Doing business around the world has become easier in the past 12 years as emerging countries adopted reforms that reduced regulatory constraints on small and midsize businesses, according to research by the World Bank.
Since the World Bank started collecting data in 2003, 189 countries have passed more than 2,600 reforms, 231 of them in the past year, the World Bank reported in its 2015 research results. The reforms improved business regulations in 11 areas, such as starting a business, making tax payments, resolving insolvency, enforcing contracts, and getting credit.
The improvements bode well for other rankings important to business. Economies that rank high in regulatory effectiveness also tend to perform well in other international data sets, such as global competitiveness and corruption perception.
“Studies show that creating a regulatory milieu that enables private enterprises, especially small firms, to function and be creative has a large positive impact on job creation and is therefore good for the economy,” Kaushik Basu, the World Bank’s chief economist, wrote in the 2015 report.
High-income members of the Organisation for Economic Co-operation and Development, such as Denmark, New Zealand, Sweden, the UK, and the US, have traditionally ranked high on the World Bank’s ease of doing business list. Each placed among the top ten in 2015.
Singapore, a high-income country that is not an OECD member, has been ranked the most business-friendly economy by the World Bank for nearly a decade. No country resolves commercial disputes quicker (150 days in the Singapore District Court), issues construction permits faster (26 days), or enforces contracts in less time (120 days).
Emerging countries, particularly those in the Middle East and North Africa (MENA), South Asia, and sub-Saharan Africa, traditionally score low, but some have made great strides in the past 12 years. Sub-Saharan Africa ranked second behind Europe and Central Asia in average year-on-year improvements compared with the best scores. The MENA region came in third, followed by East Asia and Pacific, Latin America and the Caribbean, and South Asia. High-income OECD countries adopted the fewest reforms.
Worldwide, requirements to start a business have been improved the most since 2003, followed by getting credit and trading across borders.
Standout reformers in each region were Georgia (24th overall) in the Europe and Central Asia region, Rwanda (62nd overall) in sub-Saharan Africa, Colombia (54th overall) in Latin America and the Caribbean, Egypt (131st overall) in the MENA region, China (84th overall) in East Asia and the Pacific, India (130th overall) in South Asia, and Poland (25th overall) in the OECD high-income group.
The top 10 countries with the highest regulatory efficiency in 2015 were:
- Singapore
- New Zealand
- Denmark
- South Korea
- Hong Kong
- United Kingdom
- United States
- Sweden
- Norway
- Finland
—Sabine Vollmer (svollmer@aicpa.org) is a CGMA Magazine senior editor.
