Questions about the methodology and data?
The ease of doing business index ranks economies from 1 to 189. For each economy, the index is calculated as the ranking of the simple average of its percentile rankings in each of the 10 topics included in the index in Doing Business 2014: Starting a Business, Dealing with Construction Permits, Getting Electricity, Registering Property, Getting Credit, Protecting Investors, Paying Taxes, Trading Across Borders, Enforcing Contracts and Resolving Insolvency. The ranking for each topic is the simple average of the percentile rankings of its component indicators. All topics are weighted equally.
|Starting a Business
|Procedures, time, cost and paid-in minimum capital to open a new business
||Indices of the extent of disclosure, extent of director liability and ease of shareholder suits
|Dealing with Construction Permits
|Procedures, time and cost of obtaining construction permits, inspections and utility connections
||Number of tax payments, time to prepare and file tax returns and pay taxes, total taxes as a share of profit before all taxes borne
||Trading Across Borders
|Procedures, time, and cost to obtain electricity
||Documents, time and cost to export and import
|Procedures, time and cost to register a transfer of commercial real estate
||Procedures, time and cost to resolve a commercial dispute in court
|Indices of the strength of legal rights and the depth of credit information
||Recovery rate in bankruptcy
To start, the Doing Business team designs a survey together with academic advisers. The survey uses a simple standardized 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 9,600 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 rounds of interaction with the Doing Business team, involving conference calls, written correspondence and country visits by the team. For Doing Business 2014 team members visited over 33 economies to verify data and recruit respondents.
The data from surveys are subjected to numerous rounds of verification, which lead to revisions or expansions of the information collected. The data for all sets of indicators in Doing Business 2014 are for June 1, 2013 (except for the Paying Taxes indicator, for which the data refer to January-December 2012).
The Doing Business project captures several important dimensions of the business regulatory environment as they apply to domestic firms. It provides quantitative analyses of regulations for the 11 areas captured by the report.
The project uses 2 types of data. The first type of data serves as input into indicators on the complexity and cost of regulatory processes. The second type of data comes from reading laws and regulations in each economy. In order to collect accurate data, the Doing Business team conducts several rounds of interactions with expert respondents. The objective of Doing Business is to measure the simplicity, efficiency and accessbility of the regulatory environment.
Note that last year’s report included an update in the ranking methodology for the Paying Taxes indicator. The previous report introduced a threshold for the total tax rate for the purpose of calculating the ranking on the ease of paying taxes. This change came as a result of consultations on the survey instrument and methodology for the Paying Taxes indicator with external stakeholders, including participants in the International Tax Dialogue. All economies with a total tax rate below the threshold (which is calculated and adjusted on a yearly basis) now receive the same ranking on the total tax rate indicator.
While the Employing Workers indicator (EWI) is not included in the calculation of the ease of doing business ranking, the indicator has not been excluded from the Doing Business 2014 report. The EWI methodology was recently reviewed by internal and external consultative groups, with the aim of measuring the efficiency of employment regulation that favors job creation within international standards. Currently, the Employing Workers raw data are presented as an annex of the Doing Business 2014 report and are not factored into the ease of doing business rankings.
The Doing Business methodology has the following caveats that should be considered when interpreting the data.
First, the collected data refer to businesses in the economy’s largest business city and may not be representative of regulation in other parts of the economy. To address this limitation, Subnational Doing Business indicators were created. The subnational studies point to significant differences in the speed of reform and the ease of doing business across cities in the same economy.
Second, 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.
Third, 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.
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 values of several responses given under the assumptions of the standardized case.
Fifth, 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 2014 would differ from the experiences of entrepreneurs as reported in the World Bank Enterprise Surveys or other perception surveys.
Lastly, the ease of doing business index is limited in scope. It does not measure all aspects of the business environment that matter to firms or investors—or all factors that affect competitiveness. It does not, for example, measure an economy’s proximity to large markets, quality of infrastructure services (other than services related to Trading Across Borders), security of property, transparency of government procurement, macroeconomic stability, the labor skills or the underlying strength of institutions. Nor does it focus on regulations specific to foreign investment. Doing Business does not assess the strength of the financial system or market regulations, both important factors in understanding some of the underlying causes of the global financial crisis. It does not cover all regulations, or all regulatory goals, in an economy. For example, the indicators on Starting a Business or Protecting Investors do not cover all aspects of commercial legislation.
The Doing Business research is conducted in cooperation with leading academic scholars. Each of the indicators underlying Doing Business is based on an academic paper, and all these papers have been or are in the process of being published in peer-reviewed academic journals. Doing Business has also compiled a list of research papers on topics covered by Doing Business.
Each indicator set studies a different aspect of the business environment. Economy rankings vary, sometimes significantly, across indicator sets. For example, Canada ranks 19 in the aggregate ranking on the ease of doing a business. Its ranking is 2 in Starting a Business, 4 in Protecting Investors, and 8 in Paying Taxes. But its ranking is only 58 in Enforcing Contracts, 116 in Dealing with Construction Permits and 145 in Getting Electricity.
Across all 189 economies the average correlation coefficient between the 10 sets of indicators included in the aggregate ranking is 0.38, and the coefficients between any 2 sets of indicators range from 0.18 (between Getting Credit and Getting Electricity) to 0.58 (between Trading Across Borders and Resolving Insolvency and between Trading Across Borders and Getting Electricity). The low correlations suggest that countries rarely score universally high or universally low on the indicators.
A high ranking on the aggregate ease of doing business means that the government has created a regulatory environment conducive to operating a business, as measured by the Doing Business indicators. Improvements in the Doing Business indicators are often a proxy for broader reforms to laws and institutions—whose effects go beyond the administrative procedures and the time and cost to comply with business regulations.
On average, high rankings in the Doing Business indicators are associated with better economic and social outcomes, but this association need not be linear. For example, expedient court procedures to resolve commercial disputes are welcomed by businesses. But to ensure a fair process, some procedural requirements are necessary, and these may cause delays.
There remains a large unfinished agenda for research into what regulation constitutes binding constraints, what package of reforms is most effective, and how this is shaped by country context. Empirical research is also needed to establish the optimal level of business regulation—for example, what the optimal duration of court procedures is and what the optimal degree of social protection is. The Doing Business indicators provide an empirical data set that may improve understanding of these issues.
Doing Business uses the World Bank regional and income group classifications, available here.
Questions on the methodology and challenges to data may be submitted to Doing Business via email.
Doing Business continually strengthens its indicators. Doing Business 2004 presented indicators in 5 topics: Starting a Business, Employing Workers, Enforcing Contracts, Getting Credit and Resolving Insolvency. Doing Business in 2005 added another 2 sets: Registering Property and Protecting Investors. Doing Business in 2006 added 3 more sets: Dealing with Construction Permits, Paying Taxes and Trading Across Borders. Doing Business 2012 again added another indicator: Getting Electricity, for a total of 11 areas measured.
Doing Business also continues including more economies in the sample. Doing Business 2006 included 155 economies and Doing Business 2007 added 20 economies. Doing Business 2008 again added 3 new economies: Brunei, Liberia and Luxembourg. Doing Business 2009 added 3 other economies: The Bahamas, Bahrain and Qatar. Doing Business 2010 added 2 more economies: Cyprus and Kosovo. Doing Business 2013 again added 2 new economies: Barbados and Malta. In 2014, Doing Business added 4 new economies: Libya, Myanmar, San Marino and South Sudan, to include 189 ecconomies in the sample. In 10 years of publication, Doing Business published 57,000 data points, each is available on this website.
Data time series for each indicator and economy are available on the website, beginning with the first year the indicator or economy was included in the report. To provide a comparable time series for research, the data set is back-calculated to adjust for changes in methodology and any revisions in data due to corrections. The website also makes available all original data sets used for background papers. The correction rate between Doing Business 2013 and Doing Business 2014 was less than 8.5%. It is hard to compare this with other international data sets because they do not publish corrections rates. In this respect Doing Business is the most transparent data set of its kind.
Questions About Employing Workers
Doing Business measures flexibility in the regulation of employment, specifically as it affects the hiring and redundancy of workers and the rigidity of working hours. Four areas of employment regulation are measured by the Employing Workers indicator: the difficulty of hiring, the rigidity of hours, the difficulty of redundancy and the redundancy cost.
According to the case study assumptions, the company operates in the manufacturing sector where continuous operations are economically necessary, in the economy’s largest business city. It has 60 employees, and is subject to collective bargaining agreements in economies where such agreements cover more than half the manufacturing sector and apply even to firms not party to them.
According to the case study assumptions, the worker is a lawful citizen and a full-time, male, nonexecutive employee, who earns a salary plus benefits equal to the economy’s average wage during the entire period of his employment. The worker resides in the economy’s largest business city and has a pay period that is the most common for workers in the economy. The worker is not a member of a labor union, unless membership is mandatory.
In Doing Business 2014, the Employing Workers indicator records two types of minimum wages: (a) the minimum wage applicable to the worker described in the case study assumptions, and (b) the minimum wage for a 19-year-old worker or an apprentice in the manufacturing sector. According to Employing Workers methodology, only the minimum wage recorded in (b) above is considered for the purposes of scoring. This Minimum Wage rate is the one published in the Doing Business 2014 report.
The minimum wage applicable to the worker described in the case study assumptions has been made available (please download the excel file with rates).
Doing Business 2014 does not present rankings of economies for the Employing Workers indicators or include the topic in the aggregate ranking on the ease of doing business. The report does present the data on the Employing Workers indicators in an annex.
In the past years, the team has been working with a consultative group - including labor lawyers, employer and employee representatives and experts from the ILO, OECD, civil society and the private sector - to review the Employing Workers indicator’s methodology and explore future areas of research. The consultative group completed its work in 2011, and its guidance has provided the basis for several changes in methodology. The Doing Business 2014 report presents the data on the Employing Workers indicator as an annex. Download the Consultative Group report with the main findings and recommendations.
The Doing Business project is grateful for the generous contribution of more than 9,6000 lawyers, accountants, freight forwarders, architects and public officials who serve as Contributors in 189 economies. Learn more.
This year's report, Doing Business 2014, can be purchased from the World Bank publications web site or on Amazon.com. Previous reports are available for purchase in a hard-copy format from the World Bank's publications Web site.
The analysis in Doing Business has direct relevance for policy reform. It reveals the relationship between business regulation indicators and economic and social outcomes, allowing policymakers to see how particular laws and regulations are associated with poverty, corruption, employment, access to credit, the size of the informal economy, and the entry of new firms. Also, the analysis provides guidance on the design of reforms. The data offer a wealth of detail on the specific regulations and institutions that enhance or hinder business activity, the biggest bottlenecks causing bureaucratic delay, and the cost of complying with regulations. After reviewing their country's Doing Business indicators, governments can identify where they lag behind and what to reform.
What works in developed economies often works well in developing economies too, defying the often-used saying, "one size does not fit all." But reform options are not always the same across high income, upper middle income, low income and lower middle income economies. In such instances, developing economies could simplify the models used in developed economies to make them workable with less capacity and fewer resources. Moreover, the good practice examples presented in the Doing Business report are not limited to high income economies or economies where comprehensive regulatory reform has taken place. The report provides many examples of successful reforms in developing countries in some areas of business regulation.
Policymakers, the aid community, investors, and researchers use Doing Business indicators and analysis to: compare countries on their regulatory environment for business, assess the impact of laws and regulations on business activity, make informed decisions regarding policy reform and private investment, identify best practices in regulatory reform, and support research on institutions and regulation.