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About Doing Business USAID – WORLD BANK TRAINING November 3, 2009 What does Doing Business measure? Doing Business indicators: Focus on regulations relevant to the life cycle of a small to medium-sized domestic business. Are built on standardized case scenarios.
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About Doing BusinessUSAID – WORLD BANKTRAINING November 3, 2009
What does Doing Business measure? • Doing Business indicators: • Focus on regulations relevant to the life cycle of a small to medium-sized domestic business. • Are built on standardized case scenarios. • Are measured for the most populous city in each country. • Are focused on the formal sector. • DO NOT measure all aspects of the business environment such as macroeconomic stability, corruption, level of labor skills, proximity to markets, of regulation specific to foreign investment or financial markets.
How are the data collected? • The Doing Business data are collected in a standardized way. • To start, the Doing Business team, with academic advisers, designs a survey. • Surveys are administered through more than 8,000 local experts, including lawyers, business consultants, accountants, government officials and other professionals. • These experts have several (typically 4) rounds of interaction with the Doing Business team, involving conference calls, written correspondence and country visits. • The data from surveys are subjected to numerous tests for robustness, which lead to revisions or expansions of the information collected. • The data for all sets of indicators in Doing Business 2010 are for June 1, 2009 (except for Paying taxes, for which the data refer to Jan–Dec 2008).
How are the rankings constructed? The index is calculated as the ranking on the simple average of its percentile rankings on each of the 10 topics
Why do rankings change? # 1 reason: reforms • DB2010 recorded 287 reforms in 131 economies. • Ranking can change because the economy reformed – OR others did. Changes to the methodology • Only one change in DB2010 to methodology of Employing Workers indicator. New economy additions • Since 2004, Doing Business added 50 economies to the sample (from 133 to 183). Data revisions • Correction rate for DB10 was 5.5%. • Note: data for previous years are recalculated in case of revisions. Comparable rankings are published side by side in report.
Changes to the methodology • Only one change in DB2010 to methodology of Employing Workers indicator. • Case Study: number of workers reduced from 201 to 60 and focus on shift work. • Minimum wage ratio: Scores cannot be improved by lowering the minimum wage below $1.25 per day (adjusted for purchasing power parity). • Difficulty of redundancy: group redundancy procedures affect a group of 9 workers rather than 25. • Redundancy Cost: calculation set at a minimum of 8.1 weeks of wages for countries that do not provide at least 8 weeks redundancy cost or 8 weeks of unemployment compensation.
How is the ranking of reformers done? • Economies are ranked on the number and impact of reforms. • First, Doing Business selects the economies that implemented reforms easing doing business in 3 or more of the Doing Business topics between June 2, 2008, and June 1, 2009. • Second, it ranks these economies on the increase in rank on the ease of doing business from the previous year. • The larger the improvement, the higher the ranking as a reformer.
How is the ranking constructed? • The ease of doing business index ranks economies from 1 to 183. • For each economy, the index is calculated as the ranking on the simple average of its percentile rankings on each of the 10 topics covered in Doing Business 2010. • The ranking on each topic is the simple average of the percentile rankings on its component indicators. • All topics are weighted equally.
What are limitations of the Doing Business methodology? The collected data refer to businesses in the country’s largest business city and may not be representative of regulation in other parts of the country. The data often focus on a specific business form—a limited liability company (or its legal equivalent) of a specified size—and may not be representative of the regulation on other businesses, for example, sole proprietorships. Transactions described in a standardized case scenario refer to a specific set of issues and may not represent the full set of issues a business encounters. The measures of time involve an element of judgment by the expert respondents. The methodology assumes that a business has full information on what is required and does not waste time when completing procedures. The ease of doing business index is limited in scope.
Doing Business – the project cycle Surveys - generation - sending Launch Website Data collection Media prep • Coding and Analysis • Reform memo/database • Data corrections • Backcalculations Production Translations Publication/writing Final data / contributors list
What is the deadline for counting reforms in Doing Business 2011? June 1, 2010, is the deadline to count reforms that happened during the 12 months prior and that were implemented. What is measured is the implementation of regulatory reform. For the Paying Taxes indicator, the tax burden of a standardized company based is assessed on a calendar year. So, in Doing Business 2010, the data are based on calendar year 2009. If a country implemented a reform with impact on the Doing Business case study between January 2009 and June 2010, the reform would be counted in Doing Business 2010, but the impact will not be reflected in the data until the Doing Business 2011 report.
The long path of reform • Following a longer-term agenda aimed at increasing the competitiveness of their firms. • Continually pushing forward and staying proactive. • Following a clear direction in their policy agenda while responding to new economic realities.
