db konferencija iva hamel
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Iva Hamel,
Senior Private Sector Development SpecialistTrade and Competitiveness Global Practice, World Bank Group ,
Zagreb, Croatia
February 3, 2015
Global Indicators Group
DEVELOPMENT ECONOMICS
DOING BUSINESS 2015GOING BEYOND EFFICIENCY
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1
What does Doing Business measure?
Doing Bus iness indicators:
Focus on regulations relevant to the life cycle of asmall to medium-sized domestic business.
Are built on standardized case scenarios.
Are measured for the most populous city in eachcountry, and the second largest business city incountries with more than 100 million inhabitants.
Are focused on the formal sector.
DO NOT measure all aspects of the business environment such as s ecurity,macroeconomic stability, prevalence of bribery and corruption, level of trainingand skills of the labor force, proximity to markets, regulations specific to foreigninvestment or the state of the financial system.
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What Doing Business continues to cover and what it is adding
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Methodology changes in Doing Business 2015
The Doing Business 2015 report incorporates important changes, in order to expand the focus in indicator setsto also cover aspects of the quality of services and recent good practices in the areas covered.
1) Three indicators had major revisions of their methodology:
Resolving insolvency This years report introduces a new measure: the strength of insolvency framework index ,
evaluating the adequacy and integrity of the legal framework applicable to liquidation and
reorganization proceedings. Protecting minority investors The scope of the indicator set was expanded to also measure shareholders rights in corporate
governance beyond related-party transactions1. Shareholders rights and role in major corporate decisions (extent of shareholder rights index) 2. Governance structure (strength of governance structure index)3. Transparency (extent of corporate transparency index)4. Ease of shareholder suits index expanded to take into account the allocation of legal expenses
Getting credit The methodology has been revised for both the strength of legal rights index and the depth of credit
information index to cover more good practices1. Strength of legal rights index additionally covers: Integrated legal rights framework & more features of the
collateral registry2. Depth of credit information index additionally covers: Existence of an online platform to exchange credit
information & availability of credit scores4
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2) Minor changes have been made to the Paying Taxes, Enforcing Contracts, and Dealing withConstruction Permits indicators:
Dealing with construction permits The cost of construction is now set at 50 times income per capita (before, the cost was
assessed by the Doing Business respondents); The indicator set no longer includes the procedures for obtaining a landline telephone
connection.
Enforcing contracts The value of the claim is now set at twice the income per capita or $5,000, whichever is
higher.
Paying taxes
Change in DTF ranking calculation: total tax rate component now enters the score in anonlinear fashion (> approach different from that used for all other indicators).
5
Methodology changes in Doing Business 2015
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Registering Property The indicator set will be expanded to cover the reliability , transparency and geographic
coverage of land management systems as well as dispute resolution for land issues .
Dealing with Construction Permits The indicator set will be expanded to measure good practices in construction regulation:
Does the building code follow good practices? Is it easily accessible?Who approves the designs? How are inspections carried out before, during and afterconstruction?What qualifications are required for the professionals reviewing plans or conductinginspections? What are the rules on liability and insurance?
Getting Electricity A new indicator will assess the reliability of electricity supply by measuring both the duration
and the frequency of power outages .
Paying Taxes The indicator set will be expanded to include measures of the postfiling process , such as tax
audits, tax refunds and tax appeals.
Enforcing Contracts The indicator set will be expanded to cover aspects of judicial quality as well as aspects of
court infrastructure that promote efficiency.
Changes planned for Doing Business 2016
6
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Second city added to the data set for 11 economies
City added in DB15 City already covered by Doing
Business
7
For economies with more than 100 million inhabitants, an extra city was added to the DoingBus ines s measures.These economies are: Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan,the Russian Federation, and the United States.
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New computation of ranking - from percentile ranking toDTF ranking
The distance to frontier measure benchmarkseconomies with respect to a measure of regulatorybest practice showing the gap between eacheconomies performance and the best performanceon each indicator.
Although the ranking generated from the distanceto frontier scores and the percentile rank are highlycorrelated, the distance to frontier measurecaptures more information than the percentile rankbecause it includes not only the ordering ofeconomies but also how far apart they are.
Economies with higher variance across topics aremore likely to have a less favorable classification inthe distance to frontier rank than in the percentilerank.
8
The difference of the two ranking calculations(based on DB2014 data)
The correlation between the distance to frontierranking and the percentile ranking is 99%.
Source: Doing Business database.Note: The correlation between the distance to frontier ranking and the percentile ranking is 0.99.
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Ease of doing business ranking Top 50 economies
9
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48 9
1113 14 17
2123 24
2527
31 3233
36 3738
4244
4851
54 5659
6164 65
94
0
10
20
30
40
50
60
70
80
90
100
Denmark and the United Kingdom lead the EU in the ease of doingbusiness ranking in 2013/2014
Rank (1 189)
10
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Big gaps between the highest and lowest distance to frontier scoresin some regions
Source: Doing Business database.
Tajikistan
Georgia
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Pace of reforms remains strong in 2013/14: share of economies withat least one reform making it easier to do business
12
OECD highIncome
Europe andCentral Asia
Middle East andNorth Africa
South Asia
East Asia andPacific
Sub-SaharanAfrica
LatinAmerica &
theCaribbean
Worldwide, 123 economies implemented 230 reforms in 2013/2014, with 145 reforms aimed at reducingthe complexity and cost of complying with business regulation, and 85 reforms aimed at strengtheninglegal institutions.
74%
55%
50%
60%
65%
50%
85%
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The 10 economies improving the most across 3 or more areas measuredby Doing Business in 2013/14
13
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Europe & Central Asia is the region that has improved its business environment themost over the years from 2005 to 2013 as well as from 2013 to 2014
15
Note: The distance to frontier measure shows how far on average an economy is at a point in time from the best performance achieved by any economy on each DoingBusiness indicator since 2005 or the first year in which data for the indicator were collected. The measure is normalized to range between 0 and 100, with 100 representingthe frontier. The data refer to the 183 economies included in Doing Business 2010 (2009) and to the regional classifications for 2013. Six economies were added insubsequent years. Source: Doing Business database.
72.976,8
56.1
62.7
53.9
58.9
51.7
65.0
50.4
57.7
48.7
55.0
42.1
51.3
40
50
60
70
80
90
100
2005 2006 2007 2008 2009 2010 2011 2012 2013
OECD high income East Asia & PacificLatin America & Caribbean Europe & Central AsiaMiddle East & North Africa South AsiaSub-Saharan Africa
Gap between OECD high-incomeeconomies and rest of the world
Regulatory frontier
Regions DTFDB2014DTFDB2015
Changein DTF
OECD high income 76.08 76.47 0.39
Europe & Central Asia 65.11 66.67 1.56
East Asia & Pacific 62.42 63.19 0.77
Latin America &Caribbean 59.92 60.66 0.74
Middle East & North Africa 58.92 59.23 0.31
South Asia 54.05 54.56 0.51
Sub-Saharan Africa 50.76 51.87 1.11
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It was possible to start a business inless than 20 days in only 41economies* , mostly in North Americaand Northern and Central Europe
Now, the time to start a business isless than 20 days for entrepreneursin 127 economies*
2005
2014*
*Based on samples of 174 economies in 2005 and 189economies in 2014
Development impact: Countries that regulate entry more heavily have greater corruption and
larger unofficial economies, but not better quality of public or private goods. (Quarterly Journalof Economics, February 2002, Djankov, La Porta, Lopez de Silanes, Shleifer.)
Reforms making it easier to start a business were once again mostcommon in 2013/14 and show results over time in reduced delays
16
*EU in 2005: 10 economies
*EU in 2014: 25 economies
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Developing economies around the world have reduced delays forexporting and importing through seaport
17
33
31
24
19
20
17
12
10
36
39
34
26
25
22
15
12
0 10 20 30 40 50
South Asia
Sub-Saharan Africa
Europe & Central Asia
Middle East & North Africa
East Asia & Pacific
Latin America & Caribbean
European Union
OECD high income
Time to export (days)
DB 2006 DB 2015
Global Average
22
Development impact:Empirical evidence shows that
each additional day that a productis delayed prior to being shippedreduces trade by more than 1%.(Review of Economies and Statistics ,February 2010, Djankov, Freund and Pham)
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All regions have reduced the time it takes to transfer propertybetween local firms
18
100
78
63
57
31
23
24
26
137
101
85
104
51
111
57
32
0 50 100 150
South Asia
East Asia & Pacific
Latin America & Caribbean
Sub-Saharan Africa
Middle East & North Africa
Europe & Central Asia
OECD high income
European Union
Average time to register property (days)
DB 2006 DB 2015
Global Average
50
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Strong convergence across economies since 2005 Averages by group
19
Note: Economies are ranked in quartiles by performance in 2005 on the indicator shown. The data refer to the 174 economiesincluded in Doing Business 2006 (2005). Fifteen economies were added in subsequent years.Source: Doing Business database.
116
44
2915
0
2040
6080
100120140
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Time to start a business (days)Worst quartile Best 3 quartiles
695
499
216
199
0100200300400500600700800
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Time to pay taxes (hours per year)Worst quartile Best 3 quartiles
52
40
20
16
0
10
20
30
40
50
60
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Time to export (days)Worst quartile Best 3 quartiles
235
94
42
33
0
50
100
150200
250
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Time to register property (days)Worst quartile Best 3 quartiles
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Getting electricity
Dealing withconstruction permits
Trading across
borders
Getting credit
Registering property
Enforcing contracts
Paying taxes
Starting a business
1
2
2
5
5
5
7
13
Cyprus, Hungary, Latvia, Portugal, Romania,Spain, United Kingdom
Czech Republic, Greece, Ireland,Lithuania, Portugal
Croatia ,Poland
Greece, Ireland, Poland, Spain,Sweden
Austria, Bulgaria, Croatia , Czech Republic, Denmark, France, Greece, Italy, Lithuania, Malta,Slovak Republic, Spain, United Kingdom
Cyprus, Czech Republic, Hungary,Ireland, Slovak Republic
Poland
Croatia ,Lithuania
With a total of 40 reforms, 22 economies in the European Unionimproved business regulations in 2013/2014
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Croatia was the economy that improved the most in Dealing withConstruction permits in 2013/14
21* Note: Because Jamaica implemented changes in the past year in both the strength of legal rights and depth of credit informationcomponents of getting credit, the table shows a total of 231 reforms for 2013/14, though only 230 are counted as separate reforms.a. Refers to the average for the past 4 years.Source: Doing Business database.
Total 231 21(230 counted as separate reforms)*
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Source: Doing Business database.
Croatia cut more than 6 months from the time required to deal withconstruction permits
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2013/2014 Croatia made starting a business easier by reducing notary fees.
Due to the electronic platform's implementation, the cost to notarize memorandum ofassociation and register company with the Commercial Court (electronically) has been reducedas of January 1, 2014.
Reduced GNIpc by 5.6 %.Introduced or
improved onlineprocedures
9,1
3,5
Cost (% of income per capita) tostart a business
DB14 DB15
- 5.6%
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020
40
60
80
100
120
140
160
180189
Variability across areas of business regulation in the EuropeanUnion
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Croatia TOP 3 rankings: Paying taxes: 36 Enforcing contracts: 54 Resolving insolvency: 56
Croatia BOTTOM 3 rankings: Starting a business: 88 Registering property: 92 Dealing with construction permits: 178
Croatia ranks 65 on the global ease of doing business, but in fact performancevaries significantly across indicators.
Average of the 3 lowest rankings
Average of the 3 highest rankings
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Ease of doing business rank and the distance to frontier measureevaluated by Doing Business for Croatia in 2013/14
Topics DB2015 Rank DB2015 DTF (% points) Good practice economies
Starting a Business 88 85.43 New Zealand;Canada
Dealing with Construction Permits 178 44.97 Hong Kong SAR, China;Singapore
Getting Electricity 59 80.05 Korea, Rep.;Taiwan, China
Registering Property 92 66.44 Georgia;New Zealand
Getting Credit 61 55.00 New Zealand;Colombia
Protecting Minority Investors 62 57.50 New Zealand;Hong Kong SAR, China
Paying Taxes 36 82.92 United Arab Emirates;Qatar
Trading Across Borders 86 74.25 Singapore;Hong Kong SAR, China
Enforcing Contracts 54 64.81 Singapore;Luxembourg
Resolving Insolvency 56 53.92 Finland;Japan
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The Doing Business Report is a catalyst for regulatory reforms
Over 80 countries have requested technical assistance to improve theinvestment climate in the areas measured by Doing Business since 2007
IBRA supported 191 Doing Business reforms in66 countries from FY 08 -12
Current engagements (including through country WB or IFC projects):SSA: CiV, Togo, Comoros, Burundi, Botswana, KenyaECA: Kosovo, Ukraine, ArmeniaLAC: Haiti, GU, ES, DR, T&T, CR, MXMENA: Morocco, Afghanistan, OmanAsia: Bhutan, Mongolia, IndonesiaOECD: Greece
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The World Bank Group offers technical assistance to improve clientcountries performance on DB and beyond
Reform memoranda:Overview of the economys investment climateShort and medium term reform recommendations to improve aneconomys performance on the Doing Business indicators
Development and review of action plans and reform proposals
In-depth topic specific assistance: business entry, constructionpermitting, property registration, getting credit, investor protection,taxation, trade, contractual enforcement, and insolvencyLegislative reviews of draft lawsSetting up the institutional framework to organize for reform (e.g. bysetting up cross-ministerial reform committees) Process mappingCreate and support public-private dialogueCommunication with the public
Peer to peer learning events
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Key Aspects for Long Term Success
Political will andstrong designatedcommittees tooversee reforms
Using DBstrategically
to begin areformprogram
Mobilizingmultiple WBGexperts forbroad-basedengagement
Strong WB IFC presence onthe ground tomaintainconstant clientcontact
Activelyencouragereforms that gobeyond DoingBusiness
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THANK YOU!
Questions www.doingbusiness.org
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