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Doing Business 2010: Reforming through Difficult Times

Ryan Hahn's picture

DB10_FrontCover Yup, it's that time of year again...Doing Business 2010 has just been released (at precisely 9/9/09 at 00:09 GMT, no snickers please). The widely cited rankings from the report are now publicly available, and perhaps one of the most important results this year is that Rwanda has been ranked the top reformer, the first time for a Sub-Saharan African economy.

One other headline from the report caught my attention. More governments reformed this year than in any year since 2004 (the first year of Doing Business). And much of this reform occurred in low- and lower-middle income economies. The financial crisis and its impact on the global economy clearly haven't reduced the commitment of governments in the developing world to improving their business environments. 

Here are a few more highlights from the report:

Since 2004 Doing Business has been tracking regulatory reforms aimed at improving the ease of doing business. Despite the challenges presented by the financial crisis, the number of reforms hit a record level this year. Between June 2008 and May 2009, 287 reforms were recorded in 131 economies, 20% more than the year before. Reformers focused on making it easier to start and operate a business, strengthening property rights and improving the efficiency of commercial dispute resolution and bankruptcy procedures.

Two regions were particularly active this year: Eastern Europe and Central Asia and the Middle East and North Africa. In Eastern Europe and Central Asia, 26 of the region’s 27 economies reformed business regulation in at least one area covered by Doing Business. Governments in the Middle East and North Africa are reforming at a similar rate, with 17 of 19 reforming in 2008/09. In both cases, competition among neighbors helped inspire widespread reform.

Here is an overview of the report. Here are the complete rankings of all 183 economies. And for fellow bloggers out there, here is a page with the most important figures from the report that can be freely copied. 

Comments

Allow me to comment with regard to the critique DB has faced over the last years: From my point of view DB2010 shows improvement in one area: It clearly states what it does not cover with regard to the investment climate of a country. Factors affecting an entrepreneur's decision to invest go far beyond of what is measured in DB. Chapeau for that! But, DB2010 remains astonishingly silent on other points, which were frequently criticised. Two key points are: 1) Employing Workers Indicator: Ok, "wage premiums for night and weekly holiday work up to a threshold are no longer considered a restriction", but still this indicator in general benefits countries that are regulating less. E.g. countries cannot achieve the best score if paid annual vacation is more than 21 working days. Where do this and other thresholds come from? 2) Paying Taxes Indicator: the fact that the tax rate is still included is inexplicable. This is against the logic of the report to measure the costs of bureaucracy, not tax rates. Taxes are collected to finance public goods, thus there may be good reasons for differing rates. Seeing that four natural resource rich economies (Qatar, UAE, Saudi Arabia and Oman) and two small islands states (Maldives and Kiribati) are in the Top 10 I guess this issue needs no further explanation. So, DB2010...old wine in new skins. That is at least how I would review the report.

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