Questions about the methodology and data?
The ease of doing business index ranks economies from 1 to 185. For each economy, the index is calculated as the ranking on the simple average of its percentile rankings on each of the 10 topics included in the index in Doing Business 2013: 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 on each topic is the simple average of the percentile rankings on 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, cost
||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
|Strength of legal rights index, depth of credit information index
||Recovery rate in bankruptcy
To start, the Doing Business team, with academic advisers, designs a survey. The survey uses a standardized and 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 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 2013 team members visited over 24 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 2013 are for June 1, 2012 (except for Paying taxes, for which the data refer to January-December 2011).
This year’s report includes an update in the ranking methodology for paying taxes.
Last year’s 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 indicators 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. This year’s threshold is set at the 15th percentile of the total tax rate distribution, which translates into a threshold for the total tax rate of 25.7%.
The employing workers indicator (EWI) is not included in the calculation of the ease of doing business ranking but not from the Doing Business 2013 report. The EWI methodology is currently being reviewed by internal and external consultative groups, with the aim of measuring the efficiency of employment regulation that favors job creation within international standards. Since the consultative process is not complete, the employing workers raw data is now an Annex of the Doing Business 2013 report and is not factored into the ease of doing business rankings.
The Doing Business methodology has 5 limitations 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 2013 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 no, 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 any 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, Moldova ranks 16th on the ease of registering property, its highest ranking, and 168th on the ease of dealing with construction permits, its lowest. These point to priorities for business regulation reforms: Licensing regulation and administration of construction permits is one place to start in further improving business conditions in Moldova.
Across all 185 economies the average correlation coefficient between the 10 sets of indicators included in the aggregate ranking is 0.37, and the coefficients between any 2 sets of indicators range from 0.19 (between getting credit and dealing with construction permits) to 0.60 (between starting a business and protecting investors). 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. Improvements on 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 on 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 a new 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 Businesscontinues strengthening 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 2011 again added another 1 set: getting electricity, to create 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 countries: 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, to include 185 economies in the sample. In the past 10 years, Doing Business publishes 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 2012 and Doing Business 2013 was 9.96%. 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.
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 185 economies. Learn more.
This year's report, Doing Business 2013, 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. Governments can identify, after reviewing their country's Doing Business indicators, where they lag behind and what to reform.
What works in developed countries often works well in developing countries, too, defying the often-used saying, "one size doesn't 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 countries could simplify the models used in developed countries 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 rich countries or countries 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.