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Doing Business: An Independent Evaluation

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businesswomanHighlight: Can a Civil Law Country Succeed in a "Doing Business" World?  
Having a civil law regime does not prevent a country from scoring well on the DB rankings...  MORE >

The Doing Business (DB) Indicators are the Bank Group's well-known tool for comparing the business regulatory environments of 178 countries.

This independent evaluation recommends significant changes to the indicators, including:
  • be clearer about what the indicators do and don't measure

  • disclose the changes made to published data and their effect on the rankings

  • recruit more informants

  • simplify the 'paying taxes' indicator

What Are the World Bank / IFC Doing  Business Indicators and Their Components?
(mouse over an indicator to explore)
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1The Bank Group, by prominently recognizing DB's highly ranked countries, may be inadvertently signaling that it values reduced regulatory burdens more than other development goals. The Bank Group's approach entails helping countries achieve a wide range of objectives, yet it has no comparable way of celebrating improvements in other important development outcomes.

2 Cross-country ranking can be effective in spurring dialogue and motivating interest and action. It could be applied to other development issues — those for which actionable indicators can serve as proxies for the target outcomes and for which the direction of improvement is uniform for all countries.

lockFinding: Scope
The DB inidcators exercise is anchored in research that links characteristics of a country's business environment to firm performance and macroeconomic outcomes. As an exercise in cross-country comparison, DB is not intended to, and cannot, capture country nuances. The indicators have been highly effective in drawing attention to the burdens of regulation. Reform as measured by the DB indicators typically means reducing regulations and their burden, irrespective of their potential benefits.

The Bank Group and stakeholders need to consider the indicators in a country context and interpret them accordingly. DB should be clear about the limitations of the indicators and their use for a broader policy dialogue on a country's development priorities

lockFinding: Information Sources
The information about laws and regulations is provided by a worldwide network of expert informants. But there are few informants – mostly lawyers -- for each indicator in each country. For the 'paying taxes' indicator, DB relies exclusively on a single firm to provide both the underlying methodology and the data for 142 countries.

The DB team should take a strategic approach to selecting and increasing the number of informants:

  • Establish and disclose selection criteria for informants.
  • Focus particular effort on the indicators with fewest informants and countries with the least reliable information.
  • Formalize the contributions of the supplemental informants by having them fill out the questionnaire.
  • Involve Bank Group staff more actively to help identify informants.

lockFinding: Transparency
The DB makes ongoing changes to previously presented data. For instance, there were over 2,200 changes between August and October 2007 to the posted 2007 data. These altered the published rankings for 48 countries by 10 or more positions. Although DB makes available a great deal of information about its data and methods, it remains insufficiently transparent about the number and types of informants for each indicator and the changes made to previously published data and their effects on the rankings.

The DB web site should disclose all data corrections and changes as they are made, explaining their effect on the rankings. To facilitate research, the web site should offer a link to previously published datasets. DB should also disclose the number of informants for each indicator at the country level.

lockFinding: Reform Influence
The DB indicators have been highly effective in drawing attention to the burdens of business regulation. They have motivated discussion among policy makers, but have had less influence on the choice, scope, and design of reforms. Policy makers and Bank Group staff report that they draw on a range of analytical material to determine the nature, sequence, and direction of reforms. As a cross-country benchmarking exercise, DB cannot be expected to capture the country-specific considerations involved in prioritizing, sequencing, and designing policy reforms.

key Recommendation
To make its reform analysis more meaningful, the DB team should:

  • Make clear that DB measures improvements to regulatory costs and burdens, which is only one dimension of any overall reform of the investment climate.
  • Trace the impact of DB reforms at the country level: The DB team should work with country units to analyze the effects of implementing the reforms measured by the DB (such as revised legislation or streamlined processes) on: (i) firm performance, (ii) perceptions of business managers on related regulatory burdens, and (iii) the efficiency of the regulatory environment in the country.


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wrenchFirst, the DB process establishes cardinal values for each subindicator: time, costs, number of procedures, and so on. On the basis of these values, countries are ranked on each subindicator. The subindicator rankings are averaged to come up with an indicator-level ranking. The 10 indicator rankings are then averaged to generate the overall 'ease of doing business' ranking.   


box gray Video: Interview with Victoria Elliott,  Doing Business Evaluation
Team Leader

box gray Video: Evaluation Launch

box gray Presentation:  Taking the Measure of the Doing Business Indicators: An Independent Evaluation

additonal links

box grayThe Underlying Framework of the DBI 
box grayMethodology and Data Reliability  
box grayMotivating Designing Reforms 
arrowhighlight.gifVisit the Doing Business website 
blue_arrow.gifImproving the Investment Climate in Developing Countries - German Development Institute

Media coverage of this evaluation
mediaBank's Indicators Put to Test, Oxford Analytica, July 1, 2008

Ease of Doing Business at World Bank, Arvind Panagariya, Economic Times, June 26, 2008


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