Doing Business 2009: Five years of Doing Business reforms
Since 2004 Doing Business has been tracking regulatory reforms aimed at improving the ease of doing business by measuring their impact on 10 indicator sets. Nearly 1,000 reforms have been captured since that time. For the fifth year in a row, Eastern Europe and Central Asia has led the world in Doing Business reforms—the region accounts for a third of all reforms observed since Doing Business 2004. In 2007 Eastern Europe and Central Asia surpassed East Asia and Pacific in the average ease of doing business and has maintained its place this year. Around the world, more regulatory reforms were recorded between June 2007 and June 2008 than in any previous year—113 economies implemented 239 reforms.
While Eastern Europe and Central Asia led in the share of economies with at least 1 reform, East Asia and Pacific achieved the biggest pickup in the pace of reforms. Two-thirds of its economies reformed, compared to less than half last year. The Middle East and North Africa, Sub-Saharan Africa, and Latin America and Caribbean also all saw a larger share of economies implementing at least 1 reform. Only South Asia and the OECD economies saw a deceleration in the pace of reforms from Doing Business 2008 to Doing Business 2009.
Doing Business ranks economies based on 10 indicators of business regulation that record the time and cost to meet government requirements in starting and operating a business, trading across borders, paying taxes, and closing a business. The rankings do not reflect such areas as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates.
The most popular reform measures in Doing Business 2009 fell once again in the category of starting a business. Forty-nine economies simplified start-up and reduced the cost, with Yemen as the top reformer. Yemen abolished its minimum capital requirement—the second largest in the world at $15,225—and activated a one-stop shop. These and other reforms reduced the number of procedures to start a business by 5 and the time by 50 days. Overall, Eastern Europe and Central Asia led in the total number of reforms easing business start-up, while Sub-Saharan Africa was second.
After starting a business, the most popular reforms by indicator set in Doing Business 2009 are paying taxes and trading across borders. In 2007/08, 36 economies made it easier to pay taxes. Most frequently, the profit tax rate was reduced, while a number of economies also introduced or improved electronic filing and payment systems. Thirty-four economies also made it easier to trade in 2007/08. Electronic submission of customs documents proved the most popular for the trading across borders indicator. Between 2005 and 2008, reforms with an impact on this indicator have reduced the average time to export by 3 days.
Regulatory reforms tracked by Doing Business over the past 5 years have had a number of payoffs. For example, reforms of property registration have been followed by increases in registration. Six months after Egypt reformed its property registry, title registration increased and revenue rose by nearly 40%. After reductions in minimum capital requirements, new company registration increased by 55% in Georgia and 81% in Saudi Arabia. Research also suggests that reforms in Mexico have had a positive payoff: the number of registered businesses rose by 6%, employment increased by 2.6%, and prices fell by 1% due to competition from new entrants.
The key to regulatory reform—and its benefits—is commitment. The reforms captured by Doing Business reflect a broader, sustained approach to improving competitiveness. Economies that have demonstrated this kind of commitment can serve as examples to others. As Dr. Mahmoud Mohieldin, Egypt’s minister of investment, explains:
It’s not exaggeration when I say I checked the top 10 in every [Doing Business] indicator and we just asked them, “What did you do?” If there is any advantage to starting late in anything, it’s that you can learn from others.
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