rankings do not tell the whole story. They do not account for other factors such as the quality of infrastructure services, macroeconomic policy, proximity to large markets, or law and order.
A joint IFC-World Bank product, Doing Business is based on the efforts of more than 5,000 local experts around the world—business consultants, lawyers, accountants, government officials, and leading academics—who provide empirical input and methodological support and review.
