The right place at the right time: Why business location matters for firm success

In today's digital age, the physical location of a company remains crucial to its success. This blog aims to share the often-overlooked insight, supported by data from the World Bank’s Business Ready Project (B-READY), that business location significantly influences access to customers, transportation networks, labor pools, regulatory compliance requirements, and environmental commitments. Understanding this is crucial as it underscores how strategic location decisions can boost firm performance and foster private sector development across economies.
 

How B-Ready Measures Business Location: Key Dimensions

What Makes Business Location Friendly Economies Different

B-READY analyzed 50 economies on property registration, building permits, and environmental clearances, in the Business Location topic assessing regulatory effectiveness, governance quality, and service delivery efficiency. The data finds that economies performing well in Business Location topic share traits like strong property rights, efficient land administration, and streamlined building permits. For example, Georgia excels with a score of 83.01 out of 100 points, while Estonia benefits from advanced e-government systems with a score of 80.40. In contrast, Gambia scores lower at 33.4, facing challenges in balancing oversight with service efficiency. These results highlight the specific attributes that contribute to a favorable business location, identifying what makes certain economies more business friendly.

Public Services Delivery: Digitalization, Transparency, and Interoperability

Digital service delivery is transforming public services related to business location, with about 80% of surveyed economies offering digital services for property registration, building permits, or environmental clearances. Europe and Central Asia lead in digital service delivery with countries like Estonia and Georgia implementing comprehensive digital solutions. This transformation is highly relevant as it demonstrates the significant impact of digitalization on business location.  

Regional performance varies, with Sub-Saharan Africa showing the most room for improvement. Countries like Costa Rica, Estonia, New Zealand, and Rwanda showcase how a sustained and systematic effort can drive the digital transformation of public services. All these countries offer online platforms for property transfer, for submitting building and environmental permits applications. Moreover, Rwanda has implemented a digital platform that allows users to submit online complaints and suggestions for improving services at the immovable property registry and the cadaster/mapping agency. 

Countries generally perform better in the category of transparency of information, with Costa Rica leading, followed closely by Estonia and Rwanda. These countries have made requirements, procedures, and fee schedules readily accessible to the public. However, countries like Timor-Leste and Chad struggle to make basic information available. Effective public service delivery relies on interoperable services among agencies, such as sharing property transaction data between land registries and cadasters and making spatial plans and zoning requirements accessible to construction stakeholders. This transparency reduces non-compliance risks and streamlines project implementation. Estonia and Rwanda excel in integrating property registries with cadastral agencies and linking building permit platforms with zoning and land use databases.

The data reveals a divide in implementation approaches: top performers use unified databases combining legal and geographical information, while countries like Costa Rica and Singapore take a gradual approach, focusing on property transfer integration first. Countries struggling with interoperability face challenges in technical implementation, coordination between government agencies, and standardizing data formats across systems. Achieving high interoperability requires both technological sophistication and strong institutional coordination with a clear vision for integrated service delivery.
 

Driving Forces Behind Performance

Data analysis reveals a strong connection between regulatory frameworks and public service delivery, with a correlation of 0.78. Well-designed regulations tend to offer more transparent and accessible services to businesses. These insights show that when regulations clearly spell out requirements for online services or mandate transparent fee schedules, government agencies tend to deliver better services.

For example, regulations requiring digital submission of building permits or transparent property registration processes often lead to the development of user-friendly online platforms and better information access.

This creates a positive cycle where better regulations lead to improved service delivery, which in turn makes it easier to implement and refine regulations. Countries that excel in one area often perform well in the other, suggesting that improvements in regulatory quality and service delivery go hand-in-hand. These observations demonstrate the interconnectedness of regulatory frameworks and public service delivery, providing new and interesting insights into how improvements in one area can drive progress in another.

Conclusion

Economies prioritizing effective public service delivery and transparency enable firms to better navigate property registration, building permits, and environmental clearances. Investments in service quality—through digital platforms, streamlined processes, or improved information access—benefit businesses and enhance regulatory compliance. Policymakers should prioritize transparent, predictable, and user-friendly processes and systems to improve business location services. Digital transformation fosters efficiency and compliance, creating a cycle of improvement. Strong public service delivery, alongside regulatory oversight, is key for attracting and retaining business in a competitive global landscape. These findings are valuable and significant as they offer actionable recommendations for policymakers to enhance business environments and drive economic growth.