Caja PDF

Comparta fácilmente sus documentos PDF con sus contactos, la web y las redes sociales.

Compartir un archivo PDF Gestor de archivos Caja de instrumento Buscar PDF Ayuda Contáctenos



DB14 Full Report .pdf



Nombre del archivo original: DB14-Full-Report.pdf
Título: Doing Business 2014 final 10-31-13web.pdf
Autor: wb249358

Este documento en formato PDF 1.5 fue generado por Adobe InDesign CS6 (Macintosh) / Acrobat Distiller 10.1.5 (Windows), y fue enviado en caja-pdf.es el 29/06/2014 a las 10:29, desde la dirección IP 95.61.x.x. La página de descarga de documentos ha sido vista 3831 veces.
Tamaño del archivo: 3.1 MB (316 páginas).
Privacidad: archivo público




Descargar el documento PDF









Vista previa del documento


© 2013 International Bank for Reconstruction and Development/The World Bank
1818 H Street NW, Washington, DC 20433
Telephone: 202-473-1000; Internet: www.worldbank.org
Some rights reserved
1 2 3 4 15 14 13 12
A copublication of The World Bank and the International Finance Corporation.
This work is a product of the staff of The World Bank with external contributions. Note that The World Bank does not
necessarily own each component of the content included in the work. The World Bank therefore does not warrant that
the use of the content contained in the work will not infringe on the rights of third parties. The risk of claims resulting
from such infringement rests solely with you.
The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World
Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map
in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the
endorsement or acceptance of such boundaries.
Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The
World Bank, all of which are specifically reserved.
Rights and Permissions

This work is available under the Creative Commons Attribution 3.0 Unported license (CC BY 3.0) http://creative
commons.org/licenses/by/3.0. Under the Creative Commons Attribution license, you are free to copy, distribute,
transmit, and adapt this work, including for commercial purposes, under the following conditions:
Attribution—Please cite the work as follows: World Bank. 2013. Doing Business 2014: Understanding Regulations for Small
and Medium-Size Enterprises. Washington, DC: World Bank Group. DOI: 10.1596/978-0-8213-9984-2. License: Creative
Commons Attribution CC BY 3.0
Translations—If you create a translation of this work, please add the following disclaimer along with the attribution: This
translation was not created by The World Bank and should not be considered an official World Bank translation. The World Bank
shall not be liable for any content or error in this translation.
All queries on rights and licenses should be addressed to World Bank Publications, The World Bank Group, 1818 H Street
NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org.
Additional copies of all 11 editions of Doing Business may be purchased at www.doingbusiness.org.
ISBN (paper): 978-0-8213-9984-2
ISBN (electronic): 978-0-8213-9983-5
DOI: 10.1596/978-0-8213-9984-2
Cover design: The Word Express

Doing Business 2014
Understanding Regulations for Small
and Medium-Size Enterprises

Comparing Business Regulations for Domestic Firms in 189 Economies
A World Bank Group Corporate Flagship

Resources on the
Doing Business website
Current features

Law library

News on the Doing Business project
http://www.doingbusiness.org

Online collection of business laws and
regulations relating to business and gender issues
http://www.doingbusiness.org/law-library
http://wbl.worldbank.org

Rankings
How economies rank—from 1 to 189
http://www.doingbusiness.org/rankings

Contributors
Data
All the data for  189  economies—topic
rankings, indicator values, lists of regulatory procedures and details underlying
indicators
http://www.doingbusiness.org/data

Reports
Access to Doing Business reports as well
as subnational and regional reports, reform case studies and customized economy and regional profiles
http://www.doingbusiness.org/reports

Methodology
The methodologies and research papers
underlying Doing Business
http://www.doingbusiness.org/methodology

More than 10,200 specialists in 189 economies who participate in Doing Business
http://www.doingbusiness.org/contributors/
doing-business

Entrepreneurship data
Data on business density (number of newly registered companies per 1,000 working-age people) for 139 economies
http://www.doingbusiness.org /data/
exploretopics/entrepreneurship

Distance to frontier
Data benchmarking 189 economies to the
frontier in regulatory practice
http://www.doingbusiness.org/data/distance-to-frontier

Information on good practices
Research
Abstracts of papers on Doing Business
topics and related policy issues
http://www.doingbusiness.org/research

Doing Business reforms
Short summaries of DB2014  business
regulation reforms, lists of reforms since
DB2008 and a ranking simulation tool
http://www.doingbusiness.org/reforms

Historical data
Customized data sets since DB2004
http://www.doingbusiness.org/custom-query

Showing where the many good practices identified by Doing Business have been
adopted
http://www.doingbusiness.org /data/
good-practice

Doing Business iPhone App
Doing Business at a Glance presents the full
report, rankings and highlights from each
indicator for the iPhone, iPad and iPod
touch
http://www.doingbusiness.org/specialfeatures/iphone

Contents

v

Preface

1

Overview

20

About Doing Business: measuring for impact

30

Research on the effects of business regulations

Case studies

Doing Business 2014 is the 11th in a series
of annual reports investigating the regulations that enhance business activity
and those that constrain it. Doing Business
presents quantitative indicators on
business regulations and the protection
of property rights that can be compared
across 189 economies—from Afghanistan to Zimbabwe—and over time.

41

Why are minimum capital requirements a concern for entrepreneurs?

46

What role should risk-based inspections play in construction?

52

Tackling high electricity connection costs: Trinidad and Tobago’s new
approach

56

Implementing electronic tax filing and payments in Malaysia

60

Implementing trade single windows in Singapore, Colombia and Azerbaijan

66

Improving court efficiency: the Republic of Korea’s e-court experience

Topic notes
72

Starting a business

77

Dealing with construction permits

82

Getting electricity

86

Registering property

90

Getting credit

96

Protecting investors

Regulations affecting 11 areas of the
life of a business are covered: starting
a business, dealing with construction
permits, getting electricity, registering
property, getting credit, protecting
investors, paying taxes, trading across
borders, enforcing contracts, resolving
insolvency and employing workers. The
employing workers data are not included in this year’s ranking on the ease of
doing business.

100

Paying taxes

105

Trading across borders

110

Enforcing contracts

114

Resolving insolvency

Data in Doing Business 2014 are current
as of June 1, 2013. The indicators are
used to analyze economic outcomes
and identify what reforms of business
regulation have worked, where and why.

118

Annex: employing workers

123

References

130

Data notes

155

Ease of doing business and distance to frontier

159

Summaries of Doing Business reforms in 2012/13

173

Country tables

237

Employing workers data

248

Acknowledgments

Preface
A thriving private sector—with new firms
entering the market, creating jobs and
developing innovative products—contributes to a more prosperous society.
Governments play a crucial role in supporting a dynamic ecosystem for firms.
They set the rules that establish and
clarify property rights, reduce the cost
of resolving disputes and increase the
predictability of economic transactions.
Without good rules that are evenly enforced, entrepreneurs have a harder time
starting and growing the small and medium-size firms that are the engines of
growth and job creation for most economies around the world.
Doing Business 2014 is the 11th in a series
of annual reports benchmarking the regulations that affect private sector firms, in
particular small and medium-size enterprises. The report presents quantitative
indicators on 11 areas of business regulation for 189 economies. Four economies
have been added this year—Libya, Myanmar, San Marino and South Sudan. The
data are current as of June 2013.
The Doing Business project aims to deliver a body of knowledge that will catalyze
reforms and help improve the quality of
the rules underpinning the activities of
the private sector. This matters because
in a global economy characterized by
constant change and transformation, it
makes a difference whether the rules
are sensible or excessively burdensome,
whether they create perverse incentives
or help establish a level playing field,
whether they safeguard transparency and
encourage adequate levels of competition. To have a tool that allows economies
to track progress over time and with respect to each other in the development
of the building blocks of a good business
environment is crucial for the creation of

a more prosperous world, with increased
opportunities for everyone
We have been excited to see a global
convergence toward good practices in
business regulations. The data show that
economies in all regions of the world and
of all income levels have made important
strides in improving the quality of the
rules underpinning private sector activity. This year the findings have been even
more encouraging—low-income economies have improved their business regulations at twice the rate that high-income
economies have.
These developments support the twin
World Bank Group goals of ending extreme poverty and boosting shared prosperity. By providing useful insights into
good practices worldwide in business
regulations, Doing Business helps mobilize policy makers to reduce the cost and
complexity of government procedures
and to improve the quality of institutions.
Such change serves the underprivileged
the most—where more firms enter the
formal sector, entrepreneurs have a greater chance to grow their businesses and
produce jobs, and workers are more likely
to enjoy the benefit of regulations such as
social protections and safety regulations.
We encourage you to give feedback on
the Doing Business website (http://www.
doingbusiness.org) and join the conversation as we shape the project in the years
to come to make it a more effective mechanism for better business regulation.
Sincerely,

Sri Mulyani Indrawati
Managing Director
World Bank Group

V

Overview
Regulation is a reality from the beginning
of a firm’s life to the end (figure 1.1). Navigating it can be complex and costly. On
average around the world, starting a business takes  7  procedures, 25  days and
costs  32% of income per capita in fees.
But while it takes as little as 1 procedure,
half a day and almost nothing in fees in
New Zealand, an entrepreneur must
wait  208  days in Suriname and  144  in
República Bolivariana de Venezuela.
And this is just the tip of the iceberg. Consider what the new firm must go through
to complete other transactions at the
average level of time and effort required
around the world. Preparing, filing and
paying the firm’s annual taxes could take
up another 268 hours of its staff’s time. Exporting just one shipment of its final products could take 6 documents, 22 days and
more than $1,500. If the firm needs a simple warehouse, getting the facility ready to
start operating could take 26 procedures
and 331 days more—to buy the land, register its ownership, build the warehouse
and get electricity and other utility connections. Having sorted out these initial
formalities, if the firm becomes embroiled
in a legal dispute with one of its suppliers
or customers, resolving the dispute could
mean being stuck in court for  622  days,
with costs amounting to 35% of the value
of the claim.
To operate and expand, the firm will need
financing—from shareholders or from
creditors. Raising money in the capital
market is easier and less costly where
minority shareholders feel protected
from self-interested transactions by large
shareholders. Good corporate governance
rules can provide this kind of protection.
But among the 189 economies covered by
Doing Business, 46 still have only very limited requirements for disclosing majority

shareholders’ conflicts of interest—or
none at all. This undermines trust in the
system, making it less likely that investors
will take a minority stake in a firm.
Similarly, creditors need guarantees that
their loans will be repaid. Information
about potential borrowers and solid legal rights for creditors play an important part in providing those guarantees.
Yet institutions providing these are not
universal among the  189  economies:
35 have no credit bureau or registry that
distributes information about borrowers,
and  124  lack a  modern collateral registry where a  creditor can check whether
a movable asset being pledged as collateral has any other liens on it. If despite all
efforts the firm ends up insolvent, having
institutions in place that enable creditors
to recover their assets is also important.
On average around the world, creditors
recover no more than 35% of their initial
loan in case of bankruptcy as measured
by Doing Business.
In many parts of the world in recent years,
Doing Business data show that there has
been remarkable progress in removing
some of the biggest bureaucratic obstacles to private sector activity. Yet small
and medium-size enterprises still are
subject to burdensome regulations and
vague rules that are unevenly applied
and that impose inefficiencies on the enterprise sector. This curtails the overall
competitiveness of economies and their
potential for creating jobs.

WHAT DOES DOING BUSINESS
MEASURE—AND WHO
PERFORMS WELL?
Through its indicators Doing Business
measures and tracks changes in the

• In 2012/13, 114 economies
implemented 238 regulatory
reforms making it easier to do
business—18% more reforms
than in the previous year.
• If economies around the world
followed the best practice in
regulatory processes for starting
a business, entrepreneurs
would spend 45.4 million fewer
days each year satisfying
bureaucratic requirements.
• Ukraine, Rwanda, the Russian
Federation, the Philippines and
Kosovo are among the economies
improving the most in 2012/13 in
areas tracked by Doing Business.
• Reforms reducing the complexity and
cost of regulatory processes continue
to be the most common. Less than
a third of the reforms recorded by
Doing Business in 2012/13—and in
the years since 2009—focused on
strengthening legal institutions.
• Sub-Saharan Africa is home to 9 of
the 20 economies narrowing the gap
with the regulatory frontier the most
since 2009. Low-income economies
narrowed this gap twice as much as
high-income economies did.
• Economies that improve in areas
measured by Doing Business are on
average more likely than others to
also implement reforms in other
areas—such as governance, health,
education and gender equality.
• Economies that perform well
on Doing Business indicators
do not necessarily have
smaller governments.

2

DOING BUSINESS 2014

FIGURE 1.1 Regulations as measured by Doing Business affect firms throughout
their life cycle

economies that have no regulations in the
area being measured or do not apply their
regulations (considered “no practice”
economies), penalizing them for lacking
appropriate regulation.

At start-up
s 3TARTING A BUSINESS
s %MPLOYING WORKERS

When things
go wrong
s %NFORCING CONTRACTS
s 2ESOLVING INSOLVENCY

In daily
operations
s 0AYING TAXES
s 4RADING ACROSS
BORDERS

In getting a
location
s DEALING WITH
CONSTRUCTION PERMITS
s 'ETTING ELECTRICITY
s 2EGISTERING PROPERTY

In getting
financing
s 'ETTING CREDIT
s 0ROTECTING INVESTORS

regulations applying to domestic small
and medium-size companies, operating
in the largest business city of each economy, in 10 areas in their life cycle: 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 aggregate ranking on the ease of
doing business is based on these indicators. Doing Business also documents regulations on employing workers, which are
not included in the aggregate ranking. In
addition, Doing Business tracks good practices around the world to provide insights
into how governments have improved the
regulatory environment in the past in the
areas that it measures (see table 1.5 at the
end of this overview).
Regulations that protect consumers,
shareholders and the public without overburdening firms help create an environment where the private sector can thrive.
Sound business regulation requires both
efficient procedures and strong institutions that establish transparent and enforceable rules. Doing Business measures
both these elements: through indicators
relating to the strength of legal institutions relevant to business regulation and

through indicators relating to the complexity and cost of regulatory processes.
The indicators in the first group measure
the strength of the legal and regulatory
framework for getting credit, protecting
investors, enforcing contracts and resolving insolvency. Those in the second group
measure the cost and efficiency of regulatory processes for starting a  business,
dealing with construction permits, getting
electricity, registering property, paying
taxes and trading across borders. Based
on time-and-motion case studies from
the perspective of the business, these
indicators measure the procedures, time
and cost required to complete a  transaction in accordance with the relevant
regulations (for a detailed explanation of
the Doing Business methodology, see the
data notes and the chapter “About Doing
Business”).
Doing Business is not about less regulation
but about better regulation. Accordingly, some Doing Business indicators give
a higher score for better and more developed regulation, as the protecting investors indicators do for stricter disclosure
requirements for related-party transactions. Other indicators, such as those
on dealing with construction permits,
automatically assign the lowest score to

The economies ranking highest on the
ease of doing business therefore are not
those with no regulation but those whose
governments have managed to create
a regulatory system that facilitates interactions in the marketplace and protects
important public interests without unnecessarily hindering the development of the
private sector—in other words, a regulatory system with strong institutions and
low transactions costs (table  1.1). These
economies all have both a well-developed
private sector and a  reasonably efficient
regulatory system that has managed to
strike a  sensible balance between the
protections that good rules provide and
the need to have a dynamic private sector unhindered by excessively burdensome regulations.

WHERE IS THE REGULATORY
GAP WIDER?
To complement the ease of doing business ranking, a  relative measure, Doing
Business  2012  introduced the distance to
frontier, an absolute measure of business
regulatory efficiency. This measure aids
in assessing how much the regulatory
environment for local entrepreneurs improves in absolute terms over time by
showing the distance of each economy
to the “frontier,” which represents the
best performance by any economy observed on each of the Doing Business indicators since 2003 or the year in which
data for the indicator were first collected. Because the distance to frontier is
an absolute measure, it can be used for
comparisons over time. The measure is
normalized to range between 0 and 100,
with  100  representing the frontier. A
higher score indicates a more efficient
business environment and stronger legal
institutions (for a detailed description of
the methodology, see the chapter on the
ease of doing business and distance to
frontier).
Analysis based on the distance to frontier measure shows that on average
across all regions, economies are closest

OVERVIEW

TABLE 1.1 Rankings on the ease of doing business
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63

Economy
Singapore
Hong Kong SAR, China
New Zealand
United States
Denmark
Malaysia
Korea, Rep.
Georgia
Norway
United Kingdom
Australia
Finland
Iceland
Sweden
Ireland
Taiwan, China
Lithuania
Thailand
Canada
Mauritius
Germany
Estonia
United Arab Emirates
Latvia
Macedonia, FYR
Saudi Arabia
Japan
Netherlands
Switzerland
Austria
Portugal
Rwanda
Slovenia
Chile
Israel
Belgium
Armenia
France
Cyprus
Puerto Rico (U.S.)
South Africa
Peru
Colombia
Montenegro
Poland
Bahrain
Oman
Qatar
Slovak Republic
Kazakhstan
Tunisia
Spain
Mexico
Hungary
Panama
Botswana
Tonga
Bulgaria
Brunei Darussalam
Luxembourg
Samoa
Fiji
Belarus

DB2014
reforms
2
1
1
0
0
3
1
1
0
2
1
0
1
1
0
0
2
1
0
3
0
1
3
4
6
0
0
2
0
0
1
8
1
1
2
0
2
1
0
0
1
0
2
2
2
1
0
1
0
2
0
1
3
0
4
1
1
0
1
0
0
0
4

Rank
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126

Economy
St. Lucia
Italy
Trinidad and Tobago
Ghana
Kyrgyz Republic
Turkey
Azerbaijan
Antigua and Barbuda
Greece
Romania
Vanuatu
Czech Republic
Mongolia
Dominica
Moldova
Guatemala
Seychelles
San Marino
St. Vincent and the Grenadines
Zambia
Bahamas, The
Sri Lanka
Kosovo
Morocco
Uruguay
Croatia
Albania
Barbados
Russian Federation
Serbia
Jamaica
Maldives
China
Solomon Islands
Namibia
Vietnam
Palau
St. Kitts and Nevis
Costa Rica
Malta
Kuwait
Nepal
Belize
Grenada
Philippines
Paraguay
Pakistan
Lebanon
Ukraine
Papua New Guinea
Marshall Islands
Guyana
Brazil
Dominican Republic
El Salvador
Jordan
Indonesia
Cape Verde
Kiribati
Swaziland
Nicaragua
Ethiopia
Argentina

DB2014
reforms
0
3
1
0
0
3
3
0
3
3
1
1
3
0
3
3
0
0
0
1
2
4
3
3
1
5
1
0
5
0
3
1
2
0
0
2
2
0
2
1
1
1
0
0
3
1
0
0
8
0
0
1
0
0
1
0
1
2
0
2
2
0
1

Rank
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189

Economy
Honduras
Egypt, Arab Rep.
Kenya
Bangladesh
Bosnia and Herzegovina
Uganda
Yemen, Rep.
India
Ecuador
Lesotho
Cambodia
West Bank and Gaza
Mozambique
Burundi
Bhutan
Sierra Leone
Tajikistan
Liberia
Tanzania
Uzbekistan
Nigeria
Madagascar
Sudan
Gambia, The
Iraq
Iran, Islamic Rep.
Algeria
Burkina Faso
Mali
Micronesia, Fed. Sts.
Togo
Comoros
Lao PDR
Djibouti
Suriname
Bolivia
Gabon
Afghanistan
Syrian Arab Republic
Equatorial Guinea
Côte d'Ivoire
Cameroon
São Tomé and Príncipe
Zimbabwe
Malawi
Timor-Leste
Mauritania
Benin
Guinea
Niger
Haiti
Senegal
Angola
Guinea-Bissau
Venezuela, RB
Myanmar
Congo, Dem. Rep.
Eritrea
Congo, Rep.
South Sudan
Libya
Central African Republic
Chad

DB2014
reforms
0
0
0
1
0
1
0
0
1
1
0
1
2
6
2
0
2
2
2
6
0
2
0
1
0
0
0
1
0
0
3
1
1
3
2
0
3
2
0
0
4
0
0
0
1
0
1
2
3
2
0
1
0
1
1
1
3
0
3
0
0
1
1

Note: The rankings for all economies are benchmarked to June 2013 and reported in the country tables. This year‘s rankings on the ease of doing business are the average of
the economy‘s percentile rankings on the 10 topics included in this year‘s aggregate ranking. The number of reforms excludes those making it more difficult to do business.
Source: Doing Business database.

3

DOING BUSINESS 2014

Regional performance varies considerably
across the areas measured by Doing Business. In several areas Europe and Central
Asia has an average performance similar
to that of OECD high-income economies.
But in dealing with construction permits
this region is further from the regulatory
frontier than any other. East Asia and the
Pacific follows Europe and Central Asia
closely in some areas but outperforms
that region in dealing with construction
permits, getting electricity, paying taxes
and trading across borders. Latin America
and the Caribbean has a performance remarkably similar to that of East Asia and
the Pacific except in paying taxes.
The Middle East and North Africa has
a  very diverse performance. In some areas, such as paying taxes, it is almost as
close to the frontier as OECD high-income economies. In other areas, such
as getting credit, the Middle East and
North Africa has the lowest performance
among regions. South Asia has a gap with
the frontier similar to that of Sub-Saharan
Africa in most areas, though it substantially outperforms that region in 3 areas—
starting a  business, resolving insolvency
and getting credit.
The distance to frontier measure provides one perspective on variation in

100
90
80
70
60
50
40
30
20

cy
insolven
Resolvin
g

rs
g investo
Protecti
n

cts
g contra
Enforcin

credit
Getting

Trading
a

cross bo
rders

xes

g prope
Registeri
n

Paying ta

rty

y
electricit
Getting

construcDealing with
tion perm
its

ss

Regulatory frontier

a busine

Across most areas measured by Doing
Business, OECD high-income economies
are closer to the frontier on average than
those of any other region (figure 1.2). The
exceptions are starting a  business and
registering property, where Europe and
Central Asia is slightly ahead. Sub-Saharan African economies are furthest from
the frontier on average in 6 of the 10 areas
measured by Doing Business: starting a
business, getting electricity, paying taxes,
trading across borders, protecting investors and resolving insolvency

FIGURE 1.2 OECD high-income economies are closest to the frontier in regulatory practice

Starting

to the frontier—or best practice—in the
area of starting a business. And they are
furthest from the frontier on average in
resolving insolvency. Starting a  business is also the area where all regions
are closest together, in line with the evidence on convergence presented later in
the overview. Performance in such areas
as getting credit, enforcing contracts and
resolving insolvency varies considerably
across regions.

Average distance to frontier
(percentage points)

4

OECD high income

Europe & Central Asia

South Asia

Middle East & North Africa

East Asia & Pacific

Latin America & Caribbean

Sub-Saharan Africa

Source: Doing Business database.

performance across areas of regulation
measured by Doing Business. Rankings of
economies in these areas provide another. The ease of doing business ranking is
just one number—aggregating an average
of more than  300  data points for each
economy. Not surprisingly, the full set
of rankings and data across Doing Business topics for an economy can present
a very different picture than the aggregate
ranking (figure  1.3). Take Estonia, which
stands at 22 in the ease of doing business
ranking. Its rankings on individual topics
range from  7  in trading across borders
to 68 in protecting investors. Japan’s lowest 3 rankings (in paying taxes, starting a
business and dealing with construction
permits) average 117, while its highest 3 (in
resolving insolvency, protecting investors
and trading across borders) average 13. Japan’s ranking on the overall ease of doing
business is 27. Three economies added to
the Doing Business sample this year—Libya, Myanmar and South Sudan—show
similar variation across topics (box 1.1).
This variation can point to important regulatory obstacles for firms. An economy
may make it easy to start a business, for
example. But if getting financing is difficult, the constraints will hamper the

growth of new firms, discouraging entrepreneurship.

WHAT IS THE BIGGER PICTURE?
Doing Business recognizes that the state
plays a  fundamental role in private sector development. Governments support
economic activity by establishing and
enforcing rules that clarify property rights
and reduce the cost of resolving disputes,
that increase the predictability of economic interactions and that provide contractual partners with core protections
against abuse. So it is no surprise to find
that there is no evidence suggesting that
economies that do well on Doing Business
indicators tend to have governments driven by a “smaller government” philosophy.
Indeed, the data suggest otherwise. It is
generally the bigger governments (as
measured by government consumption
expenditure as a percentage of GDP), not
the small ones, that tend to provide more
of the protections and efficient rules promoted by Doing Business.
Economies performing well on Doing
Business indicators include examples
with large governments as well as those

OVERVIEW

FIGURE 1.3 An economy’s regulatory environment may be more business-friendly in some areas than in others
180
160
120
100
80
60

Average of lowest 3 topic rankings

40

Average of all topic rankings

20

Average of highest 3 topic rankings

0

Singapore
Hong Kong SAR, China
United States
Korea, Rep.
Georgia
Finland
Iceland
Taiwan, China
Ireland
Estonia
Mauritius
Germany
Portugal
Switzerland
Saudi Arabia
Austria
Rwanda
France
Belgium
Qatar
Bahrain
Armenia
Israel
Spain
Poland
Puerto Rico (U.S.)
Slovak Republic
Hungary
Luxembourg
Mexico
St. Lucia
Greece
Bulgaria
St. Vincent and the Grenadines
Kyrgyz Republic
Italy
Ghana
Vanuatu
Guatemala
Bahamas, The
Morocco
Zambia
San Marino
Barbados
Kosovo
Solomon Islands
St. Kitts and Nevis
Vietnam
Maldives
Namibia
Costa Rica
Grenada
Albania
Belize
Ukraine
Lebanon
Guyana
Cape Verde
Papua New Guinea
Kiribati
Indonesia
El Salvador
Ecuador
Bhutan
Argentina
Bangladesh
Honduras
Lesotho
Kenya
Uzbekistan
India
Tanzania
Mozambique
Gambia, The
Micronesia, Fed. Sts.
Sudan
Nigeria
Comoros
Iran, Islamic Rep.
Equatorial Guinea
Syrian Arab Republic
Afghanistan
Djibouti
Bolivia
Cameroon
Zimbabwe
Mauritania
Haiti
Angola
Guinea
Guinea-Bissau
Myanmar
Libya
Congo, Rep.
Central African Republic

Average ranking

140

Note: Rankings reflected are those on the 10 Doing Business topics included in this year’s aggregate ranking on the ease of doing business. Figure is illustrative only; it
does not include all 189 economies covered by this year’s report. See the country tables for rankings on the ease of doing business and each Doing Business topic for all
economies.
Source: Doing Business database.

Moreover, economies performing well on
Doing Business indicators are on average
more inclusive along at least  2  dimensions. They tend to have smaller informal
sectors, meaning that more people have
access to the formal market and can
benefit from such regulations as social
protections and workplace safety regulations (figure 1.5). And they are more likely to have gender equality under the law
as measured by the World Bank Group’s
Women, Business and the Law indicators.1  These  2  aspects of inclusiveness
reflect in part a  desire by governments

to more effectively allocate resources.
This means not hampering the productivity of formal businesses through overly burdensome rules. And it means not
needlessly depriving the economy of the
skills and contributions of women. Overall, economies with smarter business
regulations are more likely to nurture an
environment conducive to greater economic inclusion.

No set of indicators can possibly capture
the full complexity of a  particular reality—in the case of the Doing Business indicators, that faced by entrepreneurs as they
go about their activities while attempting
to comply with the rules established by
government. Having a  state-of-the-art
business registry has less impact on job
creation or private sector investment in
an economy if roads are lacking, crime is

FIGURE 1.4 Good performance on Doing Business indicators is not associated with
smaller governments
Distance to frontier (percentage points), 2012

with small ones. Denmark, with among
the largest governments in the world, is
number 5 in the ease of doing business
ranking; the Netherlands, also with one of
the largest governments, is number  28.
Hong Kong SAR, China, with a  relatively small government, is number 2 in the
ranking. Economies performing poorly
on Doing Business indicators also include
examples with large and small governments. Zimbabwe, with a  large government relative to GDP, ranks at 170; Equatorial Guinea, with a  small government,
ranks at  166. Nevertheless, on average
economies with smaller governments
do not perform better on Doing Business
indicators than those with larger governments (figure 1.4).

100

80

60

40

20
0

10

20

30

General government final consumption expenditure as % of GDP, 2012

Note: The correlation between the distance to frontier and government expenditure is 0.20 and significantly
different from zero.
Source: Doing Business database; World Bank, World Development Indicators database.

40

5

6

DOING BUSINESS 2014

BOX 1.1 The right time to improve business regulations
For the first time, this year’s report measures business regulations in Libya, Myanmar and South Sudan, economies that emerged
from conflict or are starting to open up to the global economy after years of isolation. This is the right time to improve business
regulations. Old laws and regulations still apply in Myanmar, including the Companies Act of 1914, the Code of Civil Procedure
of 1908 and the Evidence Act, 1872. In Libya the civil code and the civil and commercial procedure codes all date back to 1953.
In South Sudan the challenge is not updating old laws and regulations but creating new ones from scratch. This process takes
time. Yet since independence in 2011, South Sudan has passed a company law, tax law and insolvency law.
Doing Business provides baseline data that can help inform policy makers designing laws and their implementation. Data
in this year’s report show that these 3 economies rank among the bottom 10 on the ease of doing business. Although their
performance varies somewhat across Doing Business topics, the data consistently show that these economies have complex
and costly regulatory procedures and weak institutions relevant to business regulation (see figure). But in all 3 economies new
laws are under discussion that may affect future editions of the Doing Business data. Doing Business will continue to measure and
monitor potential improvements.

There are many areas for regulatory improvement in fragile and conflict-affected states
Global ranking, by Doing Business topic

Libya

Starting a
171business Dealing with 189
construction
112
105
108 permits
Getting 68
118
electricity
77

189
Resolving
insolvency

150 Enforcing
contracts
Trading
143 across
borders

89

93
64

116
Paying taxes

113
Protecting
investors
187

South
Sudan

134 124

87 Enforcing
contracts 123
Trading
187 across
borders

133
Getting credit
186

Starting a
business
140

189
Resolving
insolvency

Registering
property189

Getting 184
electricity

141

121

Registering
property 183

126

113
Getting
Protecting credit
180
investors
182

Paying taxes
92

114

155 Resolving
insolvency
188 Enforcing
contracts

Libya
Middle East &
North Africa

108

150 Dealing with construction
permits

100
76
79

91

75
113 Trading across
borders
73

126 Getting electricity

92

154 Registering
property

81

86
107 Paying taxes

170 Getting credit
Protecting
investors
182

Starting a business
120
135
Dealing with 189
Resolving
112
construction
insolvency
permits
105
Enforcing
108
contracts
Getting electricity
118
82
179
77

Dealing with
construction 171
permits

117
135

Myanmar

189
Starting a business

147 Trading across
borders
South Sudan
Sub-Saharan
Africa

89

Paying taxes
120

64

93
133

113
Protecting
investors
115

Myanmar
East Asia &
Pacific

Syrian
Arab
Republic

Registering
property 82

Getting credit
180

Syrian Arab
Republic
Middle East &
North Africa

Note: Numbers are economy and regional average rankings, with 1 denoting the highest ranking on a topic and 189 the lowest.
Source: Doing Business database.

In economies affected by conflict, reforming business regulations is almost always a difficult task—even as firms often face
increasing challenges in the business regulatory environment. Civil strife, a substantial weakening in the state’s ability to enforce
the law and other characteristics of conflict-affected states often bring about a substantial worsening of the conditions in which
the private sector operates. The Syrian Arab Republic was the economy that showed the greatest deterioration in 2012/13 in
the areas measured by Doing Business. The time and cost associated with trading across borders increased substantially, for
example, and no building permits are being issued in Damascus, making it impossible to legally build new construction.
Yet there is encouraging news from other fragile and conflict-affected states. A recently published report, Doing Business in
the g7+ 2013, shows that all economies in the g7+ group have improved their business regulatory environment since 2005,
narrowing the gap with the best performance observed globally by Doing Business.a Sierra Leone, Burundi, Guinea-Bissau,
Timor-Leste, Côte d’Ivoire, Togo and the Solomon Islands are all among the 50 economies making the biggest improvements
between 2005 and 2012.
a. A special report, Doing Business in the g7+ 2013 compares business regulations in economies of the g7+ group: Afghanistan, Burundi, the Central African
Republic, Chad, the Comoros, the Democratic Republic of Congo, Côte d’Ivoire, Guinea, Guinea-Bissau, Haiti, Liberia, Papua New Guinea, Sierra Leone, the
Solomon Islands, South Sudan, Timor-Leste and Togo. The g7+ group is a country-owned and country-led global mechanism established in April 2010 to
monitor, report and draw attention to the unique challenges faced by fragile states.

OVERVIEW

FIGURE 1.5 Good performers on Doing Business indicators are likely to be more inclusive—with a smaller informal sector and greater
gender equality under the law
100
Distance to frontier
(percentage points), 2013

Distance to frontier
(percentage points), 2007

100
80
60
40

80
60
40
20

20
10

20

50
30
40
Informal sector as % of GDP, 2007

60

0

10

20

30

Number of restrictions for women in the law, 2013

Note: The correlation between the distance to frontier and the size of the informal sector is −0.65. The correlation between the distance to frontier and the number of
restrictions for women in the law is −0.34. Both relationships are significant at the 1% level after controlling for income per capita. The number of restrictions for women in
the law refers to those measured by Women, Business and the Law, a data set capturing 47 legal restrictions on women’s employment and entrepreneurship.
Source: Doing Business database; Schneider, Buehn and Montenegro 2010; World Bank Group, Women, Business and the Law database.

rampant and state capture or corruption
is the norm. To understand the challenges faced by businesses, the Doing Business
rankings and underlying data therefore
need to be used in conjunction with other information. Of course, sound business
regulations are not the only thing on which
a  thriving business environment depends.
Other areas beyond the focus of Doing Business are also important—including stable
macroeconomic policy, a  well-educated
workforce and well-developed infrastructure, just to name a few.

WHAT GAINS WERE ACHIEVED
IN 2012/13?
Reforming in any area of government policy
is a challenge. Business regulation is no exception. Implementing regulatory changes
often requires agreement among multiple
agencies in a government. Consider a onestop shop for business registration. Creating one involves coordination across the
business registry, the statistical office, the
municipal tax office and the state tax office, to name just a few. But 96 economies
have nevertheless done so.
Governments undertake such reforms because reducing the complexity and cost of
regulatory processes or strengthening legal institutions relevant to business regulation brings many benefits. Governments
benefit from cost savings because the
new systems often are easier to maintain
(though setting up a new system involves

an initial fixed cost). Firms benefit from
more streamlined and less costly processes or more reliable institutions. And economies as a  whole benefit from new firm
start-ups, more jobs, growth in trade and
greater overall economic dynamism (see
the chapter on research on the effects of
business regulations).
In 2012/13 such efforts continued around
the world: 114  economies implemented  238  regulatory reforms making it
easier to do business, about  18% more
reforms than in the previous year. This
is the second highest number of reforms
implemented in a year since the financial
crisis of 2009.

Inroads in reducing formalities
The results of these reforms are tangible.
They can be quantified by adding up all the
regulatory procedures, payments and documents required for a  small to mediumsize firm to complete a  set of transactions—such as to start a business, register property and so on—in every economy
covered by Doing Business. In  2012  such
formalities would have come to a  total of  21,272  and taken  248,745  days to
complete (table  1.2). Thanks to the regulatory reforms undertaken in  2012/13,
this regulatory maze now contains
about 300 (1.3%) fewer formalities than
in  2012.2  Compared with  2005, the first
year in which data for  9  of the  10  Doing
Business indicator sets were first collected, the number of formalities has fallen

by about  2,400 (11%) and the time by
about 40,000 days.
These calculations are for a  hypothetical
case taking  1  firm through all procedures
measured by Doing Business in every
economy covered. But some economies
are much larger than others, and in these
economies the burden of poor regulation affects a  larger number of firms. In
the 107 economies covered by both Doing
Business and the World Bank’s Entrepreneurship Database, an estimated  3.1  million limited liability companies were newly
registered in  2012  alone.3  Assuming that
they followed the rules and regulations
for company incorporation in their home
economy as measured by Doing Business, these 3.1 million firms together dealt
with 18.7 million different procedures and
spent  46.9  million days to get incorporated. But if all  107  economies followed
best practice in regulatory processes for
starting a business, these new firms would
have had to spend only  1.5  million days
dealing with the local bureaucracy, leaving
them a greater share of their time and entrepreneurial energy to devote to their new
business. In other words, because not all
economies followed best practice, entrepreneurs spent an extra 45.4 million days
satisfying bureaucratic requirements.

Patterns across regions
Patterns of regulatory reform vary across
regions. In  2012/13  South Asia had the
largest share of economies (75%) with

7

8

DOING BUSINESS 2014

TABLE 1.2 Total formalities, time and cost to complete one transaction in every economy
2012

2013

Savings

Procedures (number)

1,393

1,335

58

Time (days)

5,590

4,700

890

Cost (US$)

203,765

201,648

2,117

Minimum capital (US$)

523,148

480,337

42,811

2,865

2,777

88

Time (days)

33,532

31,951

1,581

Cost (US$)

2,773,595

2,570,251

203,344

1,010

1,002

8

Time (days)

20,651

20,625

26

Cost (US$)

5,640,846

5,506,263

134,583

1,105

1,090

15

Time (days)

10,082

9,488

594

Cost (US$)

5,476,360

5,543,489

–67,129

5,141

5,046

95

50,804

50,607

197

Documents to export (number)

1,174

1,175

–1

Time to export (days)

4,171

4,132

39

278,546

286,385

–7,839

Documents to import (number)

1,372

1,369

3

Time to import (days)

4,702

4,661

41

334,393

344,573

–10,180

7,212

7,207

5

117,847

117,489

358

460

454

6

Starting a business

Dealing with construction permits
Procedures (number)

Getting electricity
Procedures (number)

Registering property
Procedures (number)

Paying taxes
Payments (number per year)
Time (hours per year)
Trading across borders

Cost to export (US$ per container)

Cost to import (US$ per container)
Enforcing contracts
Procedures (number)
Time (days)
Resolving insolvency
Time (years)

2012
Total formalities (number)
Total time (days)
Total cost (US$)
Source: Doing Business database.

2013

Total savings

21,272

21,001

271

248,745

243,283

5,462

15,230,653

14,932,946

297,707

regulatory reforms in at least 1 area measured by Doing Business.4 Europe and Central Asia, continuing its steady pace of
regulatory reform, had the second largest
share (73%), closely followed by Sub-Saharan Africa (66%). In East Asia and the
Pacific 60% of economies had at least 1
regulatory reform, while in Latin America
and the Caribbean only 53% did. The Middle East and North Africa had the smallest
share of economies implementing regulatory reforms in at least  1  area (40%),
a development that is partly linked to the
current political turmoil in the region.
As in previous years, reforms aimed at
reducing the complexity and cost of regulatory processes were more common
around the world than those focused on
strengthening legal institutions relevant
to business regulation (figure  1.6). In
South Asia, for example, 75% of economies implemented at least  1  reform reducing regulatory complexity and cost,
while only  25% had at least  1  aimed at
strengthening legal institutions. The pattern is similar across all other regions except East Asia and the Pacific.

WHO IMPROVED THE MOST
IN 2012/13?
In  2012/13, 29  economies implemented
in net 3 or more reforms improving their
business regulatory systems or related
institutions as measured by Doing Business. These  29  include economies from
all income groups: high income (5), upper
middle income (9), lower middle income
(12) and low income (3). And they include economies from all regions.
Among the 29 economies, 10 stand out
as having narrowed the distance to frontier the most: Ukraine, Rwanda, the Russian Federation, the Philippines, Kosovo,
Djibouti, Côte d’Ivoire, Burundi, the former Yugoslav Republic of Macedonia and
Guatemala (table 1.3). Five of these—Burundi, Guatemala, FYR Macedonia, Rwanda and Ukraine—have placed among the
economies improving the most in previous years. Together, 10 economies implemented 49 reforms making it easier to do
business in  2012/13. Of these reforms,
38  were aimed at reducing the complexity and cost of regulatory processes
and 11 at strengthening legal institutions.

OVERVIEW

In addition, Ukraine’s private credit bureau (IBCH) began collecting data on
firms from banks, expanding the information available to creditors and debtors.
The introduction of simpler forms for value added tax and the unified social contribution reduced the time required for tax
compliance. The implementation of the
new customs code reduced the time to

FIGURE 1.6 Reforms reducing regulatory complexity and cost continued to be more
common in 2012/13
Share of economies with at least
1 Doing Business reform (%)

Ukraine was the top improver in 2012/13,
implementing reforms in 8 of the 10 areas measured by Doing Business. Ukraine
made starting a business easier by eliminating a  separate procedure for registration with the statistical office and
abolishing the fee for value added tax registration. It made dealing with construction permits easier by instituting a  riskbased approval system that streamlined
procedures for simpler buildings with
fewer risk factors. And an amendment
to the property rights law simplifying the
process for registering ownership rights
to real estate made both dealing with
construction permits and registering
property easier.

75

69
60
50

46

42
32

36
30

26

25

20

19
13

South Asia

Europe
Sub-Saharan Latin America OECD high
& Central Asia
Africa
& Caribbean
income

East Asia Middle East
& Pacific & North Africa

Reforms to reduce complexity and cost of regulatory processes
Reforms to strengthen legal institutions

Note: Reforms to reduce the complexity and cost 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. Reforms to strengthen legal institutions are those in the areas of getting credit, protecting investors,
enforcing contracts and resolving insolvency.
Source: Doing Business database.

export and import. And an amendment to
the bankruptcy law made resolving insolvency easier.

Dealing with construction permits was
the most common area of regulatory
reform among the top improvers. Nine

TABLE 1.3 The 10 economies improving the most across 3 or more areas measured by Doing Business in 2012/13
Reforms making it easier to do business
Ease of
doing
business
rank

Dealing
with
Starting a construction Getting Registering
business
permits electricity property

1

Ukraine

112

—

—

—

2

Rwanda

32

—

—

3

Russian
Federation

92

—

—

4

Philippines

108

5

Kosovo

86

—

6

Djibouti

160

—

7

Côte d‘Ivoire

167

—

—

8

Burundi

140

—

—

—

—

9

Macedonia,
FYR

25

—

—

—

10

Guatemala

79

—

—

—

—

—

Protecting
investors

—

Trading
across
borders

—

—

—

—

—

—

Enforcing Resolving
contracts insolvency

—
—

—

Paying
taxes

—

—

—

Getting
credit

—

—
—

—

—

—

—
—
—

—

—

—
—

Note: Economies are selected on the basis of the number of their reforms and ranked on how much they improved in the distance to frontier measure. First, Doing Business
selects the economies that implemented reforms making it easier to do business in 3 or more of the 10 topics included in this year’s aggregate ranking. Regulatory reforms
making it more difficult to do business are subtracted from the number of those making it easier. Second, Doing Business ranks these economies on the improvement in
their distance to frontier score from the previous year. The improvement in their score is calculated not by using the data published in 2012 but by using comparable data
that capture data revisions. The choice of the most improved economies is determined by the largest improvements in the distance to frontier score among those with at
least 3 reforms.
Source: Doing Business database.

9

DOING BUSINESS 2014

FIGURE 1.7 How far have economies moved toward the frontier in regulatory practice since 2009?
100

Regulatory frontier

75
50
25
0

Singapore
Hong Kong SAR, China
New Zealand
Denmark
United States
Korea, Rep.
United Kingdom
Ireland
Norway
Sweden
Malaysia
Iceland
Finland
Georgia
Australia
Germany
Canada
Japan
Taiwan, China
Austria
Netherlands
Thailand
Lithuania
Latvia
Portugal
Switzerland
Estonia
United Arab Emirates
Mauritius
Belgium
Macedonia, FYR
Israel
Saudi Arabia
Puerto Rico (U.S.)
France
Poland
Spain
Slovenia
Rwanda
Montenegro
South Africa
Mexico
Peru
Chile
Colombia
Bahrain
Qatar
Slovak Republic
Tunisia
Bulgaria
Cyprus
Armenia
Oman
Ghana
Italy
Botswana
Guatemala
Turkey
Fiji
Panama
Luxembourg
Tonga
Czech Republic
Vanuatu
Hungary
Samoa
St. Lucia
Belarus
Bahamas, The
Romania
Kosovo
Jamaica
Croatia
Morocco
Zambia
Moldova
Antigua and Barbuda
Dominica
Belize
Trinidad and Tobago
St. Vincent and the Grenadines
Uruguay
Kazakhstan
Maldives
Seychelles
Greece
Namibia
Brunei Darussalam

Distance to frontier (percentage points)

10

Note: The distance to frontier measure shows how far on average an economy is at a point in time from the best performance achieved by any economy on each Doing
Business indicator since 2003 or the first year in which data for the indicator were collected. The measure is normalized to range between 0 and 100, with 100 representing
the frontier. The data refer to the 183 economies included in Doing Business 2010 (2009). Six economies were added in subsequent years. The vertical bars show the change
in the distance to frontier from 2009 to 2013. The 20 economies improving the most are highlighted in red.
Source: Doing Business database.

of the  10  made changes in this area.
Improvements in construction permitting often show results only after a long
lag following the approval of new laws
or systems. In Russia it took more than
a decade for the national urban planning
code of 1997 to be implemented in Moscow. The mayor finally adopted the code
in April  2011, replacing multiple ad hoc
regulations. But builders in Moscow are
only now experiencing the positive effects of its implementation. In Guatemala
City the municipality expanded the onestop shop for construction permitting to
include the water company, EMPAGUA,
in 2012.
Property registration was another common focus, with  7  of the top improvers
implementing changes in this area. The
Rwanda Natural Resources Authority implemented a  systematic land registration
program, and now  90% of properties in
the country are registered. In March 2013
Burundi established a one-stop shop for
property transfers.
Guatemala, FYR Macedonia, the Philippines, Rwanda and Ukraine simplified the
process of paying taxes for firms. Expanding or introducing online filing and payment systems and simplifying tax forms
were the most common features of the
reforms in these economies.

Other top improvers enhanced insolvency legislation, strengthened the legal rights of creditors or increased the
scope of credit information available.
The Philippines improved credit information sharing by guaranteeing borrowers’ right to access their data in the
country’s largest credit bureau. In FYR
Macedonia new amendments to the
Law on Contractual Pledge, adopted in
June  2012, allow more flexibility in the
design of debt agreements using movable collateral. And in Djibouti a  new
commercial code that replaced the one
from 1986 strengthened the legal rights
of creditors and improved the insolvency framework.
Improvements to the import and export
process were also common. Russia introduced a  new data interchange system in  2009  enabling traders to submit
customs declarations and supporting
documents electronically. The number of
users has since grown, and it is now the
most popular method of submitting customs declarations. Rwanda implemented
an electronic single-window system in
January 2013 at the Rusumo border post
with Tanzania, the post used to access
the port of Dar es Salaam. Connected to
such institutions as the Rwanda Bureau
of Standards and the Rwanda Development Board, the system allows traders to

receive verifications and approvals electronically.
Four economies among the  10  top improvers reduced the complexity and
cost of getting an electricity connection.
Russia made obtaining a  connection
simpler and less costly by streamlining
procedures and setting standard connection tariffs.
Only 2 of the 10 top improvers strengthened the protections of minority investors—Rwanda and FYR Macedonia. And
only 1 made enforcing contracts easier—
Côte d’Ivoire, by introducing a specialized
commercial court.

WHO IMPROVED THE MOST IN
THE PAST 5 YEARS?
Many of the top improvers in 2012/13 have
been actively reforming business regulations for several years. This year’s report
presents the global trends since 2009. That
year was chosen for 2 main reasons. First,
starting with 2009 provides 5 annual data
points, allowing analysis of medium-term
improvements. And second, it means that
the distance to frontier measure can be
used to analyze the improvement across all
10 topics now included in the ease of doing
business ranking, since 2009 was the first

OVERVIEW

2013

Serbia
Russian Federation
Costa Rica
Kyrgyz Republic
Sri Lanka
Lebanon
Azerbaijan
China
Solomon Islands
Mongolia
Nepal
Vietnam
Paraguay
Dominican Republic
Kuwait
Grenada
St. Kitts and Nevis
Philippines
Palau
Jordan
Swaziland
Albania
Papua New Guinea
El Salvador
Kenya
Cape Verde
Nicaragua
Ukraine
Honduras
Guyana
Pakistan
Indonesia
Bosnia and Herzegovina
Ethiopia
Ecuador
Kiribati
Lesotho
Tanzania
Yemen, Rep.
Egypt, Arab Rep.
Marshall Islands
Argentina
Bhutan
Mozambique
West Bank and Gaza
Iran, Islamic Rep.
Uganda
Brazil
India
Sudan
Algeria
Mali
Gabon
Sierra Leone
Bangladesh
Liberia
Cambodia
Gambia, The
Iraq
Cameroon
Côte d‘Ivoire
Madagascar
Lao PDR
Togo
Bolivia
São Tomé and Príncipe
Comoros
Equatorial Guinea
Burkina Faso
Burundi
Uzbekistan
Tajikistan
Suriname
Nigeria
Benin
Malawi
Senegal
Micronesia, Fed. Sts.
Djibouti
Guinea-Bissau
Syrian Arab Republic
Angola
Timor-Leste
Guinea
Niger
Mauritania
Haiti
Afghanistan
Zimbabwe
Venezuela, RB
Congo, Rep.
Congo, Dem. Rep.
Eritrea
Central African Republic
Chad

2009

year in which data were collected for the
getting electricity indicators.

economies that typically rank low on the
ease of doing business.

Regulations have become more businessfriendly over time, but for a  large number of economies there is ample room
for more improvement. On average
since  2009, the  183  economies included
in the analysis have narrowed the gap with
the regulatory frontier by  3.1  percentage
points (figure  1.7). In  2009  these economies were 41.3 percentage points from the
frontier on average, with the closest economy  9.3  percentage points away and the
furthest one 72.3 percentage points away.
Now these  183  economies are  38.1  percentage points from the frontier on average, with the closest economy  7.8  percentage points away and the furthest
economy 68.8 percentage points away.

In some economies the absence of regulatory reforms may reflect a  turbulent
political and institutional environment,
which sharply limits the government’s
ability to focus on creating a  more
business-friendly regulatory environment. Civil conflicts, widespread poverty
and serious constraints in administrative capacity may make it difficult, for
example, to strengthen creditors’ rights,
create a  more efficient judicial system
or expand the range of protections afforded to minority shareholders. In other economies, however, the issue is not
capacity or resource constraints but the
policy choices the authorities have made,
often biased against the private sector. In
these economies the distance to frontier
measure reveals a  significant worsening
in the quality of the business regulatory
environment over the past several years,
with small and medium-size enterprises
facing a growing number of cumbersome
restrictions and distortions.

Two-thirds of the reforms recorded by
Doing Business in the past  5  years focused on reducing the complexity and
cost of regulatory processes; the remaining third sought to strengthen the
institutional framework for business
regulation. Among the  183  economies,
only  7  implemented no changes in any
of the areas measured by Doing Business—Antigua and Barbuda, Bolivia, Eritrea, Iraq, Kiribati, the Federated States
of Micronesia and the United States.
Except for the United States, these are

Improvement across regions and
income groups
Since  2009  all regions of the world and
economies at all income levels have improved their business regulations on

average. Moreover, improvement is happening where it is most needed. The regions where regulatory processes are
longer and costlier and regulatory institutions are weaker are also those where
the biggest improvements have occurred.
Over the past 5 years Sub-Saharan Africa
reduced the gap with the regulatory frontier by 3 times as much as OECD highincome economies did (figure  1.8). And
low-income economies improved their
average distance to frontier score at twice
the rate that high-income economies did
(figure 1.9). Part of the explanation is that
high-income economies were much closer to the frontier to start with and therefore had less room to improve. But lowincome economies have nevertheless
made an important effort to improve
business regulations since 2009.
Business regulatory reform is particularly
relevant in low-income economies. Information presented in this year’s report
shows the link between better business
regulations and economic growth (see
the chapter on research on the effects of
business regulations). Moreover, recent
research shows that economic growth
remains the most important factor in determining the pace of income growth for
poor people.5  Together, this evidence indicates that having sensible business regulations contributes to reducing poverty

11

DOING BUSINESS 2014

FIGURE 1.8 All regions are improving in the areas measured by Doing Business
100
Average distance to frontier
(percentage points)

12

Regulatory frontier

OECD
70

Gap between OECD high-income economies and rest of the world
ECA
EAP
MENA
LAC
SAS

60

50

SSA

40

2009

2010

2011

2012

2013

Note: The distance to frontier measure shows how far on average an economy is at a point in time from the best
performance achieved by any economy on each Doing Business indicator since 2003 or the first year in which
data for the indicator were collected. The measure is normalized to range between 0 and 100, with 100 representing the frontier. The data refer to the 183 economies included in Doing Business 2010 (2009) and to the
regional classifications for 2013. Six economies were added in subsequent years. EAP = East Asia and the Pacific;
ECA = Europe and Central Asia; LAC = Latin America and the Caribbean; MENA = Middle East and North Africa;
OECD = OECD high income; SAS = South Asia; SSA = Sub-Saharan Africa.
Source: Doing Business database.

and boosting shared prosperity, the twin
goals of the World Bank Group.
Across regions, starting a  business
emerges as the area with the largest share
of reforms since  2009. Among OECD
high-income economies resolving insolvency and paying taxes are the areas with
the highest shares of reformers. A similar

pattern can be seen in Europe and Central
Asia, where 73% of economies reformed
in resolving insolvency and 85% in paying
taxes. These reform choices partly reflect
the response to the global financial crisis,
which created a pressing need to streamline insolvency processes and lighten the
burden of tax administration on the enterprise sector.

FIGURE 1.9 Low-income economies have narrowed the gap with the regulatory frontier
the most since 2009
High income
Upper middle
income
Lower middle
income
Low income
0

1

2

3

4

5

Average improvement in distance to frontier (percentage points), 2009–13

Note: The distance to frontier measure shows how far on average an economy is at a point in time from the best
performance achieved by any economy on each Doing Business indicator since 2003 or the first year in which
data for the indicator were collected. The measure is normalized to range between 0 and 100, with 100 representing the frontier. The data refer to the 183 economies included in Doing Business 2010 (2009) and to the
income group classifications for 2013. Six economies were added in subsequent years.
Source: Doing Business database.

Beyond starting a  business, different
regions focused their regulatory reform
efforts on different areas. In Sub-Saharan
Africa the second greatest area of focus since 2009 has been trading across
borders, while in South Asia economies
were more likely to focus on registering
property. In East Asia and the Pacific and
Latin America and the Caribbean the
focus was on paying taxes, and in the
Middle East and North Africa on getting credit.
Although starting a  business has been
the most common area of regulatory
reform, it is not the area with the biggest improvements at the regional level
since 2009—mainly because the starting
point in  2009  was already closer to the
regulatory frontier than it was in other
areas. OECD high-income economies
narrowed the gap with the frontier the
most in resolving insolvency, Europe and
Central Asia in paying taxes, South Asia in
registering property, and the Middle East
and North Africa, East Asia and the Pacific
and Sub-Saharan Africa in getting credit.

The 20 economies narrowing the
gap the most
Of the  20  economies narrowing the gap
with the regulatory frontier the most
since  2009, 9  are in Sub-Saharan Africa,
8 are in Europe and Central Asia, 2 are in
East Asia and the Pacific, and 1 is an OECD
high-income economy (figure 1.7). None are
in the Middle East and North Africa or Latin America and the Caribbean, the regions
that consistently have smaller numbers of
reformers. Among the  20  economies are
both small and large economies as well
as economies at all income levels, though
there is a  higher incidence of low- and
lower-middle-income economies. Together over the past 5 years, these 20 economies implemented 253 regulatory reforms
making it easier to do business, about 20%
of the global total for the period. Two of
them—Ukraine and Rwanda—implemented at least  1  regulatory reform in every
area measured by Doing Business. In line
with the global trend, starting a  business
was the most common area of regulatory
reform among the 20 economies, followed
by paying taxes.
The  20  economies narrowing the regulatory gap the most are dynamic in other

OVERVIEW

IN WHAT AREAS HAS THE GAP
BEEN NARROWING THE MOST?
Among the more encouraging trends
shown by Doing Business data over the
past decade is the gradual convergence
in economies’ performance in the areas
tracked by the indicators. Economies with
the weakest regulatory institutions and
the most complex and costly regulatory
processes tend to undertake regulatory reform less often. But when they do,
they focus on the areas where their regulatory performance is worse, slowly but
steadily beginning to adopt some of the
better practices seen among the best performers. Here is an example: In 2005 the
time to start a business in the economies

FIGURE 1.10 A steady increase in total firm density among economies narrowing the
regulatory gap the most since 2009

Total firm density
(firms per 1,000 adults)

70
60

Macedonia, FYR

Malaysia

50
40
Russian Federation

30

Georgia

20

Armenia

10

World average

0
2006

2007

2008

2009

2010

2011

2012

14
Total firm density
(firms per 1,000 adults)

ways as well. Overall, new firm creation
in these economies has at least kept pace
with the world average in recent years.
Total firm density—the number of firms
per 1,000 adults—has steadily increased
(figure  1.10). In Russia, for example, the
number of firms per  1,000  adults grew
from 22 in 2006 to 35 in 2012. In a few
of the Sub-Saharan African economies
the number increased more than  10fold. In Rwanda the number of firms
per  1,000  adults rose from  0.3  to  3.4.
While this is still substantially below
the world average of  12.4, the increase
over time is impressive. Globally, both
total firm density and new firm density (the number of new firms created
per  1,000  adults) are significantly correlated with performance on the Doing
Business indicators (figure 1.11).

World average

12
10
8
6

Belarus

4

Rwanda

Kosovo

2

Sierra Leone

Togo

0
2006

2007

2008

2009

2010

2011

2012

Note: Data refer to limited liability companies. Other economies among the 20 narrowing the regulatory gap the
most are excluded from the figure because of missing data.
Source: World Bank Group Entrepreneurship Snapshots, 2013 edition.

ranking in the worst quartile on this indicator averaged  113  days. Among the
best 3 quartiles it averaged 29 days. Today that gap is substantially narrower.
While the difference is still substantial

at 33 days, it is considerably smaller than
the 85 days in 2005 (figure 1.12).
Similar trends can be seen in other indicators measuring the complexity and cost

FIGURE 1.11 Greater firm density in economies closer to the regulatory frontier
100
Distance to frontier
(percentage points), 2012

Distance to frontier
(percentage points), 2012

100
80
60
40

80
60
40
20

0
0

100
200
300
Total firm density (firms per 1,000 adults), 2012

400

0

10
20
30
New firm density (newly registered firms per 1,000 adults), 2012

Note: The correlation between the distance to frontier and total firm density is 0.44. The correlation between the distance to frontier and new firm density is 0.43. Both
correlations are significant at the 1% level. Data refer to limited liability companies.
Source: Doing Business database; World Bank Group Entrepreneurship Snapshots, 2013 edition.

13

14

DOING BUSINESS 2014

FIGURE 1.12 Strong convergence across economies since 2005
Averages by group
Time to pay taxes (hours per year)
800

Time to start a business (days)
120

700

100

Worst quartile

Worst quartile

600

80

500

60

400

40

Best 3 quartiles

300

Best 3 quartiles

200

20

100

0

0
2005

2006

2007

2008

2009

2010

2011

2012

2013

Time to deal with construction permits (days)
400

2005

2006

2007

2008

2009

2010

2011

2012

2013

Time to register property (days)
250

Worst quartile

350

200

300

Worst quartile

250

150

200

Best 3 quartiles
100

150

Best 3 quartiles

100

50

50
0

0
2005

2006

2007

2008

2009

2010

2011

2012

2013

Time to export (days)
60

2005

2006

2007

2008

2009

2010

2011

2012

2013

Time to import (days)
70

Worst quartile

50

60

Worst quartile

50

40

40
30

Best 3 quartiles

30

20

Best 3 quartiles

20

10

10

0

0
2005

2006

2007

2008

2009

2010

2011

2012

2013

Cost to start a business (% of income per capita)
350

2005

2006

2007

2008

2009

2010

2011

2012

2013

Cost to register property (% of property value)
16
14

300

Worst quartile

12

250

Worst quartile

200

10
8

150

6

100

Best 3 quartiles

50

Best 3 quartiles

4
2
0

0
2005

2006

2007

2008

2009

2010

2011

2012

2013

2005

2006

2007

2008

2009

2010

2011

2012

2013

Note: Economies are ranked in quartiles by performance in 2005 on the indicator shown. The data refer to the 174 economies included in Doing Business 2006 (2005).
Fifteen economies were added in subsequent years.
Source: Doing Business database.

OVERVIEW

of regulatory processes. These trends are
wholly in keeping with the World Bank
Group’s mandate of helping to narrow
the differences between high- and uppermiddle-income economies at relatively
advanced stages of development and
low- or lower-middle-income economies
facing more adverse circumstances.
Accelerating this convergence is at the
heart of effective development policies,
and the improvements in performance
on Doing Business indicators by economies around the world are an encouraging sign.
A similar convergence can be seen when
the data are aggregated by region. While
OECD high-income economies continue
to have the strongest legal institutions
and the least complex and costly regulatory processes on average, Europe
and Central Asia has been narrowing
the gap with their performance, more so
than any other region. To a great extent
this reflects efforts by the  8  economies
joining the European Union in  2004,
which have largely continued on a  path
of comprehensive and ambitious economic and institutional reforms. In the
period leading up to EU entry the incentive was to meet the entry criteria.
But after  2004  the emphasis shifted to
ensuring that they could compete with
their more developed high-income partners. Thus in  2012, for example, Poland
was the economy that had narrowed
the gap with the regulatory frontier the
most over the previous year, among
all 185 economies ranked. This suggests
that the economic integration in the European Union over the past decade has
been an effective mechanism in promoting convergence. Indeed, Poland is now
classified as a  high-income economy,
a  remarkable achievement over  2  decades.
Every region has a  leading champion
in the scope of improvements made
since  2005—whether Poland for OECD
high-income economies, China for East
Asia and the Pacific or Colombia for Latin America and the Caribbean. And this
year a  small country in Sub-Saharan Africa, Rwanda, overtook another small
country—Georgia, in Europe and Central
Asia—as the economy advancing furthest
toward the regulatory frontier since 2005
(table 1.4).

DO DOING BUSINESS REFORMS
GO HAND IN HAND WITH
OTHER REFORMS?
Since its inception in 2003 Doing Business
has recorded more than 2,100 regulatory
reforms making it easier to do business,
about  25% of which have been inspired
or informed by the report and the associated database.6 Most economies that undertake regulatory reforms as recorded by
Doing Business do so as part of a broader
reform agenda. Data show that governments investing resources in Doing Business reforms in the past decade have also
introduced many policy changes in other
important areas.
One such area is governance. Data show
that improvements in the areas measured by Doing Business are positively
correlated with changes in general regulatory quality, a key element of the overall
quality of governance. This suggests that
economies reforming in areas tracked by
Doing Business are likely to be reforming
regulation more broadly, not just business regulation. There is also a  positive
association between improvements in
Doing Business indicators and improvements in rule of law and control of corruption. This result is confirmed using
other data sources as well. Economies
that have improved their performance
on Doing Business indicators have also
improved their performance on governance measures such as those published
by Transparency International, Freedom
House and the World Bank, in its Country Policy and Institutional Assessments
(CPIA) (figure 1.13).7
Another such area is health and education. Economies that implement reforms in areas measured by Doing Business also improve health and education
at least as fast on average as economies
not focusing on such reforms (figure  1.14). This relationship is assessed
using the Human Development Index
and its components on health and education.8 The result suggests that a focus
on improving the quality of the regulatory framework underpinning private
sector activity need not imply a simultaneous lack of attention to improvements in health and education. The
cost to amend a  company or secured

transactions law, or to create a  onestop shop for company incorporation,
is insignificant compared with the cost
to build a  hospital or university. There
is no evidence to support the view that
progress in one policy area necessarily
preempts progress in others.
In addition, many economies implementing reforms in areas measured by
Doing Business are also putting in place
measures to improve gender equality.
Among the  42  economies identified by
Women, Business and the Law as having
moved their laws and regulations toward greater gender equality over the
past  2  years, 65% also reformed in areas tracked by Doing Business during the
same period.

WHAT IS IN THIS YEAR’S
REPORT?
This year’s report presents for the first
time a separate chapter about research on
the effects of business regulations. There
is a rapidly growing body of empirical research examining the impact of improvements in many of the regulatory areas
tracked by the Doing Business indicators,
and this chapter provides a  useful—and
encouraging—synthesis. This year’s report also presents an expanded data set.
It includes  189  economies, featuring for
the first time data for Libya, Myanmar,
San Marino and South Sudan.
Like previous reports, this year’s report
includes case studies. These focus on
good practices in  6  of the areas measured by Doing Business indicator sets,
with a  particular focus on e-government
and online government services. The
case studies look at the role of minimum
capital requirements in starting a  business; risk-based inspections in dealing with construction permits; the cost
structure in getting electricity; singlewindow systems in trading across borders; e-filing and e-payment in paying
taxes; and e-courts in enforcing contracts.
In choosing case studies and describing
attempts in different parts of the world
to implement better practices, the report
has attempted to illustrate experiences
and highlight processes with broad relevance for governments considering similar reforms. There are potentially useful

15

16

DOING BUSINESS 2014

TABLE 1.4 The 50 economies narrowing the distance to frontier the most since 2005
Distance to frontier (percentage points)
Economy
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50

Rwanda
Georgia
Belarus
Ukraine
Macedonia, FYR
Burkina Faso
Kyrgyz Republic
Tajikistan
Burundi
Egypt, Arab Rep.
Mali
Sierra Leone
China
Poland
Azerbaijan
Colombia
Ghana
Guinea-Bissau
Croatia
Côte d'Ivoire
Guatemala
Kazakhstan
Armenia
Madagascar
Mauritius
Angola
Senegal
Morocco
Russian Federation
Togo
Yemen, Rep.
Saudi Arabia
Lao PDR
Czech Republic
Moldova
Timor-Leste
India
Mozambique
Niger
Peru
São Tomé and Principe
Costa Rica
Malaysia
Uzbekistan
Slovenia
Lesotho
Zambia
Mexico
Cambodia
Solomon Islands

Region

2005

2013

Improvement

SSA
ECA
ECA
ECA
ECA
SSA
ECA
ECA
SSA
MENA
SSA
SSA
EAP
OECD
ECA
LAC
SSA
SSA
ECA
SSA
LAC
ECA
ECA
SSA
SSA
SSA
SSA
MENA
ECA
SSA
MENA
MENA
EAP
OECD
ECA
EAP
SAS
SSA
SSA
LAC
SSA
LAC
EAP
ECA
OECD
SSA
SSA
LAC
EAP
EAP

37.4
48.4
41.1
38.2
54.3
30.6
44.9
30.8
33.2
38.0
34.3
37.3
45.0
57.6
49.0
55.1
52.0
32.9
49.1
36.5
51.1
48.4
56.2
41.9
61.4
32.5
35.7
52.0
49.9
36.7
43.9
60.1
37.2
57.6
54.5
27.9
40.7
45.0
31.8
60.0
35.7
49.7
71.4
38.2
60.0
46.0
54.8
61.9
40.3
51.3

70.5
80.8
67.1
61.3
74.2
50.0
63.7
48.4
50.6
55.1
51.2
54.1
60.9
73.4
64.6
70.3
67.0
47.2
63.2
50.2
64.7
61.8
69.7
54.2
73.5
44.5
47.6
63.9
61.6
48.1
55.1
71.3
48.3
68.7
65.6
38.8
51.3
55.5
42.3
70.4
46.0
60.0
81.6
48.3
70.0
56.0
64.8
71.8
50.1
61.0

33.1
32.3
26.0
23.1
19.9
19.4
18.8
17.6
17.4
17.1
16.9
16.8
15.9
15.8
15.6
15.2
15.0
14.2
14.0
13.7
13.6
13.5
13.5
12.3
12.0
12.0
12.0
11.8
11.6
11.3
11.2
11.1
11.1
11.1
11.1
10.9
10.6
10.5
10.5
10.4
10.3
10.3
10.2
10.0
10.0
10.0
10.0
9.9
9.8
9.8

Total regulatory reformsa
34
36
29
26
31
20
14
14
21
23
16
20
18
22
18
27
12
7
23
14
18
20
23
19
23
9
11
18
22
9
7
19
12
22
21
6
17
12
11
19
5
12
17
19
17
9
10
19
8
5

Note: Rankings are based on the absolute difference for each economy between its distance to frontier in 2005 and that in 2013. The data refer to the 174 economies
included in Doing Business 2006 (2005). Fifteen economies were added in subsequent years. The distance to frontier measure shows how far on average an economy is
at a point in time from the best performance achieved by any economy on each Doing Business indicator since 2003 or the first year in which data for the indicator were
collected. The measure is normalized to range between 0 and 100, with 100 representing the frontier. EAP = East Asia and the Pacific; ECA = Eastern Europe and Central
Asia; LAC = Latin America and the Caribbean; MENA = Middle East and North Africa; OECD = OECD high income; SAS = South Asia; SSA = Sub-Saharan Africa.
a. Reforms making it easier to do business as recorded by Doing Business since 2005.
Source: Doing Business database.

OVERVIEW

TABLE 1.5 Good practices around the world, by Doing Business topic
Topic
Making it easy to
start a business

Practice
Putting procedures online
Having no minimum capital requirement
Having a one-stop shop

Making it easy
to deal with
construction
permits
Making it
easy to obtain
an electricity
connection

Making it easy to
register property

Making it easy to
get credit

Protecting
investors

Making it easy to
pay taxes
Making it easy
to trade across
borders
Making it easy to
enforce contracts

Having comprehensive building rules
Using risk-based building approvals
Having a one-stop shop

Economiesa Examples
109
Azerbaijan; Chile; Costa Rica; Hong Kong SAR, China; FYR
Macedonia; New Zealand; Peru; Singapore
99
Cape Verde; Greece; Kazakhstan; Kenya; Kosovo; Lithuania;
Mexico; Mongolia; Morocco; Netherlands; Serbia; United
Kingdom; West Bank and Gaza
96
Bahrain; Benin; Burkina Faso; Burundi; Côte d’Ivoire; Georgia;
Guatemala; Republic of Korea; Kosovo; Peru; Vietnam
140
Azerbaijan; Comoros; France; Taiwan, China
87
Belize; Estonia; Indonesia; Namibia
36
Burundi; Guatemala; Malaysia; Montenegro

Streamlining approval processes (utility obtains excavation
permit or right of way if required)
Providing transparent connection costs and processes
Reducing the financial burden of security deposits for new
connections
Ensuring the safety of internal wiring by regulating the
electrical profession rather than the connection process
Using an electronic database for encumbrances
Offering cadastre information online
Offering expedited procedures
Setting fixed transfer fees

107b

Armenia; Austria; Cambodia; China; Kuwait; Malaysia; Panama

103c
98

France; Germany; Ireland; Netherlands; Trinidad and Tobago
Argentina; Austria; Brazil; Kyrgyz Republic; Latvia; Mozambique;
Nepal; Russian Federation
Denmark; Germany; Iceland; Japan; San Marino

116
51
18
10

Chile; Denmark; Jamaica; Republic of Korea; Sweden
Colombia; Finland; Malaysia; South Africa; United Kingdom
Kazakhstan; Mongolia; Nicaragua; Portugal; Romania
Georgia; New Zealand; Russian Federation; Rwanda; Slovak
Republic

Legal rights
Allowing out-of-court enforcement

124

Australia; Guatemala; India; Peru; Russian Federation; Serbia; Sri
Lanka
Cambodia; Canada; Nigeria; Puerto Rico (U.S.); Romania;
Rwanda; Singapore
Afghanistan; Bosnia and Herzegovina; Ghana; Honduras;
Montenegro; New Zealand; Romania

41

Allowing a general description of collateral

92

Maintaining a unified registry

65

Credit information
Distributing data on loans below 1% of income per capita
Distributing both positive and negative credit information
Distributing credit information from retailers or utilities as
well as financial institutions
Allowing rescission of prejudicial related-party transactionsd
Regulating approval of related-party transactions
Requiring detailed disclosure
Allowing access to all corporate documents during the trial
Requiring external review of related-party transactions
Allowing access to all corporate documents before the trial
Defining clear duties for directors
Allowing self-assessment
Allowing electronic filing and payment
Having one tax per tax base
Allowing electronic submission and processing
Using risk-based inspectionsf
Providing a single windowf
Maintaining specialized commercial court, division or judge
Allowing electronic filing of complaints

Making it easy to Requiring professional or academic qualifications for
resolve insolvency insolvency administrators by law
Allowing creditors’ committees a say in insolvency
proceeding decisions
Specifying time limits for the majority of insolvency
procedures
Providing a legal framework for out-of-court workouts

128
109
57

Brazil; Bulgaria; Germany; Kenya; Malaysia; Sri Lanka; Tunisia
China; Croatia; India; Italy; Jordan; Panama; South Africa
Fiji; Lithuania; Nicaragua; Rwanda; Saudi Arabia; Spain

74
62
52

Brazil; Ghana; Iceland; India; Mauritius; Rwanda
Belarus; Bulgaria; France; Thailand; United Kingdom
Hong Kong SAR, China; New Zealand; Singapore; United Arab
Emirates; Vietnam
Chile; Ireland; Israel; Slovak Republic; Tanzania
Australia; Arab Republic of Egypt; Sweden; Turkey; Zimbabwe
Greece; Indonesia; Japan; South Africa; Timor-Leste
Colombia; Kuwait; Malaysia; Mexico; Slovenia; United States
Argentina; Canada; China; Rwanda; Sri Lanka; Turkey
Australia; Colombia; India; Lithuania; Malta; Mauritius; Tunisia
FYR Macedonia; Namibia; Paraguay; United Kingdom
Greece; Lao PDR; South Africa; Uruguay
Botswana; Georgia; Mauritania; United States
Azerbaijan; Colombia; Mexico; Mozambique
Canada; Côte d’Ivoire; Hungary; Luxembourg; Mauritius; Togo

47
43
31
30
160
76
55
151e
134
73g
90
17
110

Austria; Israel; Malaysia; United Arab Emirates; United States

109

The Bahamas; Belarus; Colombia; Namibia; Poland; United
Kingdom
Australia; Bulgaria; Philippines; United States; Uzbekistan

97

Albania; Italy; Japan; Republic of Korea; Lesotho; Ukraine

84

Argentina; Hong Kong SAR, China; Latvia; Philippines; Romania

a. Among 189 economies surveyed, unless otherwise specified.
b. Among 154 economies surveyed.
c. Based on data from Doing Business 2013.
d. Rescission is the right of parties involved in a contract to return to a state identical to that before they entered into the agreement.
e. Forty-four have a full electronic data interchange system, 107 a partial one.
f. Among 181 economies surveyed.
g. Eighteen have a single-window system that links all relevant government agencies, 55 a system that does so partially.
Source: Doing Business database.

17

DOING BUSINESS 2014

FIGURE 1.13 Improvements in Doing Business indicators are positively correlated with improvements in institutional and governance
measures
30
Change in distance to frontier
(percentage points), 2005–12

Change in distance to frontier
(percentage points), 2005–12

30

20

10

0
–2

–1
0
1
2
Change in Corruption Perceptions Index, 2005–12

20

10

0

3

–0.5

0
Change in CPIA average rating, 2005–12

0.5

Note: For years before 2009 the distance to frontier data exclude the getting electricity indicators because data for these indicators are not available. The correlation between the change in the distance to frontier and the change in the Corruption Perceptions Index is 0.36. The correlation between the change in the distance to frontier and
the change in the CPIA average rating is 0.23. Both relationships are significant at the 5% level after controlling for income per capita. The CPIA data refer to 77 economies
covered in 2005.
Source: Doing Business database; Transparency International data; World Bank data.

encourage adequate competition—all
this is largely within the control of governments. As governments over the past
decade have increasingly understood
the importance of business regulation as
a  driving force of competitiveness, they
have turned to Doing Business as a repository of actionable data providing useful
insights into good practices worldwide
(table 1.5).

FIGURE 1.14 Economies making it easier to do business are also improving human
development, including education and health
10

Change in distance to frontier
(percentage points), 2009–12

18

5

0

NOTES
1. See http://wbl.worldbank.org for more

–5
–0.01

0

0.01

0.02

0.03

0.04

Change in Human Development Index, 2009–12

Note: The correlation between the change in the distance to frontier and the change in the Human Development
Index is 0.31. The relationship is significant at the 1% level after controlling for income per capita.
Source: Doing Business database; United Nations Development Programme data.

lessons to be learned from the experiences of others.
The kind of data delivered by Doing Business over the years has sustained the interest of policy makers. One reason is that
implementing coherent economic policies in the face of a rapidly changing global economy and an uncertain economic
outlook is a great challenge. Many of the
factors shaping the environment in which
economic policies are formulated lie well
outside the control of most policy makers,

especially those in the developing world;
global interest rates, the international
prices of primary commodities, the quality of macroeconomic management in the
larger economies, are all examples that
come to mind. But the rules and regulations that governments choose to put in
place to underpin private sector activity
are largely homemade. Whether the rules
are sensible or excessively burdensome,
whether they create perverse incentives
or help establish a  level playing field,
whether they safeguard transparency and

information about the Women, Business and
the Law project.
2. Formalities include procedures in starting
a business, dealing with construction permits, getting electricity, registering property
and enforcing contracts; documents in
trading across borders; and payments in
paying taxes. The reduction is the difference
between the total number captured in Doing
Business 2013 and that captured in Doing
Business 2014, across all economies covered
by Doing Business.
3. The total number of firms registered exceeds 3.1 million, but because Doing Business
focuses only on limited liability companies
a subset of firms was chosen here.
4. The share of economies with 1 or more regulatory reforms of any type might not be the
same as the sum of the share of economies
with at least 1 reform to strengthen legal
institutions and the share with at least 1 reform to reduce the complexity and cost of
regulatory processes (see figure 1.6) because
economies can have reforms of both types.

OVERVIEW

5. Dollar, Kleineberg and Kraay 2013.
6. These are reforms for which Doing Business

is aware that information provided by the
Doing Business report was used in shaping
the reform agenda.

7. One of the 16 questions in the CPIA uses

Doing Business indicators as guideposts.
8. The correlation between the change in the
distance to frontier and the change in the
health component of the Human Development Index is 0.28. The correlation between

the change in the distance to frontier and
the change in the schooling component of
the Human Development Index is 0.16. Both
relationships are significant at the 1% level
after controlling for income per capita.

19

About Doing Business:
measuring for impact

• The choice of indicators for Doing
Business has been guided by
economic research and firm-level
data.
• Doing Business captures several
important dimensions of the
regulatory environment as it applies
to local firms.
• In constructing the indicators Doing
Business uses 2 types of data—data
that come from readings of laws
and regulations and data that
measure the complexity and cost of
regulatory processes.
• The indicators are developed
around standardized case scenarios
with specific assumptions. One
such assumption is the location of a
business in the largest business city
of the economy.
• The objective of Doing Business:
regulations designed to be efficient,
accessible to all who use them and
simple in their implementation.
• Over the past 11 years more
than 25,000 professionals in
189 economies have assisted in
providing the data that inform the
Doing Business indicators.

Sound business regulations are important
for a thriving private sector—and a thriving private sector is important for overall
development. In the developing world
the private sector is the largest employer, providing an estimated 90% of jobs.1
Having the right business regulations and
related institutions is therefore essential
for the health of an economy.2
This is the 11th Doing Business report.
Before the first report was produced, in
2003, few measures of business regulations existed, and even fewer that
were globally comparable. Earlier efforts from the 1980s and 1990s drew
on perceptions data. These expert or
business surveys focused on broad aspects of the business environment and
often captured the experiences of businesses. These surveys often lacked the
specificity and cross-country comparability that Doing Business provides—by
focusing on well-defined transactions,
laws and institutions rather than generic,
perceptions-based questions on the business environment.
Doing Business measures business regulations for local firms. The project focuses
on small and medium-size companies
operating in the largest business city of
an economy. Based on standardized case
studies, it presents quantitative indicators on the regulations that apply to firms
at different stages of their life cycle. The
results for each economy can be benchmarked to those for 188 other economies
and over time.
De jure rules, such as those that are the
focus of Doing Business, can be measured
in a standardized way and are directly
amenable to policy reforms. But these
measures may not reflect the de facto experiences of firms. Data collected through

firm-level surveys can better measure
actual experiences. Over the years the
choice of indicators for Doing Business
has therefore been guided by economic
research and firm-level data, in particular
from the World Bank Enterprise Surveys.
These surveys provide data highlighting
the main obstacles to business activity as reported by entrepreneurs in more
than 120 economies. Among the factors
that the surveys have identified as important to businesses have been access
to finance and electricity—inspiring the
design of the Doing Business indicators on
getting credit and getting electricity.
The design of the Doing Business indicators has also drawn on theoretical insights gleaned from extensive research
literature. One early inspiration was a
background paper for the World Bank’s
World Development Report 2002: Building
Institutions for Markets, which created an
index measuring the efficiency of judicial
systems.3 This paper contributed to a
new stream of research literature in law
and economics. The background papers
developing the methodology for each of
the Doing Business indicator sets are part
of this research stream.4 These papers established the importance of the rules and
regulations that Doing Business measures
for such economic outcomes as trade
volumes, foreign direct investment, market capitalization in stock exchanges and
private credit as a percentage of GDP.
Rules and regulations are under the direct control of policy makers—and policy
makers intending to change the set of
incentives under which businesses operate will often start by changing rules
and regulations that have an impact on
firm behavior. Doing Business goes beyond
identifying an existing problem in the regulatory framework and points to specific

ABOUT DOING BUSINESS: MEASURING FOR IMPACT

regulations or regulatory procedures that
may lend themselves to regulatory reform. And its quantitative measures of
business regulations enable research on
how specific regulations affect firm behavior and economic outcomes.
The first Doing Business report covered 5
topics and 133 economies. This year’s report covers 11 topics and 189 economies.
Ten topics are included in both the aggregate ranking on the ease of doing business
and the distance to frontier measure.5 The
Doing Business methodology makes it possible to update the indicators in a relatively inexpensive and replicable way.
The project has benefited from feedback from governments, academics,
practitioners and independent reviewers—most recently an independent panel
appointed by the president of the World
Bank Group. The panel’s recommendations came too late for significant changes to this year’s report, but the project
will explore options for improvement in
coming editions. To this end, operational oversight for the project will be moved
to the Development Economics Vice
Presidency of the World Bank Group,
to strengthen synergies between Doing
Business and other World Bank Group
flagship reports. The initial goal remains:
to provide an objective basis for understanding and improving the regulatory
environment for business.

WHAT DOING BUSINESS COVERS
Doing Business captures several important
dimensions of the regulatory environment
as it applies to local firms. It provides
quantitative measures of regulations for
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. Doing Business also measures
regulations on employing workers.
This year’s report does not present rankings of economies on the employing
workers indicators or include the topic in
the aggregate ranking on the ease of doing business. It does present the data on
the employing workers indicators. Additional data on labor regulations collected

in 189 economies are available on the Doing Business website.6

An emphasis on smart regulations
Doing Business is not about eliminating
the role of the state from private sector
development. On the contrary, Doing
Business recognizes that the state has a
fundamental role in private sector development. A key premise of Doing Business
is that economic activity requires good
rules. These include rules that establish
and clarify property rights, reduce the
cost of resolving disputes, increase the
predictability of economic interactions
and provide contractual partners with
core protections against abuse. The objective is to have regulations designed
to be efficient, accessible to all who use
them and simple in their implementation.
Accordingly, some Doing Business indicators give a higher score for better and
more developed regulation, as the protecting investors indicators do for stricter
disclosure requirements for related-party
transactions. Other indicators, such as
those on dealing with construction permits, automatically assign the lowest
score to economies that have no regulations in the area measured or do not
apply their regulations (considered “no
practice” economies), penalizing them for
lacking appropriate regulation. Still others
give a higher score for a simplified way
of applying regulation with lower compliance costs for firms—as the starting
a business indicators do, for example, if
firms can comply with business start-up
formalities in a one-stop shop or through
a single online filing portal. And finally,
some indicators recognize economies
that apply a risk-based approach to regulation as a way to address environmental
and social concerns—that is, by imposing
greater regulatory requirements on activities that pose a higher risk to the population and lesser regulatory requirements
on lower-risk activities.

regulate different aspects of private sector
activity. Yet all these economies perform
well not only on the Doing Business indicators but also in other international data
sets capturing dimensions of competitiveness. The economies performing best in
the Doing Business rankings therefore are
not those with no regulation but those
whose governments have managed to create rules that facilitate interactions in the
marketplace without needlessly hindering
the development of the private sector. Ultimately, Doing Business is about smart regulations, and these can be provided only
by a well-functioning state (figure 2.1).

Two types of data
In constructing the indicators the Doing
Business project uses 2 types of data. The
first comes from readings of laws and
regulations in each economy. The Doing
Business team, in collaboration with local
expert respondents, examines the company law to find, for example, the disclosure requirements for related-party transactions. It reads the civil law to find the
number of procedures necessary to resolve a commercial sale dispute through
local courts. It reviews the labor code to
find data on a range of issues concerning employer-employee relations. And it
plumbs other legal instruments for other
key pieces of data used in the indicators,
several of which have a large legal dimension. Indeed, about three-quarters of the

FIGURE 2.1 How does Doing Business
define SMART business
regulations?

S

M

STREAMLINED—regulations that
accomplish the desired outcome in the
most efficient way
MEANINGFUL—regulations that have a
measurable positive impact in facilitating
interactions in the marketplace
ADAPTABLE—regulations that
adapt to changes in the environment

A

Among the 30 economies ranking highest on the ease of doing business, a substantial number—Canada, Denmark,
Germany, Japan, the Republic of Korea,
New Zealand, Norway, Sweden—come
from a tradition of the government having
quite a prominent presence in the economy, including through setting out rules to

R

T

RELEVANT—regulations that are
proportionate to the problem they are
designed to solve
TRANSPARENT—regulations that are clear
and accessible to anyone who needs to use
them

21

22

DOING BUSINESS 2014

data used in Doing Business are of this
type and are easily verifiable against the
law. The local expert respondents play a
vital role in corroborating the Doing Business team’s understanding and interpretation of rules and laws.
Data of the second type serve as inputs
into indicators on the complexity and cost
of regulatory processes. These indicators
measure the efficiency in achieving a regulatory goal, such as the number of procedures to obtain a building permit or the
time taken to grant legal identity to a business. In this group of indicators cost estimates are recorded from official fee schedules where applicable. Time estimates
often involve an element of judgment by
respondents who routinely administer the
relevant regulations or undertake the relevant transactions. To construct the time
indicators, a regulatory process such as
starting a business is broken down into
clearly defined steps and procedures (for
more details, see the discussion on methodology in this chapter). In constructing
the starting a business indicators Doing
Business builds on Hernando de Soto’s pioneering work in applying the time-andmotion approach in the 1980s to show the
obstacles to setting up a garment factory
on the outskirts of Lima.7
In developing the data of this second type,
the Doing Business team conducts several
rounds of interaction with the expert respondents—through conference calls,
written correspondence and visits by the
team—until there is convergence on the
final answer.8 For data of the first type, because they are based on the law, there is
less need for convergence and for a larger
sample of experts to ensure accuracy.

WHAT DOING BUSINESS DOES
NOT COVER
The Doing Business data have key limitations that should be kept in mind by those
who use them.

Limited in scope
The Doing Business indicators are limited
in scope. In particular:
• Doing Business does not measure the
full range of factors, policies and in-

stitutions that affect the quality of the
business environment in an economy or its national competitiveness.
It does not, for example, capture aspects of security, the prevalence of
bribery and corruption, market size,
macroeconomic stability (including
whether the government manages its
public finances in a sustainable way),
the state of the financial system, the
state of the rental or resale property
market or the level of training and
skills of the labor force.
• Even within the relatively small set of
indicators included in Doing Business,
the focus is deliberately narrow. The
getting electricity indicators, for example, capture the procedures, time
and cost involved for a business to
obtain a permanent electricity connection to supply a standardized
warehouse, but they do not attempt
to measure the reliability of the electricity supply itself. Through these indicators Doing Business thus provides
a narrow perspective on the range of
infrastructure challenges that firms
face, particularly in the developing
world. It does not address the extent
to which inadequate roads, rail, ports
and communications may add to
firms’ costs and undermine competitiveness (except to the extent that
the quality of ports and roads is measured through the trading across borders indicators). Doing Business cov-

ers 11 areas of a company’s life cycle,
through 11 specific sets of indicators
(table 2.1). Similar to the indicators on
getting electricity, those on starting a
business or protecting investors do
not cover all aspects of commercial
legislation. And those on employing
workers do not cover all areas of labor regulation; for example, they do
not measure regulations addressing
health and safety issues at work or
the right of collective bargaining.
• Doing Business does not attempt to
measure all costs and benefits of a
particular law or regulation to society
as a whole. The paying taxes indicators, for example, measure the total
tax rate, which in isolation is a cost
to businesses. The indicators do not
measure, nor are they intended to
measure, the benefits of the social and
economic programs funded through
tax revenues. Measuring business
laws and regulations provides one input into the debate on the regulatory
burden associated with achieving regulatory objectives. Those objectives
can differ across economies. Doing
Business provides a starting point for
this discussion.

Limited to standardized case
scenarios
A key consideration for the Doing Business indicators is that they should ensure

TABLE 2.1 Doing Business—benchmarking 11 areas of business regulation
Complexity and cost of regulatory processes
Starting a business

Procedures, time, cost and paid-in minimum capital requirement

Dealing with construction permits

Procedures, time and cost

Getting electricity

Procedures, time and cost

Registering property

Procedures, time and cost

Paying taxes

Payments, time and total tax rate

Trading across borders

Documents, time and cost

Strength of legal institutions
Getting credit

Movable collateral laws and credit information systems

Protecting investors

Disclosure and liability in related-party transactions

Enforcing contracts

Procedures, time and cost to resolve a commercial dispute

Resolving insolvency

Time, cost, outcome and recovery rate

Employing workers

Flexibility in the regulation of employment

Note: The employing workers indicators are not included in this year’s ranking on the ease of doing business nor
in the calculation of distance to frontier or any data on the strength of legal institutions included in figures in the
report.

ABOUT DOING BUSINESS: MEASURING FOR IMPACT

comparability of the data across a global set of economies. The indicators are
therefore developed around standardized
case scenarios with specific assumptions.
One such assumption is the location of a
notional business—the subject of the
Doing Business case study—in the largest
business city of the economy. The reality is that business regulations and their
enforcement very often differ within a
country, particularly in federal states and
large economies. But gathering data for
every relevant jurisdiction in each of the
189 economies covered by Doing Business
would be far too costly.
Doing Business recognizes the limitations
of the standardized case scenarios and
assumptions. But while such assumptions come at the expense of generality,
they also help ensure the comparability of
data. For this reason it is common to see
limiting assumptions of this kind in economic indicators. Inflation statistics, for
example, are often based on prices of a set
of consumer goods in a few urban areas,
since collecting nationally representative
price data at high frequencies would be
prohibitively costly in many countries. To
capture regional variation in the business
environment within economies, Doing
Business has complemented its global indicators with subnational studies in some
economies where resources and interest
have come together (box 2.1).
Some Doing Business topics include complex areas, and so it is important that the
standardized cases are carefully defined.
For example, the standardized case scenario usually involves a limited liability
company or its legal equivalent. The considerations in defining this assumption
are twofold. First, private limited liability companies are, empirically, the most
prevalent business form for firms with
more than one owner in many economies
around the world. Second, this choice reflects the focus of Doing Business on expanding opportunities for entrepreneurship: investors are encouraged to venture
into business when potential losses are
limited to their capital participation.

Limited to the formal sector
The Doing Business indicators assume
that entrepreneurs have knowledge of
and comply with applicable regulations.

BOX 2.1 Comparing regulations at the local level: Subnational
Doing Business
Subnational Doing Business expands the Doing Business analysis beyond the largest
business city of an economy. It captures differences in regulations or in the implementation of national laws across locations within an economy (as in India)
or a region (as in South East Europe). Projects are undertaken at the request of
governments.
Subnational Doing Business produces disaggregated data on business regulations
in locations where information has been nonexistent or where national data are
insufficient to fully assess the regulatory environment. But it is more than a data
collection exercise. Subnational Doing Business has proved to be a strong motivator
for regulatory reform:
• Subnational Doing Business involves multiple interactions with government partners at national, regional and municipal levels, resulting in local ownership and
capacity building.
• The data produced are comparable across locations within the economy and
internationally, enabling locations to benchmark their results both locally and
globally. Comparisons of locations that are within the same economy and
therefore share the same legal and regulatory framework can be revealing: local
officials find it hard to explain why doing business is more difficult in their jurisdiction than in a neighboring one.
• Pointing out good practices that exist in some locations but not others in an
economy helps policy makers recognize the potential for achieving a regulatory performance far better than that suggested by the ranking captured in the
global Doing Business report. This can prompt discussions of regulatory reform
across different levels of government, providing opportunities for local governments and agencies to learn from one another.
• Subnational Doing Business indicators are actionable, because most of the areas
measured are within governments’ mandate. In addition, the reports provide
policy recommendations and examples of good practice that are easy to replicate because of the shared legal traditions and institutions.
Since 2005 subnational reports have covered 355 cities in 55 economies, including Brazil, China, India, Kenya, Morocco, Pakistan and the Philippines.a This year
subnational studies were completed in Colombia and Italy, and a report covering
one data set was produced for Hargeisa (Somaliland). Studies are ongoing in 15
cities and 3 ports in the Arab Republic of Egypt, in 31 states and the Federal District in Mexico and in 36 states and the Federal Capital Territory in Nigeria. In
addition, 2 regional reports were published this year:
• Doing Business in the g7+, comparing business regulations in economies of the
g7+ group—Afghanistan, Burundi, the Central African Republic, Chad, the Comoros, the Democratic Republic of Congo, Côte d’Ivoire, Guinea, Guinea-Bissau, Haiti, Liberia, Papua New Guinea, Sierra Leone, the Solomon Islands, South
Sudan, Timor-Leste and Togo.b The g7+ group is a country-owned and country-led global mechanism established in April 2010 to monitor, report and draw
attention to the unique challenges faced by fragile states.
• Doing Business in the East African Community, covering Burundi, Kenya, Rwanda,
Tanzania and Uganda.
a. Subnational reports are available on the Doing Business website at http://www.
doingbusiness.org/subnational.
b. Doing Business does not collect data for Somalia, also a member of the g7+ group.

23

DOING BUSINESS 2014

In practice, entrepreneurs may not know
what needs to be done or how to comply,
and may lose considerable time in trying
to find out. Or they may deliberately avoid
compliance altogether—by not registering
for social security, for example. Where
regulation is particularly onerous, levels of
informality tend to be higher.9 Compared
with their formal sector counterparts,
firms in the informal sector typically grow
more slowly, have poorer access to credit and employ fewer workers—and these
workers remain outside the protections
of labor law.10 Firms in the informal sector
are also less likely to pay taxes.
Doing Business measures one set of factors
that help explain the occurrence of informality and give policy makers insights into
potential areas of regulatory reform. Gaining a fuller understanding of the broader
business environment, and a broader
perspective on policy challenges, requires
combining insights from Doing Business
with data from other sources, such as the
World Bank Enterprise Surveys.11

WHY THIS FOCUS?
Why does Doing Business focus on the
regulatory environment for small and medium-size enterprises? These enterprises
are key drivers of competition, growth and
job creation, particularly in developing
economies. But in these economies up to
65% of output is produced in the informal
sector, often because of excessive bureaucracy and regulation—and in the informal
sector firms lack access to the opportunities and protections that the law provides.
Even firms operating in the formal sector
might not all have equal access to these
opportunities and protections.
Where regulation is burdensome and
competition limited, success tends to
depend on whom one knows. But where
regulation is transparent, efficient and
implemented in a simple way, it becomes easier for aspiring entrepreneurs
to compete on an equal footing and to
innovate and expand. In this sense Doing Business values good rules as a key to
social inclusion. Enabling growth—and
ensuring that all people, regardless of
income level, can participate in its benefits—requires an environment where
new entrants with drive and good ideas

FIGURE 2.2 A strong correlation between Doing Business rankings and World Economic
Forum rankings on global competitiveness
2013/14 ranking on Global
Competitiveness Index

24

140
120
100
80
60
40
20
0

0

20

40

60
80
100
120
140
DB2014 ranking on the ease of doing business

160

180

Note: Relationships are significant at the 1% level after controlling for income per capita.
Source: Doing Business database; WEF 2013.

can get started in business and where
good firms can invest and grow, thereby
creating more jobs.
Doing Business functions as a barometer
of the regulatory environment for domestic businesses. To use a medical analogy,
Doing Business is similar to a cholesterol
test. A cholesterol test does not tell us
everything about our health. But our cholesterol level is easier to measure than
our overall health, and the test provides
us with important information, warning
us when we need to adjust our behavior.
Similarly, Doing Business does not tell us
everything we need to know about the
regulatory environment for domestic
businesses. But its indicators cover aspects that are more easily measured than
the entire regulatory environment, and
they provide important information about
where change is needed.
To test whether Doing Business serves as
a proxy for the broader business environment and for competitiveness, one approach is to look at correlations between
the Doing Business rankings and other
major economic benchmarks. Closest
to Doing Business in what it measures is
the set of indicators on product market
regulation compiled by the Organisation
for Economic Co-operation and Development (OECD). These indicators are designed to help assess the extent to which
the regulatory environment promotes or
inhibits competition. They include measures of the extent of price controls, the
licensing and permit system, the degree
of simplification of rules and procedures,
the administrative burdens and legal and

regulatory barriers, the prevalence of discriminatory procedures and the degree
of government control over business
enterprises.12 These indicators—for the
39 countries that are covered, several of
them large emerging markets—are correlated with the Doing Business rankings
(the correlation here is 0.49).
There is a high correlation (0.84) between the Doing Business rankings and the
rankings on the World Economic Forum’s
Global Competitiveness Index, a much
broader measure capturing such factors
as macroeconomic stability, aspects of
human capital, the soundness of public
institutions and the sophistication of the
business community (figure 2.2).13 For
several of these factors the Global Competitiveness Index uses data collected by
other organizations. For others it uses primary data, collected through surveys of
the business community’s perceptions of
the business environment.14 Self-reported
experiences with business regulations,
such as those captured by the Global
Competitiveness Index, often vary much
more within economies (across respondents in the same economy) than across
economies, suggesting that different
firms experience the same regulatory environment in very different ways.15

DOING BUSINESS AS A
BENCHMARKING EXERCISE
By capturing key dimensions of regulatory regimes, Doing Business provides a
rich opportunity for benchmarking. Such
a benchmarking exercise is necessarily

ABOUT DOING BUSINESS: MEASURING FOR IMPACT

incomplete, just as the Doing Business
data are limited in scope. It is useful when
it aids judgment, but not when it supplants judgment.
Since 2006 Doing Business has sought to
provide 2 perspectives on the data that
it collects: it presents “absolute” indicators for each economy for 10 of the 11
regulatory topics that it addresses, and it
provides rankings of economies for these
10 topics, by topic and also in the aggregate. Judgment is required in interpreting
these measures for any economy and in
determining an economically sensible
and politically feasible path for regulatory
reform.
Reviewing the Doing Business rankings
in isolation may reveal unexpected results. Some economies may rank unexpectedly high on some topics. And
some economies that have had rapid
growth or attracted a great deal of investment may rank lower than others
that appear to be less dynamic. As
economies develop, they may add to
or improve on regulations that protect
investor and property rights. Many also
tend to streamline existing regulations
and prune outdated ones. One finding
of Doing Business is that dynamic and
growing economies continually reform
and update their business regulations
and the implementation of those regulations, while many poor economies still
work with regulatory systems dating to
the late 1800s.
For reform-minded governments, how
much the regulatory environment for local entrepreneurs improves in an absolute
sense matters far more than their economy’s ranking relative to other economies.
To aid in assessing the absolute level of
regulatory performance and how it improves over time, this year’s report again
presents the distance to frontier measure. This measure shows the distance
of each economy to the “frontier,” which
represents the highest performance observed on each of the indicators across
all economies included in Doing Business
since 2003.
At any point in time the distance to
frontier measure shows how far an
economy is from the highest performance. And comparing an economy’s

score at 2 points in time allows users to
assess the absolute change over time
in the economy’s regulatory environment as measured by Doing Business,
rather than simply the change in the
economy’s performance relative to others. In this way the distance to frontier
measure complements the yearly ease
of doing business ranking, which compares economies with one another at a
point in time.

challenges and by identifying good practices and lessons learned. Despite the
narrow focus of the indicators, the initial
debate in an economy on the results they
highlight typically turns into a deeper discussion on their relevance to the economy and on areas where business regulatory reform is needed, including areas
well beyond those measured by Doing
Business.

Doing Business uses a simple averaging
approach for weighting component indicators and calculating rankings and the
distance to frontier measure. Other approaches were explored, including using
principal components and unobserved
components.16 They turn out to yield results nearly identical to those of simple
averaging. In the absence of a strong
theoretical framework that assigns different weights to the topics covered for
the 189 economies by Doing Business,
the simplest method is used: weighting
all topics equally and, within each topic,
giving equal weight to each of the topic
components.17

Part of a broad approach to policy
reform

Each topic covered by Doing Business relates to a different aspect of the business
regulatory environment. The rankings of
each economy vary, often substantially,
across topics, indicating that strong performance by an economy in one area of
regulation can coexist with weak performance in another. A quick way to assess
the variability of an economy’s regulatory
performance across the different areas
is to look at the topic rankings (see the
country tables). Guatemala, for example,
stands at 79 in the overall ease of doing
business ranking. Its ranking is 13 on the
ease of getting credit, 23 on the ease of
registering property and 34 on the ease
of getting electricity. At the same time, it
has a ranking of 116 on the ease of trading
across borders, 145 on the ease of starting a business and 157 on the strength of
investor protections (see figure 1.3 in the
overview).

HOW GOVERNMENTS USE
DOING BUSINESS
Doing Business offers policy makers a
benchmarking tool useful in stimulating
policy debate, both by exposing potential

Many of the Doing Business indicators can
be considered “actionable.” For example,
governments have direct control over the
minimum capital requirement for new
firms. They can invest in company and
property registries to increase the efficiency of these public agencies. They can
improve the efficiency of tax administration by adopting the latest technologies
to facilitate the preparation, filing and payment of taxes by the business community.
And they can undertake court reforms to
shorten delays in the enforcement of contracts. But some Doing Business indicators
capture procedures, time and costs that
involve private sector participants, such as
lawyers, notaries, architects, electricians
or freight forwarders. Governments may
have little influence in the short run over
the fees these professions charge, though
much can be achieved by strengthening
professional licensing regimes and preventing anticompetitive behavior. And
governments have no control over the geographic location of their economy, a factor
that can adversely affect businesses.
While Doing Business indicators are actionable, this does not necessarily mean
that they are all “action-worthy” in a
particular context. Business regulatory
reforms are one element of a strategy
aimed at improving competitiveness
and establishing a solid foundation for
sustainable economic growth. There are
many other important goals to pursue—
such as effective management of public
finances, adequate attention to education
and training, adoption of the latest technologies to boost economic productivity
and the quality of public services, and
appropriate regard for air and water quality to safeguard people’s health. Governments have to decide what set of priorities best fits the needs they face. To say

25

26

DOING BUSINESS 2014

that governments should work toward
a sensible set of rules for private sector
activity (as embodied, for example, in the
Doing Business indicators) does not suggest that doing so should come at the expense of other worthy policy goals.
There is no evidence that Doing Business
reforms are crowding out reforms in other
areas, such as in fiscal policy or in health
and education. Indeed, governments are
increasingly recognizing that improving
competitiveness and creating a better
climate for private sector activity requires
actions across a broad front, addressing
factors and policies that extend well beyond those captured by the Doing Business indicators.
Over several years of engaging with authorities in a large number of economies,
the Doing Business team has never seen
a case where the binding constraint to,
say, improvements in tax administration or contract enforcement was the
feverish pace of reforms in other policy
areas. Increasingly, the opposite seems
to be the case, with governments recognizing the synergies of multifaceted
reforms across a broad range of areas.
Moreover, because the areas measured
by Doing Business indicators encompass
many government departments—typically including the ministries of justice,
commerce, industry, finance, trade and
energy, to name just a few—the administrative burden of regulatory reforms is
more equitably shared.
Another factor has also helped sustain
the interest of policy makers in the Doing Business data. Implementing coherent
economic policies in the face of a rapidly
changing global economy and an uncertain economic outlook is a great challenge. Many of the factors shaping the environment in which economic policies are
formulated lie well outside the control of
most policy makers, especially those in the
developing world. But the rules and regulations that governments put in place to
underpin private sector activity are largely
homemade. Whether these rules are sensible or excessively burdensome, whether
they create perverse incentives or help establish a level playing field, whether they
safeguard transparency and encourage
adequate competition—all this is largely
within the control of governments.

Insights into good practices
As governments over the past decade
have increasingly understood the importance of business regulation as a driving force of competitiveness, they have
turned to Doing Business as a repository
of actionable, objective data providing
unique insights into good practices
worldwide. Reform-minded governments
seeking success stories in business regulation find examples in Doing Business
(box 2.2). Saudi Arabia, for example, used
the company law of France as a model for
revising its own law. Many African governments may look to Mauritius—the
region’s strongest performer on Doing
Business indicators—as a source of good
practices to inspire regulatory reforms in
their own countries. Governments shared
knowledge of business regulations before the Doing Business project began. But

Doing Business made it easier by creating
a common language comparing business
regulations around the world.
Over the past decade governments
worldwide have been actively improving the regulatory environment for domestic companies. Most reforms relating to Doing Business topics have been
nested in broader reform programs
aimed at enhancing economic competitiveness, as in Colombia, Kenya, Liberia
and the Russian Federation. In structuring reform programs for the business
environment, governments use multiple
data sources and indicators. This recognizes the reality that the Doing Business
data on their own provide an incomplete roadmap for successful business
regulatory reforms.18 It also reflects the
need to respond to many stakeholders

BOX 2.2 How economies have used Doing Business in regulatory
reform programs
To ensure the coordination of efforts across agencies, such economies as Brunei
Darussalam, Colombia and Rwanda have formed regulatory reform committees,
reporting directly to the president. These committees use the Doing Business indicators as one input to inform their programs for improving the business environment. More than 45 other economies have formed such committees at the
interministerial level. In East and South Asia they include the Republic of Korea;
Malaysia; the Philippines; Taiwan, China; and Vietnam. In the Middle East and
North Africa: Morocco, Saudi Arabia and the United Arab Emirates. In Europe and
Central Asia: Croatia, Georgia, Kazakhstan, Kosovo, the Kyrgyz Republic, the former Yugoslav Republic of Macedonia, Moldova, Montenegro, Poland, the Russian
Federation, Tajikistan, Ukraine and Uzbekistan. In Sub-Saharan Africa: Botswana,
Burundi, the Central African Republic, the Comoros, the Democratic Republic of
Congo, the Republic of Congo, Côte d’Ivoire, Guinea, Kenya, Liberia, Malawi, Mali,
Nigeria, Sierra Leone, Togo and Zambia. And in Latin America: Chile, Costa Rica,
the Dominican Republic, Guatemala, Mexico, Panama and Peru.
Since 2003 governments have reported more than 530 regulatory reforms that
have been informed by Doing Business.a Many economies share knowledge on
the regulatory reform process related to the areas measured by Doing Business.
Among the most common venues for this knowledge sharing are peer-to-peer
learning events—workshops where officials from different governments across a
region or even across the globe meet to discuss the challenges of regulatory reform and to share their experiences. In recent years such events have taken place
in Panama and Colombia (for Latin America and the Caribbean), in South Africa
(for Sub-Saharan Africa), in Georgia (for Europe and Central Asia), in Malaysia
(for East Asia and the Pacific) and in Morocco (for the Middle East and North
Africa).
a. These are reforms for which Doing Business is aware that information provided by the
Doing Business report was used in shaping the reform agenda.

ABOUT DOING BUSINESS: MEASURING FOR IMPACT

and interest groups, all of whom bring
important issues and concerns to the
reform debate.
When the World Bank Group engages with governments on the subject of
improving the investment climate, the
dialogue aims to encourage the critical
use of the Doing Business data—to sharpen judgment and promote broad-based
reforms that enhance the investment
climate rather than a narrow focus on
improving the Doing Business rankings.
The World Bank Group uses a vast range
of indicators and analytics in this policy
dialogue, including its Global Poverty
Monitoring Indicators, World Development Indicators, Logistics Performance
Indicators and many others. The open
data initiative has made data for many
such indicators conveniently available to
the public at http://data.worldbank.org.

METHODOLOGY AND DATA
The Doing Business data are based on domestic laws and regulations as well as administrative requirements. The data cover
189 economies—including small economies and some of the poorest economies,
for which little or no data are available in
other data sets. (For a detailed explanation of the Doing Business methodology,
see the data notes.) Doing Business uses
4 main sources of information: Doing
Business respondents, the relevant laws
and regulations, the governments of the
economies covered and the World Bank
Group regional staff.

Doing Business respondents
Over the past 11 years more than 25,000
professionals in 189 economies have assisted in providing the data that inform
the Doing Business indicators. This year’s
report draws on the inputs of more than
10,200 professionals.19 Table 21.2 in the
data notes lists the number of respondents for each indicator set. The Doing
Business website shows the number of
respondents for each economy and each
indicator. Respondents are professionals
who routinely administer or advise on
the legal and regulatory requirements
covered in each Doing Business topic.
They are selected on the basis of their
expertise in the specific areas covered by

Doing Business. Because of the focus on
legal and regulatory arrangements, most
of the respondents are legal professionals
such as lawyers, judges or notaries. The
credit information questionnaire is completed by officials of the credit registry or
bureau. Freight forwarders, accountants,
architects, engineers and other professionals answer the questionnaires related to trading across borders, taxes and
construction permits. Certain public officials (such as registrars from the commercial or property registry) also provide
information that is incorporated into the
indicators.
Doing Business does not survey firms for
2 main reasons. The first relates to the
frequency with which firms engage in the
transactions captured by the indicators,
which is generally low. For example, a firm
goes through the start-up process once
in its existence, while an incorporation
lawyer may carry out several dozen such
transactions in a year. The incorporation
lawyers and other experts providing information to Doing Business are therefore better able to assess the process of
starting a business than are individual
firms. The second reason is that the Doing Business questionnaires mostly gather
legal information, which firms are unlikely to be fully familiar with. For example,
few firms will know about all the many
legal procedures involved in resolving a
commercial dispute through the courts,
even if they have gone through the process themselves. But a litigation lawyer
would have no difficulty in identifying all
the necessary steps.
The annual data collection exercise is an
update of the database. The Doing Business team and the contributors examine
the extent to which the regulatory framework has changed in ways relevant for the
features captured by the indicators. The
data collection process should therefore
be seen as adding each year to an existing stock of knowledge reflected in the
previous year’s report, not as creating an
entirely new data set. Here is an example:
In Doing Business 2012 and Doing Business
2013 there were an average of 13 economies for which changes in legislation affected the scores embedded in the protecting investors indicators. For all other
economies the protecting investors data
remained unchanged.

Relevant laws and regulations
Most of the Doing Business indicators are
based on laws and regulations. Doing
Business respondents both fill out written questionnaires and provide references to the relevant laws, regulations and
fee schedules, aiding data checking and
quality assurance. 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. For example, the Doing Business team will examine the commercial
code of Greece to confirm the paid-in
minimum capital requirement, look at the
banking law of Ghana to see whether borrowers have the right to access their data
at the credit bureau and read the tax code
of Guatemala to find applicable tax rates.
Indeed, 72% of the data embedded in the
Doing Business indicators are based on a
reading of the law. In principle in these
cases, as long as there are no issues of
language, the role of the contributors is
largely advisory—helping in the corroboration of the Doing Business team’s understanding of the laws and regulations—
and there are quickly diminishing returns
to an expansion in their number.
For the other 28% of the data the team
conducts extensive consultations with
multiple contributors to minimize measurement error. For some indicators—for
example, those on dealing with construction permits, enforcing contracts and resolving insolvency—the time component
and part of the cost component (where
fee schedules are lacking) are based on
actual practice rather than the law on the
books. This introduces a degree of judgment. The Doing Business approach has
therefore been to work with legal practitioners or professionals who regularly
undertake the transactions involved. Following the standard methodological approach for time-and-motion studies, Doing Business breaks down each process or
transaction, such as starting a business
or registering a building, into separate
steps to ensure a better estimate of time.
The time estimate for each step is given
by practitioners with significant and routine experience in the transaction. When
time estimates differ, further interactions
with respondents are pursued to converge on one estimate or a narrow range
that reflects the majority of applicable
cases.

27

28

DOING BUSINESS 2014

Governments and World Bank
Group regional staff
After receiving the completed questionnaires from the Doing Business respondents, verifying the information against
the law and conducting follow-up inquiries to ensure that all relevant information is captured, the Doing Business team
shares the preliminary findings of the report with governments through the Board
of Executive Directors and the regional
staff of the World Bank Group (figure
2.3). Through this process government
authorities and local World Bank Group
staff in the 189 economies covered can
alert the team about, for example, regulatory reforms not picked up by the respondents or additional achievements of regulatory reforms already captured in the
database. In response to such feedback,
the Doing Business team turns to the local
private sector experts for further consultation and, as needed, corroboration. In
addition, the team responds formally to
the comments of governments or regional staff and provides explanations of the
scoring decisions.

Improvements to the methodology
The methodology has undergone continual improvement over the years. For
enforcing contracts, for example, the
amount of the disputed claim in the
case study was increased from 50% of

income per capita to 200% after the
first year of data collection, as it became
clear that smaller claims were unlikely to
go to court. Another change related to
starting a business. The minimum capital requirement can be an obstacle for
potential entrepreneurs. Doing Business
measured the required minimum capital
regardless of whether it had to be paid
up front or not. In many economies only
part of the minimum capital has to be
paid up front. To reflect the relevant barrier to entry, the paid-in minimum capital
has been used rather than the required
minimum capital.
This year’s report includes an update in
the methodology for 2 indicator sets—
paying taxes and trading across borders.
For trading across borders, documents
that are required purely for purposes of
preferential treatment are no longer included in the list of documents (for example, a certificate of origin if the use is
only to qualify for a preferential tariff rate
under trade agreements). For paying taxes, the value of fuel taxes is no longer included in the total tax rate because of the
difficulty of computing these small taxes.
Fuel taxes continue to be counted in the
number of payments.
In addition, the rule establishing that
each procedure must take at least 1 day
was removed for procedures that can be

fully completed online in just a few hours.
When the indicators were first developed
in 2002, online procedures were not
widespread globally. In the ensuing years
there has been an impressive acceleration
in the adoption by governments and the
private sector of the latest information
and communication technologies for the
provision of various services. While at the
time Doing Business did not see the need
to create a separate rule to account for
online procedures, the widespread use
of the new technologies today suggests
that such distinction is now justified and
the Doing Business methodology was
changed this year to reflect the practice.
This change affects the time indicator
for starting a business, dealing with construction permits and registering property.20 For procedures that can be fully completed online, the duration is now set at
half a day rather than a full day.

Data adjustments
All changes in methodology are explained
in the data notes as well as on the Doing
Business website. In addition, 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, including those

FIGURE 2.3 The Doing Business data collection cycle
Data verification
Questionnaires developed
November:
Questionnaires developed in
consultation with different
expert groups

Questionnaires
administered
17,500 sent
for DB2014

Data analysis and government feedback
Dec−Jan

Sept−Nov

Media preparation and
report launch
September−October:
Coordination with regional
communication teams for media
outreach and prelaunch briefings
with World Bank Group regional
teams

s Conference calls and videoconferences with contributors
s Written correspondence
s Travel to 33 economies for data collection and reform
verification for DB2014

Feb−May

June−Aug
June 1: cutoff
date for
reforms
recorded

Writing and publication
August: Comments on the report
and data received from across the
World Bank Group through an
internal review process

s Analysis and verification of data received
s 13,000 contributions for DB2014
March−April: Request for input from all World
Bank Group regional teams and 25 Executive
Director offices representing their country
governments

Data scoring
s 58,000 data points coded in DB2014
s 238 reforms in 114 economies recorded in
DB2014
June: Request to review reforms captured sent to all
World Bank Group regional teams and 25 Executive
Director offices representing their country governments

ABOUT DOING BUSINESS: MEASURING FOR IMPACT

described in the previous section, and any
revisions in data due to corrections. The
data set is not back-calculated for year-toyear revisions in income per capita data
(that is, when the income per capita data
are revised by the original data sources,
Doing Business does not update the cost
measures for previous years). The website
also makes available all original data sets
used for background papers.

9.

10.
11.
12.

Information on data corrections is provided in the data notes and on the website.
A transparent complaint procedure allows anyone to challenge the data. Over
the past year the team received and responded to more than 140 queries on the
data. These queries led to corrections of
less than 8.5% of the data points. If errors
are confirmed after a data verification
process, they are expeditiously corrected.

NOTES
1.
2.

3.
4.

5.

6.
7.
8.

World Bank 2005; Stampini and others
2011.
See, for example, Alesina and others (2005);
Perotti and Volpin (2005); Fisman and Sarria-Allende (2010); Antunes and Cavalcanti
(2007); Barseghyan (2008); Klapper, Lewin
and Quesada Delgado (2009); Freund and
Bolaky (2008); Chang, Kaltani and Loayza
(2009); Helpman, Melitz and Rubinstein
(2008); Klapper, Laeven and Rajan (2006);
World Bank (2005); and Ardagna and
Lusardi (2010).
Djankov, La Porta and others 2001.
These papers include Djankov and others
(2002); Djankov and Shleifer (2007);
Djankov and others (2008); Djankov and
Pham (2010); Djankov and others (2003);
Djankov and others (2008); Botero and
others (2004); and Djankov and others
(2010).
For more details on how the aggregate
ranking is created, see the chapter on the
ease of doing business and distance to
frontier.
http://www.doingbusiness.org.
De Soto 2000.
Questionnaires are administered annually
to local experts in 189 economies to collect
and update the data. The local experts for
each economy are listed on the Doing Business website (http://www.doingbusiness.
org) and in the acknowledgments at the
end of this report.

13.

14.

15.

Kaplan, Piedra and Seira 2011; Cuñat and
Melitz 2007; Micco and Pagés 2006;
Cardenas and Rozo 2009; Dulleck, Frijters
and Winter-Ebmer 2006; Ciccone and Papaioannou 2007; Klapper, Lewin and Quesada Delgado 2009; Branstetter and others
2013; Bruhn 2011, 2013; Sharma 2009.
Schneider 2005; La Porta and Shleifer
2008.
http://www.enterprisesurveys.org.
OECD, “Indicators of Product Market
Regulation,” http://www.oecd.org/. The
measures are aggregated into 3 broad
families that capture state control, barriers to entrepreneurship and barriers to
international trade and investment. The
39 countries included in the OECD market
regulation indicators are Australia, Austria,
Belgium, Brazil, Canada, Chile, China, the
Czech Republic, Denmark, Estonia, Finland,
France, Germany, Greece, Hungary, Iceland,
India, Ireland, Israel, Italy, Japan, Korea,
Luxembourg, Mexico, the Netherlands, New
Zealand, Norway, Poland, Portugal, Russia,
the Slovak Republic, Slovenia, South Africa,
Spain, Sweden, Switzerland, Turkey, the
United Kingdom and the United States.
The World Economic Forum’s Global
Competitiveness Report uses Doing Business
data sets on starting a business, employing
workers, protecting investors and getting
credit (legal rights), representing 7 of a total
of 113 different indicators (or 6.19%).
The World Economic Forum constructs
much of the Global Competitiveness Index
mainly from secondary data. For example, it uses macroeconomic data from
the International Monetary Fund’s World
Economic Outlook database, penetration
rates for various technologies from the
International Telecommunication Union,
school enrollment rates and public health
indicators from the World Bank’s World
Development Indicators database and indicators from other such sources, including
Doing Business. It also supplements the
secondary data with some primary data,
collected from relatively small-sample
opinion surveys of enterprise managers
(Executive Opinion Surveys), for components accounting for 64% of the indicators
captured in the index. By contrast, the Doing
Business indicators are based entirely on
primary data.
Hallward-Driemeier, Khun-Jush and Pritchett (2010), analyzing data from World Bank
Enterprise Surveys for Sub-Saharan Africa,
show that de jure measures such as Doing

16.

17.

18.

19.

20.

Business indicators are virtually uncorrelated
with ex post firm-level responses, providing
evidence that deals rather than rules prevail
in Africa. The authors find that the gap
between de jure and de facto conditions
grows with the formal regulatory burden.
The evidence also shows that more burdensome processes open up more space for
making deals and that firms may not incur
the official costs of compliance but still pay
to avoid them.
A technical note on the different aggregation and weighting methods is available on
the Doing Business website (http://www.
doingbusiness.org).
For more details, see the chapter on the
ease of doing business and distance to
frontier.
One study using Doing Business indicators
illustrates the difficulties in using highly
disaggregated indicators to identify reform
priorities (Kraay and Tawara 2011).
While about 10,200 contributors provided
data for this year’s report, many of them
completed a questionnaire for more than
one Doing Business indicator set. Indeed,
the total number of contributions received
for this year’s report is more than 13,000,
which represents a true measure of the
inputs received. The average number of
contributions per indicator set and economy is just over 6. For more details, see
http://www.doingbusiness.org/contributors/doing-business.
For getting electricity the rule that each
procedure must take a minimum of 1 day
still applies because in practice there are
no cases in which procedures can be fully
completed online in less than a day. For
example, even though in some cases it is
possible to apply for an electricity connection online, additional requirements mean
that the process cannot be completed in
less than 1 day.

29

Research on the effects of
business regulations

• Since 2003, 1,578 research articles
using Doing Business data have
been published in peer-reviewed
academic journals and another
4,464 have been posted online.
• According to the findings of the
research, reforms simplifying
business registration lead to
more firm creation. Nevertheless,
firms that do not see the benefits
of formalizing are less likely to
respond to policies aimed at
improving business regulations.
• Increasing trade openness has
larger effects on growth when labor
markets are more flexible.
• Research supports the view that the
cumbersome, poorly functioning
regulatory business environments
undermine entrepreneurship and
economic performance.
• The introduction of collateral
registries and debt recovery
tribunals leads to better
performing credit markets.

Doing Business has provided new data on
business regulations, enabling research
on them to flourish. Extensive empirical
literature has assessed how the regulatory environment for business affects a
broad range of economic outcomes at
both the macro and micro levels—including productivity, growth, employment,
trade, investment, access to finance and
the informal economy. Since 2003, when
this report was first published, 1,578 research articles discussing how regulations in the areas measured by Doing
Business influence economic outcomes
have been published in peer-reviewed academic journals. Another 4,464 working
papers have been posted online.1
To provide some insight into the findings
of this fast-growing literature, this chapter reviews articles published in top-ranking economics journals over the past 5
years or disseminated as working papers
in the past 2 years.2 The chapter only covers studies that use Doing Business data
for analysis or motivation, or else rely on
conceptually and methodologically similar indicators (tables 3.1 and 3.2).
The methodologies underpinning empirical work affect the reliability of its findings
and ability to influence future research
and policies. Papers in the regulatory
business environment literature also vary
in how much they can demonstrate causal effects between better business regulation and outcomes of interest.
At one end, some studies simply document cross-country correlations between
business regulatory variables and outcome variables, showing whether these
variables are positively or negatively associated. But such studies cannot indicate
whether and how much business regulatory variables changed outcome variables

because with this method it is difficult to
isolate the effects of other factors.
At the other end, some studies use natural
experiments, in the spirit of randomized
evaluations, that to some extent control
for everything else affecting the outcome
variable and can isolate the causal part of
this relationship (box 3.1). For example,
assume that the goal is to assess how a
regulatory reform affects productivity in
a given economy. Simple correlations can
only show whether the reform is positively or negatively associated with productivity. But natural experiments make it
possible to see if the reform has a positive
or negative impact on productivity—as
well as the magnitude of that impact.
A methodology called difference-in-difference estimation, which is similar in
principle to natural experiments and is
commonly used in the literature, also allows for the assessment of the sign and
magnitude of the impact of a reform on
an outcome variable (box 3.1).
Other estimation methods frequently
used in economic analysis are panel data
and instrumental variable analyses, which
lie somewhere between pure cross-sectional analysis and natural experiments
in terms of their ability to show whether there is a causal link between variables of interest. Panel data include both
cross-sectional and time series data—for
instance, a dataset that covers multiple
economies over time. Such data enable
researchers to control for the impact of
economy-specific factors that do not vary
over time, such as location. This methodology can yield more convincing results
than pure cross-sectional analysis. But
in many cases, given the complexity of
economic settings, they may not establish causality between regulatory changes
and outcomes of interest.

RESEARCH ON THE EFFECTS OF BUSINESS REGULATIONS

BOX 3.1 What are randomized evaluations and natural experiments?
Randomized evaluations bring experimental methods normally used in medicine
or chemistry into economics. This approach tries to transform the world into a
lab where researchers can clearly define control groups and treatment groups,
with the treatment groups receiving interventions and control groups do not. Such
experiments can be randomized by design when the choice of being part of either
group is random.
For instance, when assessing how school books affect children’s learning, one can
design a randomized experiment where chance determines which children get
books and which do not. Such experiments are almost impossible to conduct for
business regulations. For example, it is impossible to randomly assign who has
access to a new one-stop shop for business registration and who does not. So
researchers look for natural experiments—interventions not designed by them—
with treatment and control groups and where the rule assigning the data to the
groups is unrelated to the outcome being studied. This is a fundamental characteristic of a natural experiment because without it causal interpretation is not
possible.
For business regulations a control group can be formed by collecting data from,
for example, cities in an economy not affected by a change in a law, regulation or
economic policy, while a treatment group can be formed by collecting the same
data from affected cities but otherwise identical to unaffected ones. To see if the
change in a law, regulation or economic policy affected an outcome variable—say,
income—one can assess whether the incomes of the treatment and control cities
differed significantly after the change. For a causal interpretation to be possible,
the treatment and control cities should have evolved similarly if the change had
not been made. This assumption is unlikely to hold in most cases, making natural
experiments rare.
A more commonly used methodology in the literature similar in principle to natural experiments and has weaker assumptions is called difference-in-difference estimation. The main difference between natural experiments and difference-in-difference estimation is that in natural experiments treatment and control groups
are assumed to be analogous prior to intervention and evolved similarly in the
absence of intervention. In difference-in-difference estimation, these assumptions
do not need to hold priori. The differences between treatment and control groups
are removed by subtracting the change in means of control group from the change
in means of treatment group over the time period considered in the study. The
impact of intervention on outcome variable then is estimated using panel data
technique and differenced data.

Instrumental variable analysis allows researchers to establish the direction and
magnitude of causality by incorporating
an exogenous “instrumental variable”
closely correlated with the variable being considered (say, regulatory reform)
and not with the outcome variable (say,
productivity). For instance, Acemoglu,
Johnson and Robinson (2002) use an
instrumental variable to analyze how institutions affect income per capita. Because economies with strong institutions

tend to have high incomes and vice versa, cross-sectional or panel data analysis
would not allow the authors to separate
the impact of institutions on income from
the impact of income on institutions.
To address this two-way relationship, the
authors use mortality rates of European
settlers as an instrument for institutions
because it is closely correlated with the
institutional environment in former colonies but not with their incomes. The

idea is that European colonizers did not
establish institutions in economies with
high mortality rates. Thus the mortality rates of colonizers hundreds of years
ago shaped the current institutions of
many economies, independent of their
current incomes, making it an appropriate instrumental variable for institutions
and allowing the authors to assess how
institutions affect incomes. However, the
credibility of this approach depends on
the plausibility of the assumption that
the instrument has no direct effect on
the outcome of interest. For example, if
there is a direct link between mortality
rates of European settlers and current
incomes (for example, through climate,
which affects the disease environment),
this approach will not be effective in isolating causal effects of institutions on
income.

FIRM ENTRY AND LABOR
MARKET REGULATIONS
One of the most cited theoretical mechanisms on how excessive business regulation affects economic performance
and development is that it makes it too
costly for firms to engage in the formal
economy, causing them not to invest
or to move to the informal economy.
Recent studies have conducted extensive empirical testing of this proposition
using Doing Business and other related
indicators.
Bruhn (2011, 2013), among the leading
studies employing natural experiments,
use quarterly national employment data
collected by the Mexican government between 2000 and 2004 and the fact that
different regions started implementing
business registration reform—called Systems of Fast Opening of Firms (SARE)—
at different times to identify how the reform affected the occupational choices of
business owners in the informal economy.
Bruhn (2011) finds that reform increased
the number of registered businesses by
5%, which was entirely because former
wage employees started businesses−not
because formerly unregistered businesses got registered. Bruhn (2011) also
shows that the reform increased wage
employment by 2% and reduced the income of incumbent businesses by 3%
due to increased competition.

31

32

DOING BUSINESS 2014

TABLE 3.1 Recent research using Doing Business and related indicators by area of study and methodology
Natural experiments and
difference-in-difference
Methodology/area of study estimators
Firm entry and labor market
regulations

Instrumental
variable panel
estimators

Branstetter and others
2013; Bruhn 2013, 2011;
de Mel, McKenzie and
Woodruff 2013; Kaplan,
Piedra and Seira 2011;
Monteiro and Assunção
2012

Instrumental
variable
cross-sectional
estimators

Other panel estimators
Dreher and Gassebner 2013

Other cross-sectional
estimators
Amin 2009

Trade regulations and costs

Chang , Kaltani and Loayza
2009; Busse, Hoekstra and
Königer 2012; Portugal-Perez
and Wilson 2011; S¸eker 2011

Djankov, Freund and Hoekman and Nicita
Pham 2010; Freund 2011
and Rocha 2011

Cavalcanti 2010;
Regulations on courts, credit Giannetti and Jentzsch
markets, bankruptcy laws and 2013; Giné and Love 2010; John, Litov and
Lilienfeld-Toal, Mookherjee Yeung 2008
investor protection
and Visaria 2012; Love,
Martinez- Peria and Singh
2013; Visaria 2009

Büyükkarabacak and Valev
2012

Houston and others
2010

Tax regulations

Monteiro and Assunção
2012

Lawless 2013

Business regulatory
environment and economic
performance

Amiti and Khandelwal 2011 Barseghyan 2008;
Freund and Bolaky
2008

Dall’Olio and others 2013; Dutz Djankov, McLiesh
and others 2011
and Ramalho 2006

Djankov and others
2010

Note: Janiak (2013) and di Giovanni and Levchenko (2013) are not included here because they are theoretical papers, not empirical. Nevertheless, the authors use Doing
Business data to calibrate their theoretical models.

To take into account the effects of individual characteristics of informal
business owners on their occupational
choices after the reform, Bruhn (2013)
separates informal business owners into
2 groups: those with characteristics similar to formal business owners and those
with characteristics similar to wage
workers. It then estimates the impact
that the reform had on the occupational
choices of the 2 groups. Bruhn finds that
in municipalities with high pre-reform
obstacles to formal entrepreneurship,
the reform caused 14.9% of informal
business owners with characteristics
similar to those of formal business owners to shift to the formal economy—
while it caused 6% of informal business
owners with characteristics similar to
those of wage workers to shift to wage
employment. These results suggest
that the informal economy has different
types of business owners who react to
reforms differently. For example, some
individuals become informal business
owners because of cumbersome regulations while others do so temporarily
until they find a job.

Kaplan, Piedra and Seira (2011) use the
same data from Mexico to construct a
counterfactual scenario showing how
quickly new firms would have been created without the business registration
reform. Their scenario uses two control
groups: municipalities that did not adopt
the reform and industries not eligible for
it. The idea is that control municipalities
and industries are good proxies for what
would have happened in treatment municipalities and industries in the absence
of the reform. The authors find that the
simplified entry regulations led 5% of informal firms to shift to the formal economy, though they note that this effect is
not permanent.
Bruhn (2013) explains the modest percentage shift of firms from the informal
economy in response to the reform as
partly resulting from lower benefits of
formalization and the fact that the reform
only covered business registration at the
municipal level and business owners still
needed to register with the federal tax
authority. But Kaplan, Piedra and Seira
(2011) point out that the cost of taxes,

the scarcity of marketable ideas and the
limited benefits of being formal are far
more important obstacles to creating
and formalizing firms. Accordingly, they
conclude that for reform to have a large
impact on formality and firm creation, it
should be comprehensive.
Branstetter and others (2013) offer further
evidence that simpler business registration helps create formal firms. The authors
use nationwide, micro-level matched employer-employee data from Portugal collected in 2000 and 2006 to examine the
impact of a reform program, called On the
Spot Firms, introduced in 2005. The program substantially cut business registration procedures and costs by introducing
one-stop-shops. Using a difference-in-difference methodology based on a comparative analysis of firms established before
and after the program to isolate the program’s impact on business start-ups, the
authors find that reducing the time and
cost of firm registration increased the
number of start-ups by 17% and created
about 7 new jobs a month per 100,000
county inhabitants in eligible industries.

RESEARCH ON THE EFFECTS OF BUSINESS REGULATIONS

TABLE 3.2 Summary findings of recent research using Doing Business and related indicators by methodology
Methodology

Findings of recent research

Natural experiments/
difference-in-difference
estimates

In Portugal cutting the time and cost of firm registration increased the number of business start-ups by 17% and created about 7 new
jobs a month per 100,000 county inhabitants in eligible industries. The start-ups created after the reform are smaller, more likely to be
owned by women, headed by relatively inexperienced and poorly educated entrepreneurs and have lower sales per worker than startups created before the reform (Branstetter and others 2013).
In municipalities with high constraints to formal entrepreneurship, business registration reform caused 14.9% of informal business
owners with characteristics similar to those of formal business owners to shift to the formal economy in Mexico (Bruhn 2013).
A reform that simplified business registration in Mexican municipalities increased registration by 5% and wage employment by 2.2%.
It also decreased the income of incumbent businesses by 3% due to increased competition (Bruhn 2011).
Providing information about registration or paying for it do not necessarily increase formalization, particularly when there are other
barriers to it (de Mel, McKenzie and Woodruff 2013).
Simplified entry regulations led 5% of informal firms to shift to the formal economy in Mexico, though this effect is not permanent
(Kaplan, Piedra and Seira 2011).
Mandatory credit reporting systems improve financial intermediation and access, particularly when used in conjunction with credit
information systems (Giannetti and Jentzsch 2013).
A reform making bankruptcy laws more efficient significantly improved the recovery rate of viable firms in Colombia (Giné and Love
2010).
Debt recovery tribunals in India caused a decrease in the borrowing and fixed assets of small firms and an increase in the borrowing,
fixed assets, and profits of large firms (Lilienfeld-Toal, Mookherjee and Visaria 2012).
Introduction of collateral registries for movable assets increased the firms’ access to finance by around 8%. The impact was larger for
smaller firms (Love, Martinez-Peria and Singh 2013).
Debt recovery tribunals reduced nonperforming loans by 28% and interest rates on larger loans, implying that faster processing of debt
recovery suit cut the cost of credit in India (Visaria 2009).
Business licensing among retail firms rose 13% after a tax reform in Brazil (Monteiro and Assunção 2012).
Import competition leads to much smaller quality upgrading in OECD economies with more cumbersome regulations, while in non-OECD
economies with more cumbersome regulations it does not have effect on quality (Amiti and Khandelwal 2011).

Instrumental variable
panel estimates

When credit market frictions are low, a reduction in credit market frictions decreases the impact of financial shocks on macroeconomic
volatility (Cavalcanti 2010).
Strong investor rights lead to higher corporate risk-taking and growth (John, Litov and Yeung 2008).
An increase in entry costs of 80% of income per capita decreases total factor productivity by 22% and output per worker by 29%
(Barseghyan 2008).
A 1% increase in trade is associated with more than a 0.5% increase in income per capita in economies with flexible entry regulations,
but has no positive income effects in more rigid economies (Freund and Bolaky 2008).

Other panel data
estimates

Cumbersome procedures and high levels of minimum capital are negatively associated with firm entry. Stringent regulations go hand in
hand with corruption (Dreher and Gassebner 2013).
Increasing trade openness has larger effects on growth when labor markets are more flexible (Chang, Kaltani and Loayza 2009).
Better regulations are associated with lower time and costs of trading in developing economies (Busse, Hoekstra and Königer 2012).
Good, efficient infrastructure and a healthy business environment are positively linked to export performance (Portugal-Perez and Wilson
2011).
Improvements in trade facilitation and entry regulations raise export volumes and reduce distortions caused by restrictions on access to
foreign markets (S¸eker 2011).
Public credit registries and private credit bureaus reduce the probability of bank crises, particularly in low-income economies
(Büyükkarabacak and Valev 2012).
Complex tax systems are associated with lower numbers of foreign direct investment in an economy but do not affect its level. A high
corporate tax rate, on the other hand, is negatively related to both the number and level of foreign direct investment. A 10% reduction
in tax complexity is comparable to a 1% reduction in effective corporate tax rates (Lawless 2013).
Improvements in the Doing Business indicators are positively associated with increases in labor productivity in the manufacturing and
services sectors in EU-15 and EU-12 countries, though this association is stronger in EU-12 countries (Dall’Olio and others 2013).

Doing Business indicators such as getting credit, protecting investors and trading across borders are positively associated with product
and process innovation for young firms in non-OECD countries (Dutz and others 2011).
(continued on next page)

33

34

DOING BUSINESS 2014

TABLE 3.2 Summary findings of recent research using Doing Business and related indicators by methodology

(continued)

Methodology

Findings of recent research

Instrumental variable
cross-sectional estimates

One day of delay in transport time reduces trade by at least 1%. The impact of this delay is larger for time-sensitive agricultural and
manufacturing products and for transit times abroad for landlocked economies (Djankov, Freund and Pham 2010).
A 1-day increase in transit time reduces exports by an average of 7% in Sub-Saharan Africa (Freund and Rocha 2011).
Stronger creditor rights increase bank risk-taking and the likelihood of financial crises as well as growth. Sharing information among
creditors, on the other hand, reduces the likelihood of financial crisis and increases growth (Houston and others 2010).
Economies with good business regulatory environments grow faster. Output growth is 2.3% higher for the best quartile in the sample
than for the worst (Djankov, McLiesh and Ramalho 2006).

Other cross-sectional
estimates

Labor reforms can increase employment in the retail sector by 22% and reduce informal economic activity by 33% (Amin 2009).
Import and export costs are highly negatively related to trade volume (Hoekman and Nicita 2011).
Higher effective corporate tax rates are associated with lower investment, foreign direct investment and entrepreneurial activity (Djankov
and others 2010).

The authors also find that start-ups created after reform tend to be smaller, more
likely to be owned by women, headed by
relatively inexperienced and poorly educated entrepreneurs and have lower sales
per worker than start-ups created before
the reform, suggesting that the pre-reform regulatory barriers to entry mattered
mostly for marginal firms.
Excessive entry regulation can be detrimental to entrepreneurship and a source
of corruption. To test this, Dreher and
Gassebner (2013) use panel data for 43
economies from 2003 to 2005. They
find that high numbers of procedures
and high minimum capital requirements
impede firm entry. Furthermore, high
levels of regulation go hand in hand with
corruption. The authors find that corruption is used to “grease the wheels,”
reducing the burdensome impact of regulations.
Using a field experiment in Sri Lanka with
one control and four treatment groups
and offering incentives to informal firms
to formalize, de Mel, McKenzie and
Woodruff (2013) find that providing information on registration or paying for it
do not necessarily increase formalization.
These interventions had a low impact
because many firms that did not register
had informal leases or agreements and
were not able to provide authorities with
the required proof of ownership for the
land where they operated.

Thus business entry regulations cannot
be seen in isolation because the benefits
of improving the start-up process are conditional on many other factors, including
land regulations, taxation and labor regulations. In addition, firms that do not see
the benefits of formalizing are less likely
to respond to policies aimed at improving business registration. This conclusion
is supported by Bruhn and McKenzie
(2013), who survey the current literature
on business entry reforms. Small informal
firms in particular do not seem to benefit
from simpler business entry and are not
more likely to formalize after such policy
interventions.
Overregulated labor markets, like overregulated business entry, can also lead to
a large informal economy and high unemployment because they increase barriers
to formal employment and make markets
too rigid to adjust to changing conditions
in an economy. Amin (2009) examines
this point using data on 1,948 formal retail stores in 16 major states and 41 cities
of India from 2006. Based on cross-sectional regression analysis and controlling
for a large number of factors that affect
unemployment, he shows that labor regulations in India’s retail sector undermine
job creation. He further notes that labor
reforms could increase employment in
the retail sector by as much as 22% for
an average store—a significant effect given that the retail sector is India’s second
largest employer, accounting for more

than 9.4% of the formal jobs. Amin also
shows that labor reforms can shrink the
informal economy by 33%.
Using a theoretical model where a few
large firms account for a disproportionate
share of economic activity and calibrating this model with Doing Business data,
di Giovanni and Levchenko (2013) show
that reducing entry costs to levels similar to those in the United States improves
welfare as measured by real income per
capita by 3.3%. One of the study’s main
assumptions is the distribution of firm
size. In economies where large firms do
not account for a disproportionate share
of economic activity (which is more likely in developing economies), gains from
lowering entry barriers−such as those
measured by Doing Business—are likely to
be larger.

TRADE REGULATIONS AND
COSTS
As the world’s economies have become
more interlinked, both public and private
sectors have become increasingly concerned about becoming more competitive
in global markets. But in many economies,
companies engaged in international trade
still struggle with high trade costs arising
from transport, logistics and regulations,
impeding their competitiveness and preventing them from taking full advantage
of their production capacity. With the

RESEARCH ON THE EFFECTS OF BUSINESS REGULATIONS

availability of Doing Business indicators on
trading across borders—which measure
the time, procedural and monetary costs
of exporting and importing—several empirical studies have assessed how trade
costs affect the export and import performance of economies.
Hoekman and Nicita (2011) use
cross-sectional data from 105 economies in 2006 and a gravity-type regression model that controls for logistics
quality and several tariff and nontariff
costs to show that import and export
costs are highly negatively related to
trade volume. Similarly, Djankov, Freund
and Pham (2010) assess the impact of
time delays in exporting on aggregate
bilateral trade volumes in 98 economies
in 2005 using instrumental variable
analysis to identify the causation between time delays and trade volumes.
As an instrumental variable they use
landlocked economies and their export
delays in neighboring economies during
the transport of their containers to ports.
The intuition here is that trade volumes
of an economy are less likely to affect
transit times in neighboring economies
because they account for a small share
of trade in those economies. The authors
show that, on average, each day of delay
reduces trade by at least 1%. They also
find a larger effect on time-sensitive agricultural and manufacturing products and
on transit times abroad for landlocked
economies.
Portugal-Perez and Wilson (2011) use
panel data from 101 developing economies between 2004 and 2007 to assess
how infrastructure, border and transport
efficiency and the business environment
affect export performance. Border and
transport efficiency is measured by a
Doing Business indicator on the number
of days and procedures it takes to export and import in an economy, while
the measure of the business environment
combines various institutional indicators
including government transparency, corruption, public trust in government, government favoritism for well-connected
firms and irregular payments for exports
and imports. After controlling for country
fixed effects and several other factors affecting export performance, the authors
find that good infrastructure, transport
and port efficiency and a healthy business

environment are associated with strong
export performance.
This conclusion is supported by studies
on Sub-Saharan Africa and other developing economies. Using cross-sectional
data for Sub-Saharan economies, Freund
and Rocha (2011) investigate whether
3 types of export costs—time spent on
inland transit, customs and ports, and
documents—have different effects on
bilateral exports. To control for the potential impact of export volumes on each
type of export cost, and to establish causality between export costs and volumes,
the authors use instrumental variable
analysis for landlocked economies. Each
component of export costs listed above
is instrumented with the corresponding
variable faced by exporters in the transit
economy. For example, time spent on
exports during inland transit is instrumented by time spent on inland transit in
neighboring economies to take containers
to ports. The assumption is that export
costs incurred in neighboring economies
are less likely to be affected by the export
volumes of exporting economies.
The authors also separate the impacts of
two sets of inland transit time: distance to
ports and congestion costs such as border delays, road security, fleet class and
competition. Inland transit has the largest
negative impact on exports, especially congestion costs. A 1-day increase in
transit time reduces exports by an average of 7% in Sub-Saharan Africa, which
donors should consider when crafting
“aid for trade” policies in Africa and elsewhere. In a related study, Busse, Hoekstra
and Königer (2012) use panel data from
2004 to 2009 for 99 developing economies, including 33 of the least developed
ones, to show that regulatory improvements are linked to lower trade times and
financial costs.
Different types of regulations, not just
for trade, can help reap the benefits of
international trade. Şeker (2011) focuses on the links between export volumes
and regulations on trade and entry. The
analysis uses two Doing Business indicators—time to export and number of procedures required to start a business—for
137 economies between 2005 and 2007.
Şeker finds that improvements in trade
facilitation and entry regulations raise

export volumes and reduce distortions
caused by restrictions on access to foreign markets. These findings suggest that
investment climate reforms help economies respond to export opportunities.
Chang, Kaltani and Loayza (2009) use
Doing Business indicators on labor market flexibility and firm entry and exit to
analyze how regulatory reforms supporting open trade affect economic growth.
They find that increasing trade openness
has larger effects on growth when labor
markets are more flexible—making it easier for firms to adjust to changing conditions—and firms can enter and exit markets more easily.

REGULATIONS ON COURTS,
CREDIT MARKETS,
BANKRUPTCY LAWS AND
INVESTOR PROTECTION
Courts, credit markets, bankruptcy laws
and investor protection are among the
regulatory areas covered by Doing Business that have received less attention
in most developing economies when it
comes to the number of reforms. Recent
empirical work provides eye-opening evidence on these issues.
Visaria (2009) uses project loan data
for 1993–2000 from a large private bank
with branches throughout India to assess
how debt recovery rates were affected by
debt recovery tribunals introduced by India in 1993 to shorten debt recovery suits
and strengthen the rights of lenders to
recover assets of defaulting borrowers. To
isolate the effect of the tribunals on debt
repayments, Visaria analyzes loan repayments in states that had the tribunals
relative to states that did not, covering
the same period and controlling for stateand industry-specific characteristics. Her
analysis finds that the tribunals reduced
nonperforming loans by 28%, implying
that faster processing of debt recovery
suits cuts the cost of credit (figure 3.1).
In another study on debt recovery tribunals in India, Lilienfeld-Toal, Mookherjee
and Visaria (2012) use firm-level panel
data for 1993–2000 and take into account the elasticity of credit supply and
the asset size of borrowers. They show
that the tribunals caused a reduction in

35

36

DOING BUSINESS 2014

the borrowing and fixed assets of small
firms but an increase in the borrowing,
fixed assets and profits of large firms. The
reason is that interest rates increased after the tribunals making it harder for small
firms to apply for large loans given that
they had insufficient collateral.
In the majority of the world economies
movable assets are less likely to be accepted as collateral for loans than immovable assets limiting the access of
small firms to finance. A study on this
point is provided by Love, Martinez-Peria
and Singh (2013) who examine the impact of the introduction of movable assets as collaterals on firms’ access to
bank finance using data from Enterprise
Surveys and Doing Business indicator on
collateral registries for movable assets
in 73 countries between 2002 and 2011.
Their difference-in-difference estimation
that compares firms’ access to finance
over time and across countries with and
without such registries reveals that in
countries introducing movable assets as
collaterals the number of firms with access to finance increased by around 8%.
They also show that the benefits of the
introduction of these registries are larger
for smaller firms.
Cavalcanti (2010) present theoretical and
empirical analyses of the complementary effect of financial shocks and credit
market imperfections on macroeconomic
volatility using data for 62 economies between 1981 and 1998. They measure credit market frictions by using Doing Business
indicators on contract enforcement costs
and anti-creditor bias. In contrast to the
widely held view that the impact of financial shocks on macroeconomic volatility
increases with credit market frictions, the
authors’ theoretical model shows that the
effects of financial shocks can increase or
decrease with credit market frictions, depending on the source and initial level of
such frictions. Their panel data analysis—
which instruments indicators on contract
enforcement costs and anti-creditor bias
with their past values to establish a causal link between them and macroeconomic
volatility—shows that in economies with
fewer credit market frictions, reductions
in both contract enforcement costs and
anti-creditor bias dampen the impact of
financial shocks on macroeconomic volatility. But in economies with extensive

FIGURE 3.1 For all loan amounts, the probability of timely repayment was higher after
India established debt recovery tribunals
Probability installment paid within 180 days

0.7
0.6
0.5
0.4
0.3
0.2
0

1

2

3

4

Amount overdue (millions of rupees)
After tribunals

Before tribunals

Note: The figure plots the probability of loan repayments before and after the Indian government created debt
recovery tribunals in 1993 to reduce the time taken to resolve cases.
Source: Visaria 2009.

credit market frictions, a reduction in
anti-creditor bias actually increases the
impact of financial shocks on macroeconomic volatility.
Credit reporting systems reduce information asymmetries in financial markets.
Giannetti and Jentzsch (2013) use panel
data for 172 economies between 2000
and 2008 to test how credit reporting
and identification systems affect financial
intermediation. They use a more sophisticated method than standard panel data
analysis by creating a synthetic control
group that is intended to consist of countries as similar as possible to those that
did not implement credit reporting and
identification system reforms. The authors find that mandatory credit reporting
systems improve financial intermediation
and access, particularly when used in
conjunction with credit information systems.
Credit information systems can also reduce the likelihood of bank crises because
they reduce information asymmetries
between banks and borrowers, enabling
banks to make better lending decisions.
In addition, they increase the probability
of loan repayments because bad credit histories make it harder for borrowers
to obtain future loans. Büyükkarabacak
and Valev (2012) use panel data from
98 economies for 1975 to 2006 to study
how sharing credit information affects the

likelihood of bank crises. They find that
the existence of public registries, private
bureaus or both reduced the probability
of bank crises, particularly in low-income
economies.
Houston and others (2010) reach similar
conclusions. The authors merge data for
2002 to 2007 from nearly 2,400 banks
in 69 economies with Doing Business
indicators on creditor rights and credit information sharing. Based on both
cross-sectional and instrumental variable
regression analyses that use legal origins
(English, French, German and Nordic) as
instrumental variables for the creditor
rights and credit information sharing indicators, they find that stronger creditor
rights increase bank risk-taking and the
likelihood of financial crises. But stronger
creditor rights are also associated with
higher growth. On the other hand, sharing information among creditors always
seems to have positive effects—reducing
the likelihood of financial crisis and raising economic growth.
Laws and regulations that protect investors and help them quickly resolve
issues related to their businesses can be
crucial for business creation and survival because they encourage investment,
facilitate smooth business operations
and help viable firms recover if they become insolvent. John, Litov and Yeung
(2008) provide an interesting analysis

RESEARCH ON THE EFFECTS OF BUSINESS REGULATIONS

Therefore, the higher the degrees of diminishing returns to scale (the lower the
returns to scale from unity) the higher the
impact of entry costs on unemployment.

FIGURE 3.2 Higher entry costs and lower recovery rates are associated with higher
unemployment rates

Unemployment rate

0.20
0.15

TAX REGULATIONS

0.10
0.05
0

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

Administrative entry costs (share of output per capita)

Unemployment rate

0.20
0.15
0.10
0.05
0

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

Recovery rate

Source: Janiak 2013.

of investor protection. They investigate
the relationship between laws and regulations protecting investors, risk-taking
and economic growth using firm and national data for 39 economies from 1992
to 2002. Investor protection is measured
by variables including the rule of law, disclosure standards and shareholder rights
that include minority shareholders. The
findings of their instrumental variable
panel data regression analysis, which
instruments firms’ risk-taking by a logarithm of initial assets, disclosure, rule of
law and anti-director rights index, show
that corporate risk-taking and growth are
positively affected by the quality of investor protection, supporting the proposition
that protecting investors promotes entrepreneurial activity and economic growth
because it enables entrepreneurs to make
risky but high value added investments.
To investigate the relationship between
efficient bankruptcy laws and recovery
rates among economically viable firms,
Giné and Love (2010) use data on a large
number of firms that filed for bankruptcy in Colombia between 1996 and 2003
and analyze how a 1999 reform in bankruptcy laws affected recovery rates. Their
analysis, which compares the length of

Tax regulations are one of the most contentious topics in public policy and economics and have prompted a large body
of theoretical and empirical work investigating the effects of high tax rates and
cumbersome and complex tax codes and
procedures. Though determining the optimal tax system is difficult because different economies need different systems
to maximize their welfare, there is less
uncertainty—from both theoretical and
empirical perspectives—about the distortionary effects of high taxes and cumbersome tax systems.

reorganization and liquidation cases before and after the reform, finds that the
reform significantly improved the recovery rate of viable firms.
Janiak (2013) uses a theoretical model
calibrated using Doing Business data to assess the impact of firm entry and exit regulations on unemployment. He finds that
firm exit regulations explain half of the
unemployment gap between continental
Europe and the United States. These findings are based on the assumptions that
there is perfect competition in the market,
the degree of returns to scale is 0.85 and
firms buy fixed capital on entry, some of
which is sunk because of exit regulations.
Janiak also finds that when the degree of
returns to scale is lower, regulation explains more of the unemployment gap
and entry regulations become more influential than exit regulations (figure 3.2).
This is because when entry costs are high,
firms need to earn more profit to recover
those costs by increasing their size. However, when there are decreasing returns
to scale (i.e. returns to scale below unity),
the marginal product of labor and capital
will fall as firms expand, causing firms to
decrease their demand for labor, which
in turn will increase unemployment.

Djankov and others (2010) examine
how effective corporate tax rates affect
entrepreneurship and investment using
cross-sectional data from 85 economies
in 2004. The authors collected the corporate income tax data based on a standardized case study used for the paying taxes
indicator of Doing Business. They find that
higher effective corporate tax rates are
strongly associated with lower aggregate
investment, foreign direct investment and
entrepreneurial activity (figure 3.3).
Lawless (2013) investigates the impact
of high corporate tax rates and tax complexity on foreign direct investment in 57
economies. Using panel data regression
analysis and controlling for a wide range
of factors affecting such investment, she
finds that complex tax systems are associated with fewer—but not smaller—foreign direct investments. A high corporate
tax rate, on the other hand, is negatively
associated with both numbers and size
of foreign investments. Lawless shows
that a 10% reduction in tax complexity is
comparable to a 1% reduction in effective
corporate tax rates in terms of its effect
on foreign direct investment.
Monteiro and Assunção (2012) examine
the effect on the formal economy of a tax
reform, called SIMPLES, that reduced the
number of taxes and tax procedures for
micro and small firms in Brazil. Based on a
cross-sectional survey of firms in Brazilian

37

DOING BUSINESS 2014

living standards in economies with flexible regulatory environments but not in
those with rigid regulatory environments.
They also show that business regulation
is more important than financial development, higher education enrollment or rule
of law for complementing trade liberalization. In addition, the authors find that
a 1% increase in trade is associated with
more than a 0.5% increase in income per
capita in economies with flexible entry
regulations, but has no positive income
effects in more rigid economies.

FIGURE 3.3 Higher effective tax rates are associated with lower business density
15
Business density per 100 people

38

10

5

0
0

10

20

30

40

1st year effective tax rate

Source: Djankov and others 2010.

state capitals and metropolitan areas, the
authors estimate the impact of SIMPLES
on formal business licensing through natural experiments that compare firms eligible to benefit from the reform and those
that are not. Their finding that business
licensing among retail firms rose by 13%
after SIMPLES was enacted is robust to a
series of sensitivity tests—indicating that
tax simplification helps expand the formal
economy.

BUSINESS REGULATORY
ENVIRONMENT AND OVERALL
ECONOMIC PERFORMANCE
The research reviewed so far was about
the effects of different business regulations on intermediate outcomes. But
it is also important to know whether
strengthening the business regulatory environment has a significant impact on the
overall economic performance of firms
and economies, through for example its
effect on growth rate of output, productivity and innovation. A number of studies
have assessed how much a good business
regulatory environment, as measured
by aggregate Doing Business, matters for
economic growth, higher productivity and
innovation.
Djankov, McLiesh, and Ramalho (2006)
shed some light on this issue using
cross-sectional data from 135 economies
covering the period from 1993 to 2002
and instrumenting business regulation
indicators with their legal origins (English,

French, German, Nordic and socialist),
the main religion in the economy (Catholic, Muslim, Protestant or other), percentage of English-speaking population,
initial income per capita and geographic
latitude. They find that economies with
good business regulatory environments
grow faster and that output growth is
2.3% higher for the best quartile in the
sample than for the worst.
Dall’Olio and others (2013) provide further
insight on links between the business environment and growth. Using the aggregate
Doing Business indicator and its sub-indexes, such as construction permits, trading
across borders, paying taxes and employing workers, they investigate whether
structural or firm-specific characteristics
contributed more to labor productivity
growth in the European Union between
2002 and 2008. Panel data analysis found
that improvements in the Doing Business
indicators are positively associated with
increased labor productivity in manufacturing and services in EU-15 and EU-12
countries, though the magnitude of this
association is larger in EU-12 countries.3
Freund and Bolaky (2008) draw on data
for 126 economies between 2000 and
2005 and use predicted trade, generated from a regression of bilateral trade
on distance, as an instrument for trade
openness to establish the direction of
causality from Doing Business indicators—
covering areas including business entry,
labor and property registration—to openness. They find that trade leads to higher

Using World Bank Enterprise Surveys
data from a large number of manufacturing firms between 2002 and 2006 in 71
economies, Dutz and others (2011) show
that the aggregate Doing Business indicator, as well as its sub-indexes (including
getting credit, protecting investors and
trading across borders), are positively
associated with product and process innovation for young firms in non-OECD
countries. Based on their findings, the authors emphasize the importance of business environment in spurring incentives
for competition and innovation.
The literature has shown that entry costs
increase the size of the informal economy and decrease job creation, which are
likely to hurt economic performance.
Barseghyan (2008) investigates how entry costs affect output and productivity
using Doing Business data on entry costs
for 97 economies and instrumental variable estimation. He instruments entry
costs by geographic latitude, share of the
population speaking a major European
language, European settler mortality rates
in the early stages of colonization and indigenous population density in the early
16th century. Barseghyan shows that
higher entry costs significantly reduce
output per worker by lowering total factor
productivity. He finds that an increase in
entry costs of 80% of income per capita decreases total factor productivity by
22% and output per worker by 29%.
On a related issue, Amiti and Khandelwal (2011) examine how improvements in
business regulatory environment, measured by aggregate Doing Business, affect
the quality upgrading of products based
on disaggregated data from 56 economies for 10,000 products. The authors
use panel data regression analysis and a

RESEARCH ON THE EFFECTS OF BUSINESS REGULATIONS

natural experiment to investigate how the
regulatory environment and import competition affect product quality upgrading
in economies that are OECD members
and those that are not. For OECD members the authors find that import competition leads to much smaller quality
upgrading in economies with more cumbersome regulations. In non-OECD economies import competition does not lead
to any quality improvements if regulations
are more cumbersome. These findings
suggest that reforms might be needed for
import competition to improve product
quality because of impediments created
by bureaucratic red tape, nontariff barriers and other entry regulations.

CONCLUSION
The empirical work reviewed in this chapter provides evidence that cumbersome,
poorly functioning regulatory business environments undermine entrepreneurship
and the economic performance of firms
and economies. They do so by, for example, impeding entry to production and
labor markets, which promotes the informal economy and unemployment, and by
making trading, accessing credit markets
and resolving legal issues more expensive
for businesses. Thus efforts to promote
economic and social development should
focus on formulating policies that make
business regulatory environments work

for entrepreneurs and small and medium-size firms—and not obstruct their creation, productivity and competitiveness.
These results are encouraging, showing
the relevance of the policy reforms in the
areas measured by Doing Business. But
further research is needed. For instance,
although empirical research provides ample evidence for positive links between
better business regulations and economic performance, more rigorous research
is needed to better understand whether
and to what extent the former causes
the latter. Some of the most convincing
evidence to date comes from natural
experiments, which have focused mostly on firm entry regulation. Other areas
of business regulations—such as trade,
taxation, labor markets, credit markets
and protecting investors—would benefit
greatly from future research using similar
techniques. Furthermore, given that only
a handful of studies separate out the impact of business regulatory environment
on the overall performance of economies,
such as economic growth, productivity
and investment, more research on these
issues would substantially enhance our
understanding of the multifaceted relationships between business regulations,
economic performance and development.
Policymakers contemplating business
regulatory reforms should consider designing these reforms and their

implementation in ways that lend themselves well to empirical analysis of their
effects, so that they can better understand whether their reforms are leading
to desired outcomes. This may consist of
(i) collecting careful baseline and followup data, and (ii) deliberately deciding to
phase in reforms for different groups of
users, perhaps even randomly selecting
locations in which reforms will be piloted, in order to be able to draw conclusions about the causal impacts of their
reforms.

NOTES
1. Based on searches for citations in the 9

background papers that form the basis for
the Doing Business indicators in the Social
Science Citation Index and Google Scholar
(http://scholar.google.com).
2. The only exception to this rule is that Djankov, McLiesh and Ramalho (2006) is included in the review although it was published
more than five years ago, given that it is one
of the few studies examining the impact of
overall regulatory business environment on
economic growth.
3. The EU-12 are those that have joined the
European Union since 2004: Bulgaria, Cyprus, the Czech Republic, Estonia, Hungary,
Latvia, Lithuania, Malta, Poland, Romania,
the Slovak Republic and Slovenia. The EU-15
consists of Austria, Belgium, Denmark,
Finland, France, Germany, Greece, Ireland,
Italy, Luxembourg, the Netherlands, Portugal,
Spain, Sweden and the United Kingdom.

39

Why are minimum capital
requirements a concern for
entrepreneurs?
Minimum capital requirements significantly slow entrepreneurship.1 Such requirements also fail to serve their intended purpose of protecting consumers and
creditors from hastily established and
potentially insolvent firms. In recent years
many governments have stopped requiring new businesses to deposit minimum
capital in banks or with notaries before
they can begin operations.
What is a minimum capital requirement?
It is the share capital that must be deposited by shareholders before starting business operations. For the Doing Business
starting a business indicator the paid-in
minimum capital is usually the amount
that an entrepreneur needs to deposit in
a commercial bank or with a notary when,
or shortly after, incorporating a business,
even if the deposited amount can be
withdrawn soon after a company is created.2 In most cases this required amount
is specified in an economy’s commercial
code or company law.3 Research shows
that the existence of a minimum capital
requirement directly hinders business development and growth.4
Of the 189 economies studied in Doing Business 2014, 99 have no minimum
capital requirements. Some economies
never required firms to deposit money
for incorporation, while 39 have eliminated minimum capital requirements in the
past seven years. Armenia, Belarus, Bulgaria, Denmark, Kosovo, the Republic of
Korea, the Kyrgyz Republic and the United Kingdom are among these economies
that have cut or eliminated such requirements. For instance, Belarus halved its
minimum capital requirement for private
limited liability companies in 2008, then
abolished it a year later. In 2009 Bulgaria
reduced its minimum capital requirement
by 99%, to less than $2. That same year,

Denmark slashed its minimum capital requirement for limited liability companies
from about $22,000 to about $14,000.
All of these changes lower the costs to
entrepreneurs to operate in the formal
sector. The other 90 economies still require entrepreneurs to deposit capital before registering a business. This amount
varies greatly—from €1 in Germany to
more than $58,000 in Myanmar.

WHERE IS THE MINIMUM
CAPITAL REQUIREMENT MORE
PREVALENT?
Across regions, minimum capital requirements are lowest in Europe and Central
Asia, Latin America and the Caribbean
and OECD high-income economies (figure 4.1). In Latin America and the Caribbean only 10 of 32 economies require
new businesses to deposit minimum
capital, with the Dominican Republic imposing the most—almost half of income
per capita, or about $2,500. Still, most
of the 10 economies that had enforced
capital requirements keep them low. In
Suriname it is about $30—0.4 percent
of income per capita—and in Bolivia it is
$40, equivalent to 1.8 percent of income
per capita. And in the past 10 years other
economies in the region, such as Mexico,
St. Kitts and Nevis, and Uruguay, have
eliminated minimum capital requirements altogether.
Among OECD high-income economies,
Austria and Slovenia have the highest
minimum capital requirements, asking
entrepreneurs to commit more than 40%
of gross national income per capita. In
Sub-Saharan Africa 13 economies have
minimum capital requirements exceeding
200% of income per capita. An extreme
example is Niger, where the minimum

• Across regions, minimum capital
requirements are lowest in Europe
and Central Asia.
• Of the 189 economies studied in
Doing Business 2014, 99 do not have
minimum capital requirements for
firms. Some economies have never
had them, while 39 have eliminated
them in the past seven years.
• Minimum capital requirements
are comparatively higher in lowincome economies.
• Paid-in minimum capital is often
a fixed amount that does not take
into account firms’ economic
activities, size or risk related to
their activity.
• Higher minimum capital
requirements are associated with
less access to finance for small and
medium-size firms.
• Higher minimum capital
requirements are associated with
weaker regulations on minority
investor protections and tend to
enable the informal economy.


Documentos relacionados


Documento PDF db14 full report
Documento PDF your 100 free home business
Documento PDF economy and business terms charlie your teacher of english
Documento PDF analyzing soviet defense programs 1951 1990
Documento PDF greg secker secrets of a forex millionaire trader
Documento PDF 1 list of financial terms


Palabras claves relacionadas