Doing Business 2012Doing Business in a More Transparent World

Augusto Lopez-ClarosDirector, Global Indicators and Analysis

Geneva Press Club – Geneva, SwitzerlandNovember 23, 2011

1

What does Doing Business measure?

Doing Business indicators: Focus on regulations relevant to the life

cycle of a small to medium-sized domestic business.

Are built on standardized case scenarios.

Are measured for the most populous city in each country.

Are focused on the formal sector.

DO NOT measure all aspects of the business environment such as macroeconomic stability, corruption, level of labor skills, proximity to markets, or of regulation specific to foreign investment or financial markets.

2

Start-up Expansion Operations Insolvency

Starting a businessMinimum capital requirement,

procedures, time and cost

Registering propertyProcedures, time and cost

Getting creditCredit information systems

Movable collateral laws

Protecting investorsDisclosure and liability in related party transactions

Enforcing contractsProcedures, time and cost to resolve a commercial dispute

Dealing with construction permits

Procedures, time and cost

Paying taxesPayments, time and Total Tax

Rate

Trading across bordersDocuments, time and cost

Getting electricity Procedures, time and cost

Employing workers (annex)

Resolving insolvency (formerly Closing a business)

Time, cost and recovery rate

Doing Business indicators – 11 areas of business regulation (9 included in the DB2011 ranking; 10 in DB2012)

EntryProperty rights

Investor protectionAccess to credit

Administrative burden Flexibility in hiring

Recovery rateReallocation of assets

3

What's new in Doing Business 2012?

2007175 economies

2008178 economies

2009181 economies

2010183 economies

2011183 economies

2012183 economies

Starting a business

Dealing with construction permits

Employing workers

Registering property

Getting credit

Protecting investors

Paying taxes

Trading across borders

Enforcing contracts

Resolving Insolvency (formerly Closing a business)

Update of 2007

Add 3 countries

Reformer’s Club, and 16 case studies

New “About DB” chapter

Trends analysis DB04-DB09 Most

popular reforms

Most effective reforms

Lessons learned

Add 3 new countries (Bahamas, Bahrain, Qatar)

Methodology change in Getting Credit (Legal Rights)

Business regulation and reform in the context of the global crisis

EWI and social protection

Worker Protection: Researching ILO core labor standards

Piloting a new infrastructure indicator

Add Cyprus, Kosovo

New metric on 5-year change at country level

Focus on reform results

Getting Electricity: added 36 countries and indicator level ranking

Methodology review for Employing Workers indicator

Getting Electricity included in overall ranking

New metric on an economy’s distance to the frontier

Illustration of variability of performance across indicators

Access to information data

4 case studies on regulatory reform

E-chapters for indicators

Threshold applied to the TTR in Paying Taxes

4

1. Singapore 16. Georgia2. Hong Kong SAR, China 17. Thailand3. New Zealand 18. Malaysia4. United States 19. Germany5. Denmark 20. Japan6. Norway 21. Latvia7. United Kingdom 22. Macedonia, FYR8. Korea, Rep. 23. Mauritius9. Iceland 24. Estonia10. Ireland 25. Taiwan, China11. Finland 26. Switzerland 12. Saudi Arabia 27. Lithuania13. Canada 28. Belgium14. Sweden 29. France15. Australia 30. Portugal

Top 30 economies for the ease of doing business in 2010/11

5

Progress in narrowing the distance to the frontier 2005-11

6

New metric on ‘distance to the frontier’: tracking economies’ progress over time

…captures the absolute improvement that countries have made over time, and…also provides information on how far countries have been away from the “frontier” – a measure based on the most efficient business regulatory practices observed by the Doing Business Project across countries and over time.

SGP

USA

CAN

FIN

ISL

DEU

BEL

MYS

ISR

PRI

THA

CHL

ATG

NAM

HUN

BLZ

BGR

MNG

VCT

SVN

WSM

ARM

KNA

MDV

KIR

SYC

VNM

PNG

GRC

SWZ

KAZ

MAR

TZA

PRY

NIC

GTM

URY

AZE

UGA

LSO

DZA

BOL

BRA

BTN

ZWE

MOZ

KHM

SUR

VEN

CMR

RWA

GIN

STP

CIV

AGO

GNB

BFA

TMP

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

Distance to Frontier, 2005-2011

2005

2011

Georgia, biggest improver

Rwanda

Nar

row

ing

the

Dist

ance

to th

e Fr

ontie

r fro

m 2

005

to 2

011

(per

cent

age

poin

ts)

7

New metric on dispersion: an economy’s performance across different areas of business regulation can vary significantly

8

Globally, the pace of reforms making business easier remains strong in 2010/11: 245 in 125 economies

While in 2005/2006 only 33% of the economies of Sub-Saharan Africa implemented business regulation reforms, in 2010/2011 78% of the economies reformed

9

Stronger legal institutions and property right protections are associated with more efficient regulatory processes

Economies in Sub-Saharan Africa and South Asia are the most likely to have both weaker legal institutions and more complex regulatory processes

10

Economies worldwide increasingly focused reform efforts on legal institutions and property rights protections

Reform increasing efficiency of regulatory processes are those in the areas of starting a business, dealing with construction permits, getting electricity, registering property, paying taxes and trading across borders.

Reform strengthening legal institutions are those in the areas of getting credit, protecting investors, enforcing contracts and resolving insolvency.

11

Reforms making it easier to start a business were once again most common in 2010/11 – and have shown results over time in reduced delays…

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…and in lower costs

13

All regions have reduced the time it takes to transfer property between local firms

Registering property now takes on average nearly as many days in Eastern Europe & Central Asia (33) and Middle East & North Africa (34) as it does in OECD high income economies (33).

14

Developing economies around the world have reduced delays for exporting and importing through seaport

Middle East & North Africa has experienced the biggest cumulative drop in the time for trading across borders

Sub-Saharan African economies have reformed 52 times in trading across borders, also reducing time, but exporters in the region still face delays over 3 times longer than in OECD high income economies

15

Tajikistan Sweden

The complexity and time it takes to get an electricity connection varies significantly among economies

16

Easier access to fee schedules and lower fees tend to go hand in hand

The rise in e-government initiatives around the world provides an opportunity to increase access to information and transparency.

17

Paying taxes: High tax rates do not always lead to high tax revenue or good public services

18

Change in ranking DB11

to DB12Starting a Business

Dealing with construction

permits

Getting electricity

Registering property

Getting credit

Protecting investors

Paying taxes

Trading across

borders

Enforcing contracts

Resolving insolvency

Morocco 11594 (-21) √ √ √

Moldova 9981 (-18) √ √ √ √

Macedonia, FYR 3422 (-12) √ √ √ √

São Tomé and Principe

174163 (-11)

√ √ √ √

Latvia 3121 (-10) √ √ √ √

Cape Verde 129119 (-10)

√ √ √

Sierra Leone 150141 (-9) √ √ √ √

Burundi 177169 (-8) √ √ √ √

Solomon islands 8174 (-7) √ √ √ √

Korea, Rep. 158 (-7) √ √ √

Armenia 6155 (-6) √ √ √ √ √

Colombia 4742 (-5) √ √ √

Economies improving the most in the ease of doing business in 2010/11

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Among large emerging economies, China has made the greatest strides in closing the gap to the frontier

2005 2006 2007 2008 2009 2010 20110.30

0.35

0.40

0.45

0.50

0.55

0.60

China Nigeria India Russian Federation Brazil

DB reforms

14 9 19 17 10

Nar

row

ing

the

Dist

ance

to th

e Fr

ontie

r fro

m 2

005

to 2

011

(per

cent

age

poin

ts)

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Efficient Product Market Regulation in OECD correlate with ease of Doing Business

0 20 40 60 80 100 120 140 1600

0.5

1

1.5

2

2.5

3

3.5

OECD Product Market Regulation Indicator and Doing Business Rank 2011

Doing Business Rank

OEC

D Pr

oduc

t Mar

ket R

egul

ation

The positive correlation is statistically significant at the 95% level. Significance holds when controlling for income per capita.

21

World Economic Forum Competitiveness Index and Doing Business 2011

0 20 40 60 80 100 120 140 160 180 2000

20

40

60

80

100

120

140

160

WEF Global Competitiveness Rank and Doing Business Rank 2011

Doing Business Rank

WEF

Glo

bal C

ompe

titive

ness

Ran

k

The positive correlation is statistically significant at the 95% level. Significance holds when controlling for income per capita.

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Thank you!For more information: www.doingbusiness.org

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