What is the definition of BUSINESS INDEX?
It is the statistical compilation that provides a context for economic or financial conditions; a ratio is derived from a series of observed facts. Ease of doing business index is created by the World Bank Group. A low numerical value is considered as a higher ranking thus indicates a better, simpler regulations for business and stronger protection of property rights. The Doing Business project has allowed an empirical research to establish the optimal level of business regulation.
What comprises the WORLD BANK GROUP?
World Bank Group is made up of 189 member countries, these are shareholders who are represented by a Board of Governors. The Board of Governors are the ultimate policymakers of the World Bank Group. The goal of the Work Bank Group is to eradicate the extreme poverty by decreasing the percentage of living on less than $1.90 a day to no more than 3% and to promote shared prosperity by fostering the income growth of the bottom 40% for every country, the goal is set to be achieved by the year 2030.
What is Doing Business Project all about?
Doing Business project was launched in 2002, it aims to provide an objective measure of business regulations and their enforcement across the 190 economies and selected cities at the subnational and national level. It gives attention to the small and medium-size companies and measures the regulations applying to them. The reports offered by Doing Business provides data on the ease of doing business, rank each location and recommend reforms to improve the business performance. The initial goal of Doing Business still remains as to provide an objective basis for understanding and improving the regulatory environment for the businesses around the globe.
Subindices required for a Nation’s ranking index
An average of 10 subindices is based on the nation’s ranking on the index, these subindices are:
- Starting a business ― procedure, time, cost and minimum capital to open
- Dealing with construction permits ― procedure, time and cost to build
- Getting electricity ― procedure, time and cost required for a business to obtain a permanent electricity connection
- Registering property ― procedure, time and cost to register a commercial real estate
- Getting credit ― strength of legal rights index, depth of credit information index
- Protecting investors ― indices of the extent of disclosure, extent of director liability and ease of shareholder suits
- Paying taxes ― number of taxes paid, hours per year on preparing tax returns and total tax payable
- Trading across borders ― number of documents, cost and time necessary to import and export
- Enforcing contrasts ― procedure, time and cost to enforce a debt contract
- Resolving insolvency ― time, cost and recovery rate under bankruptcy proceeding