Does Doing Business suck?

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The last couple of days have seen ample discussion of the Doing Business indicators, with most commentators gratifyingly complimentary.

But not everyone is persuaded. Robert Lawson at Division of Labour, for instance, also wants to improve the business environment but prefers surveys of businessmen to the Doing Business methodology.

So a word about what the Doing Business indicators aim to do. The World Bank is trying to relieve poverty, which in this case means persuading and advising governments to cut senseless red tape and improve the quality of economic institutions. Whatever merits a survey of businessmen may have, it will not tell a reformer what to do. A survey which says that Redtapia's courts do not respect contracts is of limited help.

What Doing Business will tell reformers about - say - contract enforcement is:
- Which procedures are causing the delays;
- Specifically, which laws or regulations would need to be changed to improve things;
- Which other countries have better alternatives.

Incidentally - but importantly - because the Doing Business numbers are based on a close reading of the laws, coupled with detailed discussions with experts, they can actually be proved wrong, and on a few occasions have been shown to be wrong. That's a valuable check on the data. A survey result is 'not even wrong' - how could the result be challenged?

Chapter 1 of Doing Business in 2004 is excellent on these issues, and I can say that with a clear conscience because it was written before I had anything to do with the report.

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