‘Ease of Doing Business’ averages rankings on 10 indicators

1. Taking the measure of the Doing Business Indicators: An Independent Evaluationwww.worldbank.org/ieg/doingbusiness

2. ‘Ease of Doing Business’ averages rankings on 10 indicators • Starting and closing a business • Enforcing contracts • Trading across borders • Closing a business • Registering property • Protecting investors • Dealing with licenses • Paying taxes • Employing workers • Getting credit

3. DB covers less than half of businesses’ top constraints

4. RECOMMENDATION: Be clearer about what DB does and does not measure Since DBI measures…. • Only a few of the constraints on business • Written rules, not actual practice • Regulations’ burdens, not benefits ….it shouldavoid overstating the indicators’ scope and explanatory power

5. DB informants are mostly lawyers

6. Few informants per indicator

7. RECOMMENDATION: Get more informants • Disclose how many informants per indicator per country • Establish selection criteria • Recruit more informants… especially for indicators with fewest informants and the countries with least reliable information

8. DB changes its published data… • Of the 5600 data points used for the 2007 country rankings, DB changed 40% after publication • Changes not mentioned on website • Previous data no longer available

9. …and the changes would alter the country rankings

10. RECOMMENDATION: Disclose the data changes • disclose data changes as they are made • explain their effect on the rankings • make available the removed data for research

11. Anomalies in Paying Taxes • One firm provides data on 142 countries • “Total tax rate” reflects fiscal policy -- not ‘red tape’ • Top-rated countries on tax rate include tax havens and oil states

12. RECOMMENDATION: Simplify Paying Taxes • Collect information on tax rates but exclude it from the rankings • Simplify the calculations and get more informants to reduce dependency on PwC

13. Usefulness of the DB Indicators High • sparking dialogue on regulatory issues Low • designing and sequencing reform programs

14. Considerations for the World Bank Group • Does the World Bank Group inadvertently signal that reducing regulation is its most important development goal? How can it celebrate other development achievements ? • Can the DB approach be applied to other development issues? Only where actionable indicators can proxy the target outcomes and where the direction of improvement is uniform for all countries.

15. Learn more at…. www.worldbank.org/ieg/doingbusiness

16. Where do civil law countries do poorly? • Civil law countries score significantly lower than common law countries on 12 subindicators

17. Latvia reduced tax rate 10% up 17 ranks Belarus reduced tax rate 42% no change in rank Not all reforms are rewarded equally Countries at the more dispersed sections of the distribution must work harder to change their overall rankings 12 Latvia 10 8 Number of Countries 6 4 Belarus 2 0 Total Tax Rate as a Share of Profits

18. Why do they participate?

19. Where do civil law countries do poorly? • Civil law countries score significantly lower than common law countries on 12 subindicators

20. Employing workers is consistent with letter of ILO provisions but not the spirit • Ease of hiring index and Rigidity of hours index – Consistent • Firing cost and Ease of firing index – 6 questions are consistent, 4 questions are consistent with the letter but not the spirit