A government’s impact on the economy is not limited to taxes, spending, and monetary policy. As any manager can attest, regulations dramatically impact the way managers think about production. An effective regulatory environment will allow both new and existing firms to grow and innovate. Burdensome regulations can lower economic productivity and employment, and are associated with higher levels of informal economic activity and employment.
This technical note addresses the annual Doing Business report published by the World Bank, which aims to capture the differences in regulations between countries. Doing Business summarizes these finding in an absolute score and a relative ranking. The doing business score measures how a given country’s regulatory environment compares to the global best practice. Scores can range between 0 to 100, with 100 corresponding to the best performance. Those scores are then sorted to give the final ease of doing business ranking, in which countries are ranked from 1 (best score) to 190 (worst).