ECONOMICS AND TRADE | Achieving growth through open markets
22 April 2008
Easing Regulations Boosts Entrepreneurs
Business-friendly climate associated with higher incomes, employment
Washington -- An increasing number of entrepreneurs start businesses as governments reform commerce regulations, according to a report published by the World Bank and International Finance Corporation.
The 2008 edition of Doing Business ranks countries on the ease of doing business based on 10 indicators that track the time and cost to meet government requirements for business startups, operation, trade, taxation and closure. The 2008 report covers activity from April 2006 to June 2007.
The report, published annually since 2003, also identifies countries that made the most progress in reforming business regulations from among 178 economies ranked. In 2007, the top reformers were Egypt, Croatia, Ghana, Macedonia, Georgia, Colombia, Saudi Arabia, Kenya, China and Bulgaria. These and some other countries made it simpler to establish a business, strengthened property rights, enhanced investor protections, increased access to credit, eased tax burdens, expedited trade and reduced the cost of trading, according to a September 2007 World Bank news release on the report.
Higher rankings are associated with greater potential for income-generation, employment, investment and higher percentages of women in the ranks of entrepreneurs and employees.
Simeon Djankov, lead author of the report, said that new business entry was particularly strong in Eastern Europe, where an entrepreneurial boom rivals the rapid growth in East Asia in the past. Estonia, the most business-friendly country of the former Soviet bloc, ranked 17th.
The top 10 countries and regions in which doing business is easiest are Singapore, New Zealand, the United States, Hong Kong (China), Denmark, the United Kingdom, Canada, Ireland, Australia and Iceland.
The United States excels on ease of employing workers, starting a business, protecting investors, getting credit and enforcing contracts.
Disparity between the most and least business-friendly nations is striking. For example, starting a business in Iceland takes, on average, five days and involves five steps at a cost that amounts to below 3 percent of gross national income per capita; in the Democratic Republic of Congo, ranked last, it takes 155 days and involves 13 procedures at a cost that amounts to almost 490 percent of gross national income per capita.
The report can be accessed on the World Bank Web site.
