Doing Business in 2006

I just read an interesting report called Doing Business in 2006: Creating Jobs. The World Bank published the report, and you can download it here. Here’s a description of the report:

Doing Business in 2006: Creating Jobs is the third in a series of annual reports investigating the regulations that enhance business activity and those that constrain it. New quantitative indicators on business regulations and their enforcement can be compared across 155 countries—from Afghanistan to Zimbabwe—and over time...The indicators are used to analyze economic outcomes and identify what reforms have worked, where, and why.

These are the top thirty economies based on the ease of doing business:

1 New Zealand
2 Singapore
3 United States
4 Canada
5 Norway
6 Australia
7 Hong Kong, China
8 Denmark
9 United Kingdom
10 Japan
11 Ireland
12 Iceland
13 Finland
14 Sweden
15 Lithuania
16 Estonia
17 Switzerland
18 Belgium
19 Germany
20 Thailand
21 Malaysia
22 Puerto Rico
23 Mauritius
24 Netherlands
25 Chile
26 Latvia
27 Korea
28 South Africa
29 Israel
30 Spain

Here are the top ten things that I learned from reading the report:

1. In Guatemala it takes 1,459 days to resolve simple disputes in court.

2. If you paid all your business taxes in Sierra Leone, you would pay 164% of gross profit.

3. Greece, ranked last of the OECD countries in this study, has an unemployment rate of 10.9%.

4. Entrepreneurs in Serbia and Montenegro can register new businesses online, and if the entrepreneur has not heard from the government in five days, the business can start.

5. In over half the world, new businesses are still required to announce their formation in a newspaper or official gazette.

6. The most difficult country to fire an employee is Angola.

7. Canada has the least rigid working hours. (It’s not clear if this is year round or just during hockey season.)

8. New Zealand, United States, and Afghanistan rank 1-2-3 in terms of the lowest cost to dismiss a redundant worker.

9. The mandatory retirement age for men in Greece is sixty-five. For women, it’s fifty eight.

10. It takes 363 days to register property in Bangladesh.

If you’re interested in worldwide conditions for entrepreneurs, you’ll find this report enlightening. Many thanks to Peep Laja for bringing it to my attention.

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Comments

[Alex Bell]

[...]I love your blog by the way, I am gonna have to add you to my list of watched blogs.[...]

[Teck]

hey, guess what, Singapore made #1 this year, in the latest report!
Check out http://www.doingbusiness.org/ =)

And, a recent Nikkei survey of East Asians showed that Singapore was the top choice among Asian countries to be born in. =)http://app.mfa.gov.sg/pr/read_content.asp?View,4539,

[Paul Elosegui]

Not good for Europe. France does not even figure on your list

You should do a "difficulty of doing business list"

[skyliner1998]

It's inspiring to find Lithuania at 15 (and the highest on the list of all the emerging markets). Latvia, where we also do business, is at 26 and the difference largely matches my empirical evidence.

However, I believe more weight should be given in the index to the ease of closing a business venture as opposed to starting it. It is true that forming a company is fairly straightforward in Lithuania (and the other Baltic countries) - but if a company fails (which many companies inevitably do), the process of properly shutting one down may drag for months and even years, eating up the entrepreneur's time and discouraging him/her from giving it a second (or a third, or an n-th) try.

Also, while an unsuitable employee can be fired quickly, it costs the company dearly (as in most European countries). But one just factors the associated costs into the overall scheme of things and marches on.

Being at No15, we cannot complain too loudly ;-).

[Diego Luna]

Their is also a companion web site to the report, which has country specific fact sheets, country reports a custom query feature and previous editions:

http://www.doingbusiness.org/

http://www.doingbusiness.org/ExploreEconomies/

The World Bank Group that publishes that reports also blogs:

http://psdblog.worldbank.org/psdblog/business_environment/index.html

http://www.google.com/search?q=%22Doing+Business%22&domains=http%3A%2F%2Fpsdblog.worldbank.org&sitesearch=http%3A%2F%2Fpsdblog.worldbank.org

[Christopher Meisenzahl]

Great post, thanks.

[Wild Wild East]

I find it interesting that India did not make the list at all. (Especially given the fact that China is #7.)

With all the hype of India being the jewel of Asia, perhaps the past five years of economic growth was simply a shooting star?

[Marcus FREX]

Great work Mr. Kawasaki!! I really needed some work like this, before moving to a new country for doing business.

Thanks too much.

[Tim Morris]

If this has inspired you to move to New Zealand, you can take a quick test and see whether you qualify (without doing the research, I would hazard a guess that everyone reading Guy's blog qualifys) here:
http://www.immigration.govt.nz/pointsindicator/

Its also fun in a geeky way...

[James Lillis]

New Zealand #1... and the best rugby team in the world, damn I feel proud. I think I'll go off and perform a haka...

But I'll let you in on a secret as to why it is so easy to do business in NZ - because it is very easy for New Zealanders to up and move to Australia. If NZers get ticked off with red tape in NZ, they'll simply move to Aus...

[Cristián Frenkel]

I'm from Chile and whith 23 years, I'm handling my own business.

Is pleasant to see how my country has progressed in the last years and the opportunity that has of being a world-wide power thanks to its particular characteristics.

I hope that it happens. With my team at least we are contributing to with our sand grain through design and innovation.

Thanks Guy for your Blog!

[boomer]

Where is the United Kingdom? Does it really suck so bad?

[China Law Blog]

I hope this ends the myth of China as a wholly corrupt backwater.

[happyjuggler0]

Anyone who likes this World Bank report probably would also find this link useful too: http://www.heritage.org/research/features/index/countries.cfm . Hint for the link: click on the country for info for that country.

The inescapable conclusion is that the freer an economy is the more prosperous it is.

[Candy Minx]

Oh, I always learn so much when I stop by your blog. Very interesting. I had no idea my sweet sweet country was number three. Okay, so your country is ranked higher for business than mine...but my Technorati rank is climbing climbing! # 76,985!

Hope you are having a lovely summer,
Cheers,
Candy

[Dan Dare]

What about Romania? Things used to be very beaurocratic, but now you can open a company in 2 (TWO) days and a lot of new ways of filling taxes on the Internet have been developed.

I have been in business in the last 10 years, and it's getting easier and easier.

[Ashish Tomar]

Another interesting reading:

The Global Entrepreneurship Monitor:

http://www.gemconsortium.org/download.asp?fid=450

[Kim Pallister]

Did they include specifics for different types of businesses? Some countries (states/provinces for that matter) have great tax incentives for high tech or other specific fields. I'd imagine that would sway the list somewhat (as would availability of talent)

[Max Ischenko]

I'm in Ukraine and my country ranked 124. ;-(

If anyone interested, I gathered Ukraine-specific findinds on a post in my blog (in Russian): http://www.developers.org.ua/archives/max/2006/08/01/doing-business-in-ukraine/.

[argos]

Poor Greece. I wish they'd come out of their shell a bit.

# 8 causes me to wonder by what means they dismiss a redundant worker in Afghanistan.

[jaywalker]

The interesting point is that small countries are obviously better at bureaucracy than the behemoths.

As ever, international comparisons are difficult due to the details. Inclusion of arranging cheap health coverage would push the US down a bit.

Kudos to the Baltic nations that managed to wipe out Soviet bureaucratic practices. And Mauritius is a beacon for Africa (but then again, it is a small island).

[mickslam]

excellent post.

In France about 13-14% of the population owns and runs their own business. In the US, the number is about 8%.

Its probably much more difficult to start a business in France, but it appears to be a choice that more people make there.

Additionally, I think ease of getting property rights, clarity of these rights, and easy, clear and fair enforcment of these rights are really important, probably more important than the ease of setting up a business or the general tax regime. 1400 days to settle a simple dispute in court? Thats how many years?

When you know you can own something and its not likely to be stolen, taken away by someone powerful, or simply disputed, you're willing to go through the trouble of setting up a business, even with significant hurdles.

[hirschi]

Sorry Guy... of course it's not your fault. At least not directly but you use it as an example and thus you imply some kind of relationship (which is ok).
But i think there are just so many factors influencing unemployment, that it will be very difficult to show any kind of causation.

[Prakash Muralidharan]

- Very few developing nations in the top 15. That's not a good sign. Developing nations need to lead the charge here.
-If someone does an correlation with the world corruption index I won't be surprised if the worst nations in this index are also the most corrupt.
Red tape + stupid laws = Tough to do biz
Red tape + stupid laws = Corruption.
-An analysis of any wealthy nations where it is tough to do biz (if there are such nations) would be interesting. I bet oil rich middle eastern kingdoms would rank high here.
-Pr@ky

[Meikah Delid]

No wonder my country isn't on the top 30! Because it takes forever to get things accomplished here, especially when it comes to getting business licenses. Good information, Guy!

[Berislav Lopac]

"It takes 363 days to register property in Bangladesh."

Bah! In Croatia it's 956 days, according to the same site. At least it's getting better due to recent reforms and updating of backlogs.

In any case, www.doingbusiness.com is a great resource, although their statistic can sometimes be dubious, as pointed by previous comments to this post. But you know how they say -- statistics is like women's underwear: what it shows is suggestive, but what it hides is what matters.

(BTW, Bjorn is a Scandinavian name, where it means "bear".)

[Marc Duchesne]

Well, shall I confess that I am French, living in France, and on the verge to create my own business(es) ?!!
France ranked #44 for the ease of doing business, just behind... Jamaica. Something wrong here, huh ?
Guess why I'm heading on the Silicon Valley ;-)
_Marc

[hirschi]

Several mistakes:
a) Greece is not ranked last (80 out of 155):
http://www.doingbusiness.org/EconomyRankings/

b) Greece does not have an unempolyment rate of 10.9%: its 9.7%
http://en.wikipedia.org/wiki/Economy_of_Greece

c) According to the report there seems to be an "association" (whatever they want to prove) between unemployment and ease of doing a business. Its not a correlation and not statistical proven. By the way: statistics always lie (addendum: if you cant understand them ;-)

Germany has an unemployment rate of 12.1% in Jan 06 (average for the year 2006 is going to be 11.5%)
http://www.destatis.de/indicators/e/arb210ae.htm

*******************

Greece is killing me. :-) It's the lowest of the OBCD countries. Made the change in the blog. As for not having the same figure as Wikipedia, well, I'll choose to believe the World Bank. :-)

Not sure who's "mistake" it is about correlation versus causation, but all I said was "Greece, ranked last of the OECD countries in this study, has an unemployment rate of 10.9%." How is correlation versus causation my mistake?

Thanks,

Guy

[Kuba Choinski]

Very interesting report, but it's sad that my country is ranked 54 - with many neighbors ranked in top 30. So I have an excuse, why starting my own business is so difficult and takes so much time ;-)
Thanks

****************

Kuba,

On the other hand, Poland dominates the market for page counters that reset every night!

Guy

[bjorn]

Interesting post as usual, but where did you find "Germany, ranked last in this study, has an unemployment rate of 10.9%."?
Germany is in place 19, which is perhaps not stellar, but far from last.

*************

Bjorn,

First, I didn't realize "Bjorn" was a German name! I'm glad you mentioned this. My mistake: it's Greece, not Germany. Those G countries all sound alike to me!

Thanks!

Guy

[Andy A.]

Great info! New Zealand is beautiful, I would have no problem moving there.