The 2013 IFC-World Bank Doing Business Report ranked 185 economies on their ease of doing business. Singapore tops the list for being the easiest place to do business. Hong Kong, New Zealand, USA, and Denmark follow for the top 5. The worst place to do business is in the Central African Republic. Chad, The Republic of Congo, Eritrea, and The Democratic Republic of the Congo do not trail far behind.
The ‘Ease of Doing Business’ ranking is not only determined on the macroeconomic level – it includes policies affecting the quality of laws, regulations, and institutional arrangements that shape daily economic life for small to medium-sized companies. Economies that rank high on the Ease of Doing Business index tend to combine efficient regulatory processes with strong legal institutions that protect property and investor rights.
Ten items are factored into the rankings when considering a country’s Ease of Doing Business. A country’s set of regulations to safeguard economic activity and facilitate business operations matter for promoting a vibrant economy:
• starting a business
• dealing with construction permits
• getting electricity
• registering property
• getting credit
• protecting investors
• paying taxes
• trading across borders
• enforcing contracts
• resolving insolvency
Economic empowerment is a key to poverty alleviation in the developing world. The private sector provides an estimated 90 percent of jobs in developing economies. Efforts that help people sustain their own livelihoods have to go hand-in-hand with efforts that enable them to become educated, stay healthy, and be safe. People have greater opportunities where governments support a dynamic business environment—with ﬁrms making investments, creating jobs, and increasing productivity. The World Bank study, Voices of the Poor, asked 60,000 poor people around the world how they thought they might escape poverty. The answers were unequivocal: women and men alike pin their hopes, above all, on income from their own business or wages earned in employment. Enabling growth—and ensuring that all people, regardless of income level, can participate in its benefits—requires an environment where new entrants with drive and good ideas can get started in business and where good ﬁrms can invest and grow, thereby generating more jobs.
Inc. Magazine took another angle when examining the Ease of Doing Business rankings. Inc. looked specifically at the Starting a New Business category and found that it was faster to start up a business in Rwanda than in the USA. It only takes about 3 days to start up a business in Rwanda because the country has recently instituted some electronic processes for starting a business. This is one of many other reasons why Rwanda has been dubbed “Africa’s new Singapore,” and this is one of many other examples why some developing countries have the advantage to leapfrog over cumbersome bureaucratic systems.
New Zealand claims the number one spot for the category of starting a business. An entrepreneur there can do so in 1 day thanks to its ‘one-stop’ shop approach – most of the government agencies that a start-up needs are linked online. Additionally, the Kiwi only needs less than 1 percent of income per capita and no paid-in minimum capital.
– Maria Caluag
Sources: IFC World Bank, INC. Magazine, Economist