Ease of Doing Business Report [World Bank] – UPSC

In this article, You will read Ease of Doing Business Report by World Bank – for UPSC IAS.

Ease of Doing Business Report (EoDBR)

Ease of Doing Business Report (EoDBR) is published by the World Bank.  In the EODB index, ‘higher rankings’ (a lower numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.

The report was introduced in 2003 to provide an assessment of objective measures of business regulations and their enforcement across 190 economies on ten parameters affecting a business through its life cycle.

The key highlights of the Ease of Doing Business Report are given below:

  • The World Bank Publishes this report Every year. The index has been created to evaluate the impact of the economic policies/reforms implemented by the government in the respective countries to promote and make it easier to do business.
  • This report is published after evaluating the performance of countries under the 10 parameters.
  • Empirical research from government officials, lawyers, business consultants, accountants, other professionals is done in order to collect the data for the performance of these countries.

The report measures the performance of countries across 10 different parameters namely –

  1. Starting a business – Procedures, time, cost, and minimum capital to open a new business
  2. Dealing with construction permits – Procedures, time, and cost to build a warehouse
  3. Getting electricity – procedures, time, and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse
  4. Registering property – Procedures, time, and cost to register commercial real estate
  5. Getting credit – Strength of legal rights index, depth of credit information index
  6. Protecting investors – Indices on the extent of disclosure, the extent of director liability, and ease of shareholder suits
  7. Paying taxes – Number of taxes paid, hours per year spent preparing tax returns, and total tax payable as a share of gross profit
  8. Trading across borders – Number of documents, cost, and time necessary to export and import
  9. Enforcing contracts – Procedures, time, and cost to enforce a debt contract
  10. Resolving insolvency – The time, cost, and recovery rate (%) under a bankruptcy proceeding

The Doing Business project also offers information on the following datasets:

  • Distance to the frontier – Shows the distance of each economy to the “frontier,” which represents the highest performance observed on each of the indicators across all economies included since each indicator was included in Doing Business. Distance to Frontier (DTF) score highlights the gap of an economy with respect to the global best practice. For example, a score of 75 means an economy was 25 percentage points away from the frontier constructed from the best performances across all economies and across time.
  • Good practices – Provide insights into how governments have improved the regulatory environment in the past in the areas measured by Doing Business.

Benefits of Ease of Doing Business Rank

The rank a country secures under EoDBR by World Bank brings a lot of benefits along. These benefits are given in the points below:

  • The image of the country in the global market improves. GoI has implemented as many as 37 reforms in the reference period and wants to evaluate the effectiveness of these reforms
  • The government is taking steps to liberalize the business and these reforms are working
  • It changes the image of the country in the eyes of the global market into a favourable country to conduct business in
  • The rankings are expected to act as a guide to investors to take/make decisions. Hence better the ranking in the report more the favourability
  • The performance of GoI in terms of implementation of GST and will provide an answer with the question of how business-friendly this reform is (GST was not considered for last year’s ranking and this year’s ranking too could not fully account for GST as the deadline for tax-related reforms was 31st December and it had been just six months into the implementation of GST)
  • The growth in industries has been averaging around 7% in the 90s and increased to 7.4% in the last decade. At the end of it the manufacturing, export sectors came under pressure because of the global financial crisis. The government through better regulatory environment aims to attract domestic and foreign investments into the manufacturing sector
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