Infrastructure
Doing Business builds indicators of government regulation of business across 178 countries. The project currently covers 10 areas of regulation -- from starting to closing a business. The sets of indicators have been expanded over time and the team continues to develop new indicators of regulations that help or hinder businesses to invest, create jobs, and grow. Infrastructure is one of two new topics being developed.
Infrastructure services matter for private businesses and their absence can represent a significant brake on companies’ growth potential. According to data from the World Bank Enterprise Surveys, private businesses in lower and middle income countries worldwide estimate that they lose on average 7.5 percent of their sales due to electricity and telephone outages and insufficient water supply. Including in high income countries, the average is still 3.8 percent.
A variety of indicators on infrastructure services are currently available. But these typically measure outcomes: kilometers of paved roads, number of telephone lines, and percentage of households connected to running water. Indicators like these have two limits. First, since building infrastructure is expensive, the cross-country comparisons show an obvious pattern: rich countries have good infrastructure, and poor countries don’t. Second, if a reformist government wants to make its mark by improving infrastructure services, it can do little to change these indicators in a short time. Heavy investment is needed.
New indicators
What a reformer can do is adopt regulation that facilitates expansion in infrastructure services. A reformer can also simplify the process of hooking up to these services for new businesses. These are the two aspects of infrastructure services on which the Doing Business team is constructing new indicators.The first set of indicators builds on a specific case: an unexpected rise in electricity demand in the country has created opportunities for expansion. The case study documents the process that a private or public utility goes through to procure the components needed to extend the electricity distribution grid.
The second set looks at the process of obtaining a power connection, a water connection and a telephone line for a newly constructed building. The number of procedures for getting these services, and the associated time and cost, are recorded. The study does not compare prices of these services after the building is connected. That would involve detailed knowledge of subsidy policies, which is beyond the scope of Doing Business.