World Bank Ranks State of Health of World’s Economies
The World Bank Group published one of its flagship annual reports this week: “Doing Business 2016: Measuring Regulatory Quality and Efficiency.” The report ranks and compares business regulation in 189 economies. World Bank calls the report an annual report on the state of health of those economies.
Economies with good rules, not ‘no rules’, are the ones that work
It makes sense. If there is spotty or no regulation in a jurisdiction, too many unknowns lurk. Business investors and economic growth detest the unknown. Where there is too much regulation–too much red tape–the government has made it too cumbersome and too expensive to set up shop there. In the middle is where economic growth occurs. Business can live with common sense regulations that are laid out clearly, because investors and management are able to know what lies ahead. Plans can be made, reasonable projections can be made. Business can move forward there because everyone knows what the rules are and management can cost-out what has to be done to follow them.
In assessing the world’s economies for its 2016 report, The World Bank said the best 30 performing economies were not those with little regulation but those with good rules “that allow efficient and transparent functioning of businesses and markets while protecting the public interest.”
The bank pointed out that the economies that rank high on its Doing Business indicators tend to perform well in other international data sets, such as the Global Competitiveness Index.
It bases its rankings on detailed diagnostics of underlying and embedded characteristics—such as the regulatory system, the efficacy of the bureaucracy and the nature of business governance.
The report aggregates information for each economy/country from 10 areas of business regulation—starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency—to develop an overall ease of doing business ranking.
The Top 10 Places To Do Business |
| (Benchmark World Bank 2015 Data. Note: oil reserves were not part of the World Bank report. Oil reserves data: CIA) |
| (World Bank Score) (CIA Oil Reserves) (OPEC Member?) |
| 1. Singapore 87.34 0 |
| 2. New Zealand 86.79 67,200,000 |
| 3. Denmark 84.40 611,000,000 |
| 4. South Korea 83.88 0 |
| 5. Hong Kong SAR 83.67 0 |
| 6. United Kingdom 82.46 2,982,000,000 |
| 7. United States 82.15 36,520,000,000 |
| 8. Sweden 81.72 0 |
| 9. Norway 81.61 6,435,000,000 |
| 10. Finland 81.05 0 |
Bottom 10 Places To Do Business |
| 180. Equatorial Guinea 40.03 1,100,000,000 |
| 181. Angola 39.64 9,011,000,000 YES |
| 182. Haiti 39.56 0 |
| 183. Chad 38.22 1,500,000,000 |
| 184. Congo, Democratic Republic 38.14 180,000,000 |
| 185. Central African Republic 36.26 0 |
| 186. Venezuela 35.51 298,400,000,000 YES |
| 187. South Sudan 34.78 3,750,000,000 |
| 188. Libya 31.77 48,360,000,000 YES |
| 189. Eritrea 27.61 0 |
The total number of economies ranked in the 2016 report were 189.
Other economies that made the top 20 places to do business were Taiwan (11), Macedonia (12), Australia (13), Canada (14), Germany (15), Estonia (16), Ireland (17), Malaysia (18), Iceland (19) and Lithuania (20).
While Angola, Venezuela and Libya, all of whom had scores below 40, ranked in the bottom 10, the reset of OPEC fared better. The OPEC members ranked in the 2016 list as follows: UAE (31), Qatar (68), Saudi Arabia (82), Kuwait (101), Indonesia (109), Ecuador (117), Iran (118), Iraq (161), Algeria (163), Nigeria (169).
Other notable oil and gas producing and consuming economies that were in between The World Bank’s top 10 and bottom 10 ease of doing business list were Mexico (38), Kazakhstan (41), Russian Federation (51), China (84), Brazil (116), and India (130).
Impact of the Report
The World Bank said that during the 13 years since its inception the Doing Business report has become “one of the world’s most influential policy publications.” “In the past 12 years more than 2,600 reforms have been recorded globally in the areas measured by the report,” according to Kaushik Basu, chief economist for The World Bank, Washington, D.C.
