Submitted by Taps Coogan on the 10th of December 2018 to The Sounding Line.
The following infographic, courtesy of Visual Capitalis, visualizes the results of this year’s World Bank ‘Ease of Doing Business Index (PDF),’ For the last 16 years, the index has been ranking the relative ease of ‘doing business’ around the world based on “12,500 expert contributors in 190 countries who deal with business regulations on a daily basis. The final score is based on the average of 11 factors:
Starting a business – Procedures, time, cost, and minimum capital to open a new business
Dealing with construction permits – Procedures, time, and cost to build a warehouse
Access to electricity – Procedures, time, and cost required to obtain an electricity connection for a new warehouse
Registering property – Procedures, time, and cost to register commercial real estate
Procuring credit – Strength of legal rights index, depth of credit information index
Protecting investors – Indices on the extent of disclosure, extent of director liability and ease of shareholder suits
Paying taxes – Number of taxes paid, total tax payable as share of gross profit, and hours per year spent preparing tax returns
Trading across borders – Number of documents, cost, and time necessary to import and export
Enforcing contracts – Procedures, time, and cost to enforce a debt contract
Resolving insolvency – The time, cost, and recovery rate (%) under bankruptcy proceeding
Labor market regulation – Flexibility in employment regulation and aspects of job quality”
New Zealand has taken the top spot for the last three years in a row. It is followed by Singapore, Denmark, and Hong Kong. The US has dropped to eighth place, in part because the recent corporate tax cuts do not appear to be reflected in the ranking yet. Meanwhile, Russia, China, and India have surged in recent years, though they still remain outside the top 20. Argentina has dropped to the least business friendly country in the G20. Rwanda, ranked 29th, is the only low income country in the top 50.
While the index is fairly comprehensive and certainly provides interesting insights, it seems to overlook at least three important factors that are pertinent to the ease of doing business: the overall regulatory burden, intellectual property protections, and the rule of law. For example, the EU has, or has had, regulations dictating everything from the allowable curvature of bananas, whether water can be said to be hydrating, banning the sale of eggs by the dozen, limiting the wattage of toasters, hairdriers, vacuum cleaners, and kettles, to specifying what seeds farmers can plant. Similarly, the EU’s current drive to outlaw hyperlinks and internet memes will make it much harder for many websites like The Sounding Line to exist at all. The fact that this article uses hyperlinks to point readers to its sources could literally put it afoul of upcoming EU regulations. To suggest that these sorts of regulations don’t massively effect the ease of doing business is willful ignorance. Similarly, there doesn’t seem to be an easy way in their rankings to capture the onerous rules China imposes on foreign companies hoping to open subsidiaries in China, nor its state sponsored campaign of intellectual property theft. Furthermore, Afghanistan was the most improved country in the entire list despite increasing portions of the country being under de-facto Taliban control and despite being one of the most corrupt countries on Earth. If the rule of law isn’t enforced, what difference does it make if the law improves?
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