Methodology and Changes in 2007

The Doing Business data are collected in a standardized way. To start, the Doing Business team, with academic advisers, designs a survey. The survey uses a simple business case to ensure comparability across countries and over time -- with assumptions about the legal form of the business, its size, its location and the nature of its operations. Surveys are administered through more than 5,000 local experts, including lawyers, business consultants, accountants, freight forwarders, government officials and other professionals routinely administering or advising on legal and regulatory requirements. These experts have several (typically 4) rounds of interaction with the Doing Business team, through conference calls, written correspondence and country visits.

For Doing Business 2008 team members visited 71 countries to verify data and recruit respondents. The data from surveys are subjected to numerous tests for robustness, which lead to revisions or expansions of the information collected.

The Doing Business methodology offers several advantages. It is transparent, using factual information about what laws and regulations say and allowing multiple interactions with local respondents to clarify potential misinterpretations of questions. Having representative samples of respondents is not an issue, as the texts of the relevant laws and regulations are collected and answers checked for accuracy. The methodology is inexpensive and easily replicable, so data can be collected in a large sample of economies. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across countries. And the data not only highlight the extent of obstacles to Doing Business; they also identify their source and point to the needed reform.

Limits to what is measured

The Doing Business methodology has 5 limitations that should be considered when interpreting the data. First, the collected data refer to businesses in the country’s most populous city and may not be representative of regulation in other parts of the country. To address this limitation, subnational Doing Business indicators were created for 5 economies in 2006/07: Bangladesh, Brazil, India, Mexico and Pakistan. Eight other subnational studies are under way -- for China, Colombia, Egypt, Morocco, Nigeria, the Philippines, Russia and Ukraine. Some of the existing studies are updated annually, such as those in Mexico and the South Asian economies. These subnational studies point to significant differences in the speed of reform and the ease of Doing Business across cities in the same country.

Second, the data often focus on a specific business form -- a limited liability company of a specified size -- and may not be representative of the regulation on other businesses, for example, sole proprietorships. Third, transactions described in a standardized case study refer to a specific set of issues and may not represent the full set of issues a business encounters. Fourth, the measures of time involve an element of judgment by the expert respondents. When sources indicate different estimates, the time indicators reported in Doing Business represent the median value of several responses given under the assumptions of the standardized case.

Finally, the methodology assumes that a business has full information on what is required and does not waste time when completing procedures. In practice, completing a procedure may take longer if the business lacks information or is unable to follow up promptly. Alternatively, the business may choose to disregard some burdensome procedures. For both reasons the time delays reported in Doing Business 2008 would differ from the perceptions of entrepreneurs reported in the World Bank Enterprise Surveys or other perception surveys.

Changes in what is measured

The methodology for 3 of the Doing Business topics -- dealing with licenses, employing workers and enforcing contracts -- improved this year. For dealing with licenses, 3 changes were made. First, the case study now applies to builders that are fully licensed and insured at the start of the project. As a result, procedures that involve insuring or licensing the construction business are no longer counted. Second, inspections are now assumed to take 1 day to complete even where there is a delay between the request for an inspection and its occurrence. This change was made to eliminate discretion in interpreting the time that respondents report for inspections. Third, preconstruction inspections were added to the list of procedures; these affect mainly countries in the former Soviet Union. The first 2 changes reduce the number of procedures and delays associated with the case study; the third increases them.

For employing workers, improvements were made to align the Doing Business methodology with International Labour Organization (ILO) conventions. It is now possible for an economy to receive the highest score on the ease of employing workers --indicating the most flexible labor regulations -- and comply with all 187 ILO conventions. Two main changes were made. First, the calculation of firing costs was modified so that 8 or fewer weeks of salary now receives a score of 0 for purposes of calculating the rankings on the ease of employing workers. Second, restrictions on night work such as higher overtime premiums or limitations on scheduling work hours are no longer coded as rigidities. Both changes result in more flexibility in employment regulations as coded in Doing Business.

For enforcing contracts, the list of procedures was revised to accommodate procedural differences between civil and common law. For example, in civil law countries the judge appoints an independent expert, while in common law countries parties send the court a list of their expert witnesses. Two assumptions were added, on attaching the defendant’s goods prior to judgment and on providing expert opinions. To indicate the overall efficiency of court procedures, 1 procedure is now subtracted for countries that have specialized commercial courts and 1 procedure for countries that allow electronic filing of court cases. Finally, the cost indicator now includes all fees for enforcing judgments.

View details on revisions affecting data published in Doing Business 2007.
View changes to the methodology, 2004-2006.