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Doing Business 2015 Going Beyond Efficiency COMPARING BUSINESS REGULATIONS FOR DOMESTIC FIRMS IN 189 ECONOMIES A World Bank Group Flagship Report 12TH EDITION

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Doing Business 2015: Going Beyond Efficiency, a World Bank Group flagship publication, is the 12th in a series of annual reports measuring the regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 189 economies—from Afghanistan to Zimbabwe—and over time. Doing Business measures regulations affecting 11 areas of the life of a business. Ten of these areas are included in this year’s ranking on the ease of doing business: 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. Doing Business also measures labor market regulation, which is not included in this year’s ranking. Data in Doing Business 2015 are current as of June 1, 2014. The indicators are used to analyze economic outcomes and identify what reforms of business regulation have worked, where and why. This year’s report introduces a notable expansion of several indicator sets and a change in the calculation of rankings. More >> http://goo.gl/6KiQ70

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  • 1. Doing Business 2015Going Beyond EfficiencyComparing Business Regulations for domestic firms in 189 EconomiesA World Bank Group Flagship Report12th edition

2. 2014 International Bank for Reconstruction and Development / The World Bank1818 H Street NW, Washington DC 20433Telephone: 202-473-1000; Internet: www.worldbank.orgSome rights reserved1 2 3 4 17 16 15 14This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusionsexpressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governmentsthey represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denomina-tions,and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning thelegal status of any territory or the endorsement or acceptance of such boundaries.Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank,all of which are specifically reserved.Rights and PermissionsThis work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) http://creativecommons.org/licenses/by/3.0/igo. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work,including for commercial purposes, under the following conditions:AttributionPlease cite the work as follows: World Bank. 2014. Doing Business 2015: Going Beyond Efficiency. Washington, DC: WorldBank. DOI: 10.1596/978-1-4648-0351-2. License: Creative Commons Attribution CC BY 3.0 IGOTranslationsIf you create a translation of this work, please add the following disclaimer along with the attribution: This translationwas not created by The World Bank and should not be considered an official World Bank translation. The World Bank shall not be liable for anycontent or error in this translation.AdaptationsIf you create an adaptation of this work, please add the following disclaimer along with the attribution: This is anadaptation of an original work by The World Bank. Views and opinions expressed in the adaptation are the sole responsibility of the author orauthors of the adaptation and are not endorsed by The World Bank.Third-party contentThe World Bank does not necessarily own each component of the content contained within the work. TheWorld Bank therefore does not warrant that the use of any third-party-owned individual component or part contained in the work willnot infringe on the rights of those third parties. The risk of claims resulting from such infringement rests solely with you. If you wishto re-use a component of the work, it is your responsibility to determine whether permission is needed for that re-use and to obtainpermission from the copyright owner. Examples of components can include, but are not limited to, tables, figures, or images.All queries on rights and licenses should be addressed to the Publishing and Knowledge Division, The World Bank, 1818 H Street NW,Washington, DC 20433, USA; fax: 202-522-2625; e-mail: [email protected] (paper): 978-1-4648-0351-2ISBN (electronic): 978-1-4648-0352-9DOI: 10.1596/978-1-4648-0351-2ISSN: 1729-2638Cover design: Corporate Visions, Inc. 3. Doing Business 2015Going Beyond EfficiencyCOMPARING BUSINESS REGULATIONS FOR DOMESTIC FIRMS IN 189 ECONOMIESA World Bank Group Flagship Report12TH EDITION 4. Doing Business 2015Going Beyond EfficiencyResources on theDoing Business websiteCurrent featuresNews on the Doing Business projecthttp://www.doingbusiness.orgRankingsHow economies rankfrom 1 to 189http://www.doingbusiness.org/rankingsDataAll the data for 189 economiestopicrankings, indicator values, lists ofregulatory procedures and detailsunderlying indicatorshttp://www.doingbusiness.org/dataReportsAccess to Doing Business reports as wellas subnational and regional reports,reform case studies and customizedeconomy and regional profileshttp://www.doingbusiness.org/reportsMethodologyThe methodologies and research papersunderlying Doing Businesshttp://www.doingbusiness.org/methodologyResearchAbstracts of papers on Doing Businesstopics and related policy issueshttp://www.doingbusiness.org/researchDoing Business reformsShort summaries of DB2015 businessregulation reforms, lists of reforms sinceDB2008 and a ranking simulation toolhttp://www.doingbusiness.org/reformsHistorical dataCustomized data sets since DB2004http://www.doingbusiness.org/custom-queryLaw libraryOnline collection of business laws andregulations relating to businesshttp://www.doingbusiness.org/law-libraryContributorsMore than 10,700 specialists in 189economies who participate in DoingBusinesshttp://www.doingbusiness.org/contributors/doing-businessEntrepreneurship dataData on business density (number ofnewly registered companies per 1,000working-age people) for 139 economieshttp://www.doingbusiness.org/data/exploretopics/entrepreneurshipDistance to frontierData benchmarking 189 economies tothe frontier in regulatory practicehttp://www.doingbusiness.org/data/distance-to-frontierInformation on good practicesShowing where the many goodpractices identified by Doing Businesshave been adoptedhttp://www.doingbusiness.org/data/good-practiceDoing Business iPhone appDoing Business at a Glancepresentingthe full report, rankings and highlightsfor each topic for the iPhone, iPad andiPod touchhttp://www.doingbusiness.org/special-features/iphone 5. Doing Business 2015Going Beyond EfficiencyContentsv Foreword1 Overview15 About Doing Business24 What is changing in Doing Business?33 Reforming the business environment in 2013/14Case studies47 Starting a businessThe growing efficiency of company registries53 Zoning and urban planningUnderstanding the benefits60 Registering propertyMeasuring the quality of land administration systems67 Getting creditThe importance of registries76 Protecting minority investorsGoing beyond related-party transactions83 Paying taxesTrends before and after the financial crisis90 Enforcing contractsHow judicial efficiency supports freedom of contract96 Resolving insolvencyMeasuring the strength of insolvency laws102 Highlights from the Doing Business research conference109 References1 14 Data notes146 Distance to frontier and ease of doing business ranking152 Summaries of Doing Business reforms in 2013/14167 Country tables231 Labor market regulation data252 AcknowledgmentsDoing Business 2015 is the 12th in aseries of annual reports investigatingthe regulations that enhance businessactivity and those that constrain it.Doing Business presents quantitativeindicators on business regulationsand the protection of property rightsthat can be compared across 189economiesfrom Afghanistan toZimbabweand over time.Doing Business measures regulationsaffecting 11 areas of the life of abusiness. Ten of these areas areincluded in this years ranking on theease of doing business: starting abusiness, dealing with constructionpermits, getting electricity, registeringproperty, getting credit, protectingminority investors, paying taxes,trading across borders, enforcingcontracts and resolving insolvency.Doing Business also measures labormarket regulation, which is not includedin this years ranking.Data in Doing Business 2015 are currentas of June 1, 2014. The indicators areused to analyze economic outcomesand identify what reforms of businessregulation have worked, where and why. 6. Doing Business 2015Going Beyond EfficiencyForewordHow to use Doing Business indicators and how not toThe public discourse on eco-nomicpolicy is overwhelminglyfocused on fiscal measures,monetary interventions, welfare pro-gramsand other such highly visibleinstruments of government action.Thus when an economy does poorly, adisproportionate amount of our debatecenters on whether or not it needs afiscal stimulus, whether there should beliquidity easing or tightening, whetherits welfare programs have been tooprofligate or too paltry and so on.What gets much less attention but isequallyand, in some situations, evenmoreimportant for an economyssuccess or failure is the nuts andbolts that hold the economy togetherand the plumbing that underlies theeconomy.The laws that determine how easily abusiness can be started and closed,the efficiency with which contracts areenforced, the rules of administrationpertaining to a variety of activitiessuch as getting permits for electricityand doing the paperwork for exportsand importsare all examples of thenuts and bolts that are rarely visibleand in the limelight but play a criticalrole. Their malfunctioning can thwartan economys progress and renderthe more visible policy instruments,such as good fiscal and monetary poli-cies,less effective. Just as the SpaceShuttle Challenger broke apart ontakeoff from Cape Canaveral, Florida,on January 28, 1986, not because (aswas later realized) something majorhad gone wrong but because a jointheld together by a circular nut calledthe O-ring had failed, an economy canbe brought down or held back by thefailure of its nuts and bolts. The WorldBank Groups Doing Business reportis an annual statement of the stateof the nuts and bolts of economiesaround the world and, as such, is one ofthe most important compendiums ofinformation and analysis of the basisof an economys effective day-to-dayfunctioning and development.Creating an efficient and inclusiveethos for enterprise and businessis in the interest of all societies. Aneconomy with an efficient bureaucracyand rules of governance that facilitatesentrepreneurship and creativity amongindividuals, and provides an enablingatmosphere for people to realizetheir full potential, can enhance livingstandards and promote growth andshared prosperity. It can also helpin creating an environment in whichstandard macroeconomic policies aremore effective and course through theeconomy more easily. After decadesof debate there is now some conver-gencein economics about the rolesof the market and the state. To leaveeverything to the free market can leadto major economic malfunction andelevated levels of poverty, and haveus be silent witnesses to, for instance,discrimination against certain groups.Moreover, there is a logical mistake thatunderlies the market fundamentalistphilosophy. To argue that individualsand private businesses should haveall the freedom to pursue what they 7. vi DOING BUSINESS 2015wish and that government should notintervene overlooks the fact that gov-ernmentis nothing but the outcomeof individual actions. Hence the edictis internally inconsistent. Fortunately,market fundamentalism has, for themost part, been relegated to the mar-ginsof serious policy discourse.Turning to the other extreme, it is nowwidely recognized that to have thestate try to do it all is a recipe for eco-nomicstagnation and cronyism. In anynational economy there are too manydecisions to be made, and too great avariety of skills and talents scatteredthrough society, for any single author-ityto take effective charge.It is true that government should inter-venein the market to help the disadvan-taged,to keep inequality within bounds,to provide public goods and to createcorrectives for market failures suchas those stemming from externalities,information asymmetries and systemichuman irrationalities.1 But over andabove these, government also has thecritical responsibility to provide a nimbleregulatory setup that enables ordinarypeople to put their skills and talentsto the best possible use and facilitatesthe smooth and efficient functioningof businesses and markets.2 It is thiscritical role of providing an enablingand facilitating ethos for individual tal-entand enterprise to flourishwhichincludes an awareness of where not tointervene and interferethat the DoingBusiness report tries to measure. Thereis no unique way of doing this, and thereare plenty of open conceptual questionsone has to contend with. In brief, by itsvery nature Doing Business has all theingredients of being both important andcontroversial, and it has lived up to bothqualities in ample measure.SWITCHING SIDESAs an independent researcher and,later, as Chief Economic Adviser to theIndian government, I used, criticized,valued and debated the Doing Businessreport, unaware that I would be at theWorld Bank one day and hence beshifted from the side of the consumerto that of the manufacturer of thisproduct. This shift has given me a360-degree view of Doing Business and,along with that, an awareness of itsstrengths and weaknesses, which oth-ers,luckier than I, may not have.Its greatest strength is its transpar-encyand adherence to clearly statedcriteria. Doing Business takes the sameset of hypothetical questions to 189economies and collects answers tothese. Thus, for instance, when check-ingon an economys efficacy in enforc-ingcontracts, it measures the time,cost and procedures involved in resolv-inga hypothetical commercial lawsuitbetween 2 domestic firms through alocal court. The dispute involves thebreach of a sales contract worth twicethe size of the income per capita ofthe economy or $5,000, whichever isgreater. This meticulous insistence onusing the same standard everywheregives Doing Business a remarkablecomparability across economies.However, this same strength is inevi-tablya source of some weaknesses. Itmeans that, contrary to what somepeople believe, Doing Business is notbased on sample surveys of firms. It isnot feasible, at least not at this stage,to conduct such surveys in 189 econo-mies.A lot of the Doing Business dataare based on careful collection of de jureinformation on what an economys lawsand regulations require. Further, evenwhen, based on a study of one economyor a cluster of economies, some measureis found to be an important determinantof the ease of doing business, it may notbe possible to put this measure to useunless a way is found to collect informa-tionon it from all 189 economies.Nor does the fact that the same mea-suresare collected for all economiesautomatically mean that they are theright measures. The same measuremay be more apt for one economy andless so for another. As Ken Arrow oncepointed out, the medieval English lawunder which no one was allowed to sleepon park benches applied to both pau-persand aristocrats, but since the lattertypically did not consider the use of parkbenches for napping, it was amply clearthat this horizontally anonymous lawwas actually meant for only one class ofpeople, namely the poor.3Another problem arises from the factthat the overall ease of doing businessranking is an aggregation of 10 com-ponentindicatorsmeasuring howeasy it is (in the economy concerned)to start a business, deal with construc-tionpermits, get electricity, registerproperty, get credit, pay taxes, tradeacross borders, enforce contracts andresolve insolvency and how strong theprotections for minority investors are.Further, each of these 10 componentindicators is itself an amalgam ofseveral even more basic measures. Theway all this is aggregated is by givingeach basic measure the same weight toget to each component indicator, andthen giving an equal weight to each ofthe 10 component indicators to get tothe final score. Questions may indeedbe asked about whether it is rightto give the same weight to differentindicators.4 Is an economys speed at1. There is evidence that human beings are not just frequently irrational but have certain systematic propensities to this, which can be and has been used toexploit individuals (Akerlof and Shiller 2009; Johnson 2009). By this same logic, these irrationalities can be used to promote development and growth. Thenext World Development Report (World Bank, forthcoming), to be published in December 2014, is devoted to this theme.2. This convergent view can increasingly be found in microeconomics books, such as Bowles (2006); Basu (2010); and Ferguson (2013).3. Arrow 1963.4. There is a lot of research on the choice of weights when aggregating and on the algebra of ranking; see, for example, Sen (1977); Basu (1983); and Foster,McGillivray and Seth (2012). 8. FOREWORD viigiving an electricity connection to anew enterprise as important as itsability to enforce contracts efficiently?Further, the measures count both thetime taken to get certain permits andclearances and also the number andintricacy of procedures. These alsoentail weights.There is a way of doing away withweights, an approach that involvesdeclaring one economy to be rankedabove another only if it dominatesthe other in all 10 indicators. This isreferred to as the criterion of vector-dominance,and its properties havebeen studied and are well understood.The trouble with this criterion is thatit leads to incompleteness in rankings.For many pairs of economies it will notbe possible to treat either as rankedabove the other; nor can we, in suchcases, declare the 2 to be equally goodin terms of the ease of doing business.This is illustrated in the figure, whichranks a small cluster of economies byusing vector-dominance in terms of the10 indicators. A downward line between2 economies represents dominance, and2 economies that cannot be connectedby a downward line cannot be comparedwith each other. Hence Singapore isunequivocally ranked above Ireland,which is ranked above Cyprus and so on.Singapore is also ranked above Latvia.Similarly, New Zealand is ranked aboveLatvia, which is above Morocco andBenin, and so on. Singapore and NewZealand, which are this years winnerand runner-up in our ordinal ranking,cannot, however, be ranked in terms ofvector-dominance; nor can we rank NewZealand and Ireland.5It is true that the figure shows onlya small segment of the quasi-orderover the 189 economies; but even if weshowed the full set, the picture wouldbe populated with pairs of economiesthat cannot be ranked. That is indeedthe disadvantage of vector-dominance.When it pronounces judgment, it doesso with great authority, but it achievesthis at the cost of total reticence overlarge domains.What I suspected when I was a userof Doing Business, and now know, isthat a significant number of the top30 economies in the ease of doingbusiness ranking come from a traditionwhere government has had quite aprominent presence in the economy,including through the laying out ofrules to regulate different dimensionsof the activities of the private sector.However, all these economies havean excellent performance on theDoing Business indicators and in otherinternational data sets capturingvarious dimensions of competitiveness.The top-performing economies in theease of doing business ranking aretherefore not those with no regulationbut those in which governments havemanaged to create rules that facilitateinteractions in the marketplace withoutneedlessly hindering the developmentof the private sector.6 Ultimately, DoingBusiness is about smart regulationsthat only a well-functioning state canprovide. The secret of success is tohave the essential rules and regulationsin placebut more importantly to havea good system of clearing decisionsquickly and predictably, so that smalland ordinary businesses do not feelharassed.To get to an evaluation of this, one hasto make choices, such as what to includeand what to exclude and what weightsto use. This has been done in creatingthe Doing Business measures, and effortis being made to improve on these.Excessive taxation, for instance, candampen incentives and adversely affectan economys functioning. But thisdoes not mean that the lower the taxrates and collections, the better. Thereare economies where the tax revenueto GDP ratio is so low that it hampersthe governments ability to regulateefficiently, invest in infrastructure andprovide basic health and educationservices to the poor. With that in mind,the Doing Business team changed theindicator that used to treat a lowertax rate as better. Three years ago athreshold was set such that economieswith tax rates below this threshold arenot rewarded. This has reduced the biasin favor of economies that choose notto levy even a reasonable tax on privatecompanies.Our attention has been drawn to manycritiques by the Independent Panelon Doing Business, chaired by TrevorManuel, which submitted its report in2013.7 Following this report a decisionwas made to set a 2-year target toimprove the methodology of DoingBusiness without damaging the overallintegrity of this valuable publication.The Doing Business team is in the midstRanking by vector-dominanceSingaporeIrelandCyprusSenegalNew ZealandLatviaMoroccoBenin5. This example of vector-dominance is based only on the top 2 economies in this years ease of doing business ranking. The figure was constructed asfollows: First, all economies were sorted by their ranking, and the first economy for which all 10 indicator rankings are lower than those of Singapore wasidentified: Ireland. The process was then repeated for Ireland, and so on for all 189 economies. Second, the analysis was replicated, this time startingwith New Zealand. Third, all pairs of economies in the figure were compared (for example, the horizontal line between Singapore and Latvia means thatSingapore vector-dominates Latvia and all economies connected with a vertical line under Latvia).6. See Besley and Burgess (2004).7. The report by the Independent Panel on Doing Business is available on its website at http://www.dbrpanel.org/. 9. viii DOING BUSINESS 2015of such an exercise, and it is hoped thatindependent researchers, wherever inthe world they happen to be, will join inthe task of refining and improving thisimportant document.STRENGTHS ANDWEAKNESSESWhile the 2-year task of improving themethodology continues, it is worth beingclear that there is no such thing as thebest, all-encompassing indicator. Asa consequence, responsibility rests asmuch with the users of the ease of doingbusiness ranking as with its producersto make sure that it is a valuableinstrument of policy. Controversy hasoften arisen from reading more intothe ranking or indicator than what itactually captures. It has been pointedout, critically, that there are economiesthat do poorly on the Doing Businessindicators but that nevertheless geta lot of foreign direct investment(FDI) from global corporations. Theseexamples are usually nothing morethan a reminder that an economy hasmany more aspects than the featuresthat are tracked and measured by theDoing Business report. The flow of FDIinto an economy is facilitated by havinga better doing business ethos, true, butFDI flows can be thwarted by otherpolicy weaknesses; and, conversely, aneconomy with poor performance on theDoing Business indicators may make upfor it in other ways so as to attractlarge FDI inflows. The fact that thereare examples of economies that do notdo well on the Doing Business indicatorsbut continue to receive flows of FDIshows that private corporations do notmake this mistake; they will decide onthe basis of a range of factors.Another common criticism is implicitin the question, If economy x is grow-ingfast, why does it not rank high onthe ease of doing business? First, ifthe ease of doing business rankingwere constructed in such a way thatit had a very high correlation withGDP or GDP growth, there would belittle reason to have a new ranking. Wewould be able to get our result fromlooking at GDP or GDP growth tables.Second, this question is often rooted inthe common mistake, already noted,of treating the ease of doing busi-nessranking as an all-encompassingmeasure of an economys goodness.It is not. An economy can do poorly onDoing Business indicators but do well inmacroeconomic policy or social welfareinterventions. In the end, Doing Businessmeasures a slender segment of thecomplex organism that any moderneconomy is. It attempts to capture asegment that is representative of othergeneral features of the economy (andeffort will be made to improve on this),but the fact remains that an economycan undo the goodness or badness ofits performance on Doing Business indi-catorsthrough other policies.Moreover, economic efficiency is notthe only measure by which we evalu-atean economys performance.8 Mostof us value greater equality amongpeople; the ease of doing businessranking is not meant to measure suc-cesson that scale. We value betterhealth, better education, literatureand culture; the ease of doing businessranking is not meant to capture theseeither. It is a mistake to treat this as acriticism of the ease of doing businessranking; it is simply a reminder that lifeis a many-splendored thing, and theDoing Business report tries to captureone aspect of the good life. The need isto resurrect that once-popular expres-sion,ceteris paribus. Other things re-mainingthe same, an economy shouldtry to improve its score underlying theease of doing business ranking.In putting the ease of doing businessranking to use in crafting policy, itis important to keep in mind thesecaveats, strengths and weaknesses.Ultimately, the Doing Business indicatorsare meant to simply hold up a mirror toeconomies. A poor score should alert agovernment that it ought to examineits regulatory structure. On the basis ofthis it may decide to change some regu-latoryfeatures and policies in ways thatmay not even directly affect its ease ofdoing business ranking but neverthelessimprove the economys performance. Ifthis happens, and there is some evidencethat it does, the Doing Business reportwould be serving its purpose. There aregovernments that attract a lot of talentinto their bureaucracy but neverthelessdo not have an efficient administrationbecause the bureaucrats get trapped intheir arcane rules of engagement. Thisis a report that can be of great value tosuch governments. And it is gratifyingthat a large number of governmentshave put it precisely to such use.Promoting a well-functioning, competi-tiveprivate sector is a major undertak-ingfor any government, especially forone with limited resources and techni-calcapabilities. It requires long-termcomprehensive policies targeting mac-roeconomicstability; investment in in-frastructure,education and health; andthe building of technological and entre-preneurialcapacity. A well-functioningpolitical systemone in which the gov-ernmentis perceived to be working in thepublic interest while managing scarceresources in a reasonably transparentwayplays a central role. Removingadministrative barriers and strengthen-inglaws that promote entrepreneurshipand creativityboth of which are withinthe power of governments to docanset an economy on the path to greaterprosperity and development. There iscompelling evidence that excessivelyburdensome regulations can lead tolarge informal and less-productive sec-tors,less entrepreneurship and lowerrates of employment and growth.8. See Stiglitz, Sen and Fitoussi (2009); World Bank (2014a); and World Bank and IMF (2014). 10. FOREWORD ixCARDINALITY,ORDINALITY, RANKINGSAND RATINGSOne feature of the report that hasreceived a lot of attention is its use ofrankings. Ultimately, what the reportdoes is to provide a table with a simpleordinal ranking of all 189 economies.After a lot of debate and discussiona decision was made to stay with theoverall ranking, even though other,cardinal features of the exercise are atthe same time being strengthened, aswill be explained shortly.It was in 2005 that the World BankGroup management decided to startranking economies on the ease ofdoing business because it recognizedthe value of benchmarking exercisesin generating interest among policymakers in reform.9 In an area thathad received little attention frompolicy makers before the publicationof the first Doing Business report, therankings proved to be an importantcatalyst in raising the profile ofregulation as a central element of agood investment climate. The rank-ingsalso proved effective in movingissues of performance and progressin business regulation to the center ofpolicy discussions in a large numberof economies. By capturing complex,multidimensional realities in a simplequantified framework, the rankingsalso helped to facilitate communica-tionbetween different stakeholdersand made possible meaningful inter-nationalcomparisons of the regula-toryperformance of economies, con-tributing,along the way, to increasingthe accountability of political actors.Members of the business commu-nity,for instance, could point to theexistence of less complex and costlyprocedures or better-functioning insti-tutionsin other economies in the regionin their dealings with governments,which, by and large, had been slow tosee their own Doing Business data in aninternational perspective. The overallranking has value in addition to thetopic-level indicators. The overall rank-ingcombines a wealth of informationthat serves as a summary measureand allows governments to benchmarktheir economys performance againstthat of other economies.Notwithstanding the important ben-efitsof rankings, the disaggregateddata are also a clear strength of theproject. Policy makers frequentlybecome aware of the measurementsthrough the ranking but then use thedisaggregated data to shape reformprograms. The data identify best prac-ticesglobally and identify where eacheconomys practices hold inefficienciesor inadequate legal protections. Forexample, governments find it usefulto compare their own procedures listsfor firm start-up with those of othereconomies that pursue the same goalswith less procedural complexity and atlower cost.Having noted these advantages, wewould be remiss if we did not point tosome of the disadvantages of ordinalranking. When an economy is given arank, there is no sense of how far it isfrom its closest contenders. Consideran economy that is ranked at 95,with no other economy at that rank.We know that its closest contendersare at 94 and 96 and this would beunchanged no matter how far or hownear those other economies are. Thismeans that when economies are verydensely packed, a small improvementcan lead to a vast jump in ranking anda small worsening can lead to a largedrop in ranking. To see this, consideran extreme case where 50 economieshave exactly the same scores on theindicators underlying the ease of doingbusiness ranking and so each of themhas the same ranking, say 95. If oneeconomy does slightly worse, with nochange in the performance of all theother economies, it will drop not to 96in the ranking but to 145. On an ordinalranking scale this will show up as aseemingly alarming drop, but noth-ingalarming has actually happened.Similarly, if an economy is far behindthe economy ahead of it, it can makea large improvement and yet show nogain in the ordinal rank measure.In response to this, there are 2comments in defense of the methodsused. First, the Doing Business teamworked over the past 3 years to deepenthe indices by adding a distance tofrontier measure. This measure hascertain cardinal qualities because ittries to capture the actual distanceeach economy has to go to reach thefrontier of best performance. Thisputs on display how each economyperforms not only vis--vis othereconomies but also in absolute terms.Further, the distance to frontier scorecan shed light on the progress madeby individual economies over time incomparison with their own regulatorypractices of previous years. This makesit transparent that an economy canmake actual progress and still loseground in the ranking when rank-neighboringeconomies do even better.Recent Doing Business reports havegiven increasing attention to long-termtrends in the datawith an emphasison economies performance withrespect to their past performancetobalance the short-term perspectivethat the ranking provides. Further, forreasons of transparency Doing Businessmakes the disaggregated dataavailable on its website. This allowsusers to construct alternative rankingswith any set of weights they may wishto attach to individual indicators.Second, the ranking issue crops upfor both the final aggregate score andthe basic indicators that go into the9. See World Bank (2006). 11. x DOING BUSINESS 2015creation of this final score. Here, theuse of ordinal ranks is more problem-aticbecause they get absorbed in thefinal measure and economies makingsmall improvements or regressionsin densely packed areas can have adisproportionate gain or loss in rank-ing.This information being buried inthe basic indicators makes it harder todiscern. For this reason from this yearwe decided to switch from using the or-dinalranks of basic indicators to usingabsolute or cardinal measures beforethey are aggregated in the final rank-ing.There are also other options. Oneis to switch from rankings to ratings,which would have economies appear inclusters that are then ranked. But thismethod too comes with its own shareof strengths and weaknesses.CONCLUSIONThe economy is a complex machine, be-yondthe full comprehension of any per-son.Over the years meticulous research,collection of increasingly sophisticateddata and the advance of economictheory and innovative modeling havegiven us a better understanding of thismachine. Nevertheless, one has to ap-proacheconomic policy making with acertain humility, keeping an eye on thefact that what we, all this time, took tobe an established feature of economicsmay be open to question. In brief, thediscipline is evolving and we must bewilling participants in the process.The World Bank Groups Doing Businessinitiative is no exception to this. It triesto track and measure one of the mostimportant features of an economythe ease with which it is possible todo business, trade and exchange. Itprovides governments, administratorsand researchers with valuable data andanalysis to promote a better regula-toryframework for development, jobcreation and growth. There are econo-miesthat have benefited greatly fromthis and it is hoped that Doing Businesswill continue to provide this service. Atthe same time, as this foreword hasargued, we are aware that we still havesome distance to go in our understand-ingof an economy. For that reason wewelcome research and criticism andhope that this will lead to a better DoingBusiness report. This years report is asmall, first step in that direction.Kaushik BasuSenior Vice President andChief EconomistThe World BankWashington, DC 12. Doing Business 2015Going Beyond EfficiencyOverviewGreat ideas for new businessventures happen every day andeverywhere. Some go far, whileothers never take off. Great ideas areat the heart of development; they alloweconomies to grow, and they improvepeoples lives. So it is important to un-derstandwhy some great ideas nevercome to fruition even as others thrive.What do entrepreneurs need to pursuea great idea? First of all, they need theability to give legal form to the ideathat is, to start a businesssimply,quickly and inexpensively and with thecertainty of limited liability. They alsoneed the certainty of a well-designedinsolvency system, in case the idea failsto work out. In addition, they will needto hire people to help realize the idea,will probably need to obtain financing(both equity and credit) and, in todaysincreasingly interdependent globaleconomy, may in many cases need asimple way to import and export. Andthey will need a straightforward way topay their taxes.Sound business regulations are funda-mentalto all this. The right businessregulations enable good ideas to takeroot, leading to the creation of jobsand to better lives. But where businessregulations make it difficult to startand operate a business, good ideas maynever see the light of day and importantopportunities may be missed. Buddingentrepreneurs, daunted by burden-someregulations, may opt out of doingbusiness altogether or, if they have theresources, take their ideas elsewhere.Doing Business looks at how businessregulations determine whether goodideas can get started and thrive or willfalter and wither away. Many other di-mensionsof the business environmentalso matter but are outside the scopeof Doing Business. For example, DoingBusiness does not capture such aspectsas security, market size, macroeco-nomicstability and the prevalence ofbribery and corruption. Nevertheless,improving in the areas measured byDoing Business is an important steptoward a better business environmentfor all.WHAT DOES DOINGBUSINESS MEASUREANDHOW IS IT CHANGING?This years Doing Business reportlaunches a 2-year process of introduc-ingimportant improvements in 8 of the10 sets of Doing Business indicators.These improvements provide a newconceptual framework in which theemphasis on the efficiency of regula-tionis complemented by an increasedemphasis on its quality. In the area ofdealing with construction permits, forexample, Doing Business will measurethe quality of building regulations andthe qualifications of the people review-ingthe building plans in addition to theefficiency of the process for completingall the formalities to build a warehouse.With a few exceptions, the originalDoing Business indicators focusedmainly on measuring efficiency, such as This years Doing Business reportlaunches a 2-year process ofintroducing improvements in 8 of the10 Doing Business indicator setstocomplement the emphasis on theefficiency of regulation with a greateremphasis on its quality. New data show that efficiency andquality go hand in hand. Insolvency casesare resolved more quickly, and withbetter outcomes, where insolvency lawsare well designed. Property transfersare faster and less costly in economieswith good land administrationsystems. And commercial disputesare resolved more efficiently by courtsusing internationally recognized goodpractices. For the first time this year, DoingBusiness collected data for 2 citiesin large economies. The data showfew differences between cities withineconomies in indicators measuring thestrength of legal institutions, whichtypically apply nationwide. Differencesare more common in indicatorsmeasuring the complexity and costof regulatory processes, where localjurisdictions play a larger role. Sub-Saharan Africa accounts for 5 ofthe 10 top improvers in 2013/14. Theregion also accounts for the largestnumber of regulatory reforms makingit easier to do business in the pastyear75 of the 230 worldwide. Morethan 70% of its economies carried out atleast one such reform. Business regulations such as thosemeasured by Doing Business areimportant for new business creation andfor the performance of small firms. 13. 2 DOING BUSINESS 2015by recording the procedures, time andcost to start a business or to transferproperty. These are very importantaspects to measure. But as the proj-ectsimportance grew, it became clearthat there was a need to expand whatwas being measured to include moreaspects of regulatory quality. Many ofthe improvements in methodology wereinspired and informed by the report ofthe Independent Panel on Doing Businessas well as by input from policy makersand data users.1 They also benefitedfrom discussions at the Doing Businessresearch conference held in Washington,DC, in February 2014. (For more detailson the changes in methodology, see thechapter on what is changing in DoingBusiness.)Doing Business continues to focus onregulations that affect domestic smalland medium-size enterprises, operat-ingin the largest business city of aneconomy, across 10 areas: starting abusiness, dealing with constructionpermits, getting electricity, registeringproperty, getting credit, protectingminority investors, paying taxes, trad-ingacross borders, enforcing contractsand resolving insolvency. Doing Businessalso measures labor market regulation,which is not included in any of theaggregate measures. The indicatorsets for 3 of the 10 topics are beingexpanded in this years report; thosefor 5 others will be expanded in nextyears report (figure 1.1).In another change starting in this yearsreport, Doing Business has extended itscoverage to include the second larg-estbusiness city in economies with apopulation of more than 100 million.These economies are Bangladesh,Brazil, China, India, Indonesia, Japan,Mexico, Nigeria, Pakistan, the RussianFederation and the United States.In addition, while Doing Business contin-uesto publish the ease of doing businessranking, this years report introduces achange in the basis for the ranking, fromthe percentile rank to the distance tofrontier score. The distance to frontierscore benchmarks economies withrespect to a measure of regulatory bestpracticeshowing the gap betweeneach economys performance and thebest performance on each indicator.2This measure captures more informa-tionthan the simple rankings previouslyused as the basis for the ease of doingbusiness ranking because it shows notonly how economies are ordered on theirperformance on the indicators but alsohow far apart they are.The distance to frontier score alsoprovides an important complementto the ease of doing business rankingin analyzing changes in an economysbusiness regulatory environment. Anexample at the global level suggestswhy: the time series of the distance tofrontier scores overwhelmingly showsimprovements in business regulationsaround the world, while in the easeof doing business ranking, for everyeconomy that goes up another must godown. (For more details on the differ-encesbetween the 2 measures, see thechapter on the distance to frontier andease of doing business ranking.)While the changes being implementedthis year are substantive, there is astrong correlation at the aggregatelevel between this years data under theold methodology and the same dataunder the new one (figure 1.2). This is notsurprising, since changes are being in-troducedfor only 3 of the 10 topics thisyear. But even with a high correlationthere can still be relatively large shifts inranking in some cases. This is particu-larlylikely for economies in the middleof the distribution, in part because theyare more closely bunched and smallshifts in their distance to frontier scoreswill therefore tend to have a greater im-pacton their positions relative to othereconomies. Another reason is that theseare the economies that historically havemade more intense efforts to reformbusiness regulation.The Doing Business website presentscomparable data for this year and last,making it possible to assess the extentto which there has been an improve-mentin business regulation in anyeconomy as tracked by the distanceto frontier measure. Moreover, becausemost of the changes in methodologyinvolve adding new indicators ratherthan revising existing ones, data formore than 90% of the previously exist-ingindicators remain comparable overtime. The full series are available on thewebsite.FIGURE 1.1 What Doing Business continues to cover and what it is addingWhatDoing Businesscontinuesto coveraaaaMMaanMMMMMMMWhatthis yearsreport addsWhatnext yearsreport will add 14. OVERVIEW 3WHERE ARE REGULATIONSMORE BUSINESS-FRIENDLY?Singapore continues to be the economywith the most business-friendly regu-lations(table 1.1). And while there wassome reordering of economies withinthe top 20 in the ease of doing businessranking, the list remains very similar tolast years: 17 economies stayed on thelist, while 3 entered this yearEstonia,Germany and Switzerland. Economiesin the top 20 continued to improvetheir business regulatory environ-mentin the past year. For example,Switzerland made starting a businesseasier by introducing online proceduresand strengthened minority investorprotections by increasing the level oftransparency required from listed com-panies.And Sweden made registeringproperty easier through a new onlinesystem that became fully operationalin the past year. The system providescomprehensive coverage, allowing us-ersto conduct searches and file regis-trationsfrom anywhere in the country.The 20 economies at the top of theease of doing business ranking performwell not only on the Doing Businessindicators but also in other interna-tionaldata sets capturing dimensionsof competitiveness. The economiesperforming best in the Doing Businessrankings therefore are not those withno regulation but those whose govern-mentshave managed to create rulesthat facilitate interactions in the mar-ketplacewithout needlessly hinderingthe development of the private sector.Moreover, even outside the top 20economies there is an association be-tweenperformance in the ease of doingbusiness ranking and performance onmeasures of quality of government andgovernance. For example, in a sampleof 78 mostly low- and lower-middle-incomeeconomies the distance tofrontier score is strongly correlatedwith the International DevelopmentAssociation (IDA) Resource AllocationIndex, which measures the quality ofa countrys policies and institutionalarrangements.3The distance to frontier scores under-lyingthe ease of doing business rank-ingsreveal some regional patterns.OECD high-income economies have thehighest distance to frontier scores onaverage, indicating that this regionalgroup has the most business-friendlyregulations overall (figure 1.3). But bestpractices in business regulation can beFIGURE 1.2 Distance to frontier scores remain similar under the new methodology1009080706050403030 40 50 60 70 80 90 100Distance to frontier scoreunder new methodology (0100)Distance to frontier scoreunder old methodology (0100)Note: The figure compares distance to frontier scores based on this years data computed using the old (Doing Business 2014)methodology with scores based on the same data computed using the new methodology. The differences between the 2series are in protecting minority investors, resolving insolvency, the depth of credit information index in getting credit and thedistance to frontier calculation for the total tax rate in paying taxes. It is not possible to isolate the changes in the strengthof legal rights index in getting credit. The 45-degree line shows where the scores under the old and new methodologies areequal. The correlation between the 2 scores is 0.99. For analysis of the effect of the change in ranking calculation, see figure3.1 in the chapter on what is changing in Doing Business.Source: Doing Business database.FIGURE 1.3 Big gaps between the highest and lowest distance to frontier scores insome regions10080604020051.87Sub-SaharanAfrica54.56SouthAsia59.23MiddleEastNorthAfrica60.66LatinAmerica Caribbean63.19East Asia Pacific66.67Europe Central Asia76.47OECD highincome74.81Worst score Best score Average score66.7086.9148.5779.4643.5588.2741.4172.2933.3576.8141.1661.3633.16Distance to frontier scoreSource: Doing Business database. 15. 4 DOING BUSINESS 2015TABLE 1.1 Ease of doing business rankingRank Economy DTF score Rank Economy DTF score Rank Economy DTF score1 Singapore 88.27 64 Cyprus 66.55 127 Mozambique 56.922 New Zealand 86.91 65 Croatia 66.53 128 Lesotho 56.643 Hong Kong SAR, China 84.97 66 Oman 66.39 128 Pakistan 56.644 Denmark 84.20 67 Samoa 66.17 130 Iran, Islamic Rep. 56.515 Korea, Rep. 83.40 68 Albania 66.06 131 Tanzania 56.386 Norway 82.40 69 Tonga 65.72 132 Ethiopia 56.317 United States 81.98 70 Ghana 65.24 133 Papua New Guinea 55.788 United Kingdom 80.96 71 Morocco 65.06 134 Kiribati 55.489 Finland 80.83 72 Mongolia 65.02 135 Cambodia 55.3310 Australia 80.66 73 Guatemala 64.88 136 Kenya 54.9811 Sweden 80.60 74 Botswana 64.87 137 Yemen, Rep. 54.8412 Iceland 80.27 75 Kosovo 64.76 138 Gambia, The 54.8113 Ireland 80.07 76 Vanuatu 64.60 139 Marshall Islands 54.7214 Germany 79.73 77 Kazakhstan 64.59 140 Sierra Leone 54.5815 Georgia 79.46 78 Vietnam 64.42 141 Uzbekistan 54.2616 Canada 79.09 79 Trinidad and Tobago 64.24 142 India 53.9717 Estonia 78.84 80 Azerbaijan 64.08 143 West Bank and Gaza 53.6218 Malaysia 78.83 81 Fiji 63.90 144 Gabon 53.4319 Taiwan, China 78.73 82 Uruguay 63.89 145 Micronesia, Fed. Sts. 53.0720 Switzerland 77.78 83 Costa Rica 63.67 146 Mali 52.5921 Austria 77.42 84 Dominican Republic 63.43 147 Cte dIvoire 52.2622 United Arab Emirates 76.81 85 Seychelles 63.16 148 Lao PDR 51.4523 Latvia 76.73 86 Kuwait 63.11 149 Togo 51.2924 Lithuania 76.31 87 Solomon Islands 63.08 150 Uganda 51.1125 Portugal 76.03 88 Namibia 62.81 151 Benin 51.1026 Thailand 75.27 89 Antigua and Barbuda 62.64 152 Burundi 51.0727 Netherlands 75.01 90 China 62.58 153 So Tom and Prncipe 50.7528 Mauritius 74.81 91 Serbia 62.57 154 Algeria 50.6929 Japan 74.80 92 Paraguay 62.50 155 Djibouti 50.4830 Macedonia, FYR 74.11 93 San Marino 62.44 156 Iraq 50.3631 France 73.88 94 Malta 62.11 157 Bolivia 49.9532 Poland 73.56 95 Philippines 62.08 158 Cameroon 49.8533 Spain 73.17 96 Ukraine 61.52 159 Comoros 49.5634 Colombia 72.29 97 Bahamas, The 61.37 160 Sudan 49.5535 Peru 72.11 97 Dominica 61.37 161 Senegal 49.3736 Montenegro 72.02 99 Sri Lanka 61.36 162 Suriname 49.2937 Slovak Republic 71.83 100 St. Lucia 61.35 163 Madagascar 49.2538 Bulgaria 71.80 101 Brunei Darussalam 61.26 164 Malawi 49.2039 Mexico 71.53 102 Kyrgyz Republic 60.74 165 Equatorial Guinea 49.0140 Israel 71.25 103 St. Vincent and the Grenadines 60.66 166 Tajikistan 48.5741 Chile 71.24 104 Honduras 60.61 167 Burkina Faso 48.3642 Belgium 71.11 104 Lebanon 60.61 168 Niger 47.6343 South Africa 71.08 106 Barbados 60.57 169 Guinea 47.4244 Czech Republic 70.95 107 Bosnia and Herzegovina 60.55 170 Nigeria 47.3345 Armenia 70.60 108 Nepal 60.33 171 Zimbabwe 46.9546 Rwanda 70.47 109 El Salvador 59.93 172 Timor-Leste 46.8947 Puerto Rico (U.S.) 70.35 110 Swaziland 59.77 173 Bangladesh 46.8448 Romania 70.22 111 Zambia 59.65 174 Liberia 46.6149 Saudi Arabia 69.99 112 Egypt, Arab Rep. 59.54 175 Syrian Arab Republic 46.5150 Qatar 69.96 113 Palau 59.50 176 Mauritania 44.2151 Slovenia 69.87 114 Indonesia 59.15 177 Myanmar 43.5552 Panama 69.22 115 Ecuador 58.88 178 Congo, Rep. 43.2953 Bahrain 69.00 116 Maldives 58.73 179 Guinea-Bissau 43.2154 Hungary 68.80 117 Jordan 58.40 180 Haiti 42.1855 Turkey 68.66 118 Belize 58.14 181 Angola 41.8556 Italy 68.48 119 Nicaragua 58.09 182 Venezuela, RB 41.4157 Belarus 68.26 120 Brazil 58.01 183 Afghanistan 41 .1 658 Jamaica 67.79 121 St. Kitts and Nevis 58.00 184 Congo, Dem. Rep. 40.6059 Luxembourg 67.60 122 Cabo Verde 57.94 185 Chad 37.2560 Tunisia 67.35 123 Guyana 57.83 186 South Sudan 35.7261 Greece 66.70 124 Argentina 57.48 187 Central African Republic 34.4762 Russian Federation 66.66 125 Bhutan 57.47 188 Libya 33.3563 Moldova 66.60 126 Grenada 57.35 189 Eritrea 33.16Note: The rankings are benchmarked to June 2014 and based on the average of each economys distance to frontier (DTF) scores for the 10 topics included in this years aggregate ranking. Forthe economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities. An arrow indicates an improvement in the score between 2013 and 2014 (and thereforean improvement in the overall business environment as measured by Doing Business), while the absence of one indicates either no improvement or a deterioration in the score. The score for bothyears is based on the new methodology.Source: Doing Business database. 16. OVERVIEW 5found in almost all regions. In 6 of the7 regions the highest distance to fron-tierscore is above 70. The differencebetween the best and worst scores ina region can be substantial, however,especially in East Asia and the Pacific,the Middle East and North Africa andSub-Saharan Africa.WHO IMPROVED THE MOSTIN 2013/14?Since 2004 the Doing Business reporthas captured more than 2,400 regula-toryreforms making it easier to dobusiness. In the year from June 1, 2013,to June 1, 2014, 123 economies imple-mentedat least one reform in the areasmeasured by Doing Business230 intotal. More than 63% of these reformsreduced the complexity and cost ofregulatory processes, while the oth-ersstrengthened legal institutions.Twenty-one economies, including 6 inSub-Saharan Africa and 6 in the OECDhigh-income group, implemented 3 ormore reforms reducing burdensomebureaucracy or improving legal andregulatory frameworks.4 Globally, morethan 80% of the economies covered byDoing Business had an improvement intheir distance to frontier scoreit isnow easier to do business in most partsof the world.Sub-Saharan Africa, the region withthe largest number of economies,accounted for the largest numberof regulatory reforms in 2013/14,with 39 reducing the complexity andcost of regulatory processes and 36strengthening legal institutions. As inprevious years, however, Europe andCentral Asia had the largest share ofeconomies implementing at least oneregulatory reform, with some 85%doing so (figure 1.4). Sub-SaharanAfrica had the second largest shareof economies implementing at leastone reform and the second largestaverage improvement in distance tofrontier scores. Latin America and theCaribbean and South Asia remain the2 regions with the smallest share ofeconomies implementing regulatoryreforms as captured by Doing Business.Among the 21 economies with the mostreforms making it easier to do businessin 2013/14, 10 stand out as havingimproved the most in performance onthe Doing Business indicators: Tajikistan,Benin, Togo, Cte dIvoire, Senegal,Trinidad and Tobago, the DemocraticRepublic of Congo, Azerbaijan, Irelandand the United Arab Emirates (table 1.2).Together, these 10 top improvers imple-mented40 regulatory reforms makingit easier to do business. Among these 10,only Cte dIvoire featured among the 10top improvers in last years report. Andonly 4 place among the top 100 in theoverall ease of doing business ranking;Ireland has the highest ranking, at 13.Being recognized as top improvers doesnot mean that these economies have ex-emplarybusiness regulations; instead, itshows that thanks to serious efforts inregulatory reform in the past year, theymade the biggest advances toward thefrontier in regulatory practice (figure1.5). Many of the 10 top improvers stillface many challenges on their way tointernational best practices in businessregulation, including high bureaucraticobstacles, political instability and weakfinancial institutions.Among the 10 top improvers, Tajikistanmade the biggest advance toward theregulatory frontier in the past year,thanks to improvements in several ar-eas.For example, starting a businessin Tajikistan is now easier as a result ofthe implementation of new softwareat the one-stop shop and the elimina-tionof one of the business registrationprocedures. A reduction of fees madeFIGURE 1.4 Europe and Central Asia had both the largest share of economies makingit easier to do business in 2013/14 . . .Share of economies with at least one reformmaking it easier to do business (%)10080604020085. . . and the biggest average improvement in distance to frontier scoresAverage change in distance to frontier scorebetween 2013 and 20142.01.51.00.50SouthAsiaLatin America CaribbeanMiddle East North AfricaEast Asia PacificOECDhigh incomeSub-SaharanAfricaEurope Central AsiaSouthAsiaLatin America CaribbeanMiddle East North AfricaEast Asia PacificOECDhigh incomeSub-SaharanAfricaEurope Central Asia7465605550 501.561.110.77 0.740.520.39 0.31Source: Doing Business database. 17. 6 DOING BUSINESS 2015TABLE 1.2 The 10 economies improving the most across 3 or more areas measured by Doing Business in 2013/14Reforms making it easier to do businessEase ofdoingbusinessrankStarting abusinessDealing withconstructionpermitsGettingelectricityRegisteringpropertyGettingcreditProtectingminorityinvestorsPayingtaxesTradingacrossbordersEnforcingcontractsResolvinginsolvencyTajikistan 166 Benin 151 Togo 149 Cte dIvoire 147 Senegal 161 Trinidad and Tobago 79 Congo, Dem. Rep. 184 Azerbaijan 80 Ireland 13 United Arab Emirates 22 Note: Economies are selected on the basis of the number of their reforms and ranked on how much their distance to frontier score improved. First, Doing Business selects the economies thatimplemented reforms making it easier to do business in 3 or more of the 10 topics included in this years aggregate distance to frontier score. Regulatory changes making it more difficultto do business are subtracted from the number of those making it easier. Second, Doing Business ranks these economies on the improvement in their distance to frontier score from theprevious year. The improvement in their score is calculated not by using the data published in 2013 but by using comparable data that capture data revisions and methodology changes.The choice of the most improved economies is determined by the largest improvements in the distance to frontier score among those with at least 3 reforms.Source: Doing Business database.FIGURE 1.5 How far have economies moved toward the frontier in regulatory practice since 2013?Distance to frontier score1007550250SingaporeNew ZealandHong Kong SAR, ChinaDenmarkKorea, Rep.NorwayUnited StatesUnited KingdomFinlandAustraliaSwedenIcelandIrelandGermanyGeorgiaCanadaEstoniaMalaysiaTaiwan, ChinaSwitzerlandAustriaUnited Arab EmiratesLatviaLithuaniaPortugalThailandNetherlandsMauritiusJapanMacedonia, FYRFrancePolandSpainColombiaPeruMontenegroSlovak RepublicBulgariaMexicoIsraelChileBelgiumSouth AfricaCzech RepublicArmeniaRwandaPuerto Rico (U.S.)RomaniaSaudi ArabiaQatarSloveniaPanamaBahrainHungaryTurkeyItalyBelarusJamaicaLuxembourgTunisiaGreeceRussian FederationMoldovaCyprusCroatiaOmanSamoaAlbaniaTongaGhanaMoroccoMongoliaGuatemalaBotswanaKosovoVanuatuKazakhstanVietnamTrinidad and TobagoAzerbaijanFijiUruguayCosta RicaDominican RepublicSeychellesKuwaitSolomon IslandsNamibiaAntigua and BarbudaChinaSerbiaParaguaySan MarinoRegulatory frontier20142013Note: The distance to frontier score shows how far on average an economy is at a point in time from the best performance achieved by any economy on each Doing Business indicator since2005 or the third year in which data for the indicator were collected. The measure is normalized to range between 0 and 100, with 100 representing the frontier. The vertical bars show thechange in the distance to frontier score from 2013 to 2014; for more details, see the note to table 1.1. The 30 economies improving the most are highlighted in red.Source: Doing Business database. 18. OVERVIEW 7dealing with construction permitsless costly, and the introduction of anelectronic system for filing and payingthe corporate income tax, value addedtax and labor taxes made paying taxeseasier. Finally, the Credit InformationBureau of Tajikistan improved accessto credit information by starting toprovide credit scores in June 2013.Eight of the 10 top improvers carriedout reforms making it easier to start abusiness, while 7 implemented reformsmaking it easier to get credit. Someof these changes were inspired bytransnational initiatives. One such ini-tiativewas the revision by the Councilof Ministers of the Organization forthe Harmonization of Business Lawin Africa (OHADA) of the UniformAct on Commercial Companies andEconomic Interest Groups. The revisedact authorizes each member state toadopt national legislation reducingits paid-in minimum capital require-mentthe amount of capital thatentrepreneurs need to deposit in abank account or with a notary beforeor within 3 months of incorporation.Benin, Cte dIvoire, Senegal and Togowere all among the OHADA membereconomies that did so in 2013/14.Cte dIvoire and Senegal also tookmeasures within the framework of theWest African Economic and MonetaryUnion. Both adopted the Uniform Lawon the Regulation of Credit InformationBureaus ahead of other memberstates, providing a legal framework toestablish credit information bureaus.Reforms making it easier to get creditwere also undertaken at the nationallevel. In the United Arab Emirates thecredit bureau Emcredit and the DubaiElectricity and Water Authority (DEWA)began exchanging credit informationin October 2013. As a result, the creditbureau can now identify customers withunpaid DEWA accounts beyond 90 daysand the utility has access to the bureausbounced check repository. Ireland im-provedits credit information system bypassing a new act that provides for theestablishment and operation of a creditregistry. And in Trinidad and Tobago anew insolvency law strengthened pro-tectionsof secured creditors rights ininsolvency proceedings, giving greaterflexibility in enforcement actions.Six of the 10 top improvers reformedtheir property registration processesand 6 strengthened the rights of mi-norityshareholders, with Cte dIvoire,Senegal, Togo and the United ArabSouth SudanCentral African RepublicLibyaEritreaMaltaPhilippinesUkraineBahamas, TheSri LankaSt. LuciaBrunei DarussalamKyrgyz RepublicSt. Vincent and the GrenadinesHondurasLebanonBarbadosBosnia and HerzegovinaNepalEl SalvadorSwazilandZambiaEgypt, Arab Rep.PalauIndonesiaEcuadorMaldivesJordanBelizeNicaraguaBrazilSt. Kitts and NevisCabo VerdeGuyanaArgentinaBhutanGrenadaMozambiquePakistanLesothoIran, Islamic Rep.TanzaniaEthiopiaPapua New GuineaKiribatiCambodiaKenyaYemen, Rep.Gambia, TheMarshall IslandsSierra LeoneUzbekistanIndiaWest Bank and GazaGabonMicronesia, Fed. Sts.MaliCte dIvoireLao PDRTogoUgandaBeninBurundiSo Tom and PrncipeAlgeriaDjiboutiIraqBoliviaCameroonComorosSudanSenegalSurinameMadagascarMalawiEquatorial GuineaTajikistanBurkina FasoNigerGuineaNigeriaZimbabweTimor-LesteBangladeshLiberiaSyrian Arab RepublicMauritaniaMyanmarCongo, Rep.Guinea-BissauHaitiAngolaVenezuela, RBAfghanistanCongo, Dem. Rep.ChadDominica. 19. 8 DOING BUSINESS 2015Emirates reforming in both these areas.These 4 economies strengthened mi-norityinvestor protections by makingit possible for shareholders to inspectdocuments pertaining to related-partytransactions as well as to appoint audi-torsto conduct inspections. Moreover,the United Arab Emirates introducedadditional approval requirements forrelated-party transactions, greaterrequirements for disclosure of suchtransactions to the stock exchange anda requirement that interested directorsbe held liable if a related-party transac-tionis unfair or constitutes a conflict ofinterest. The United Arab Emirates alsomade it possible for shareholders torequest the rescission of unfair related-partytransactions.Highlights of reforms making it easierto register property include Azerbaijansintroduction of an online procedure forobtaining nonencumbrance certificatesfor property transfers. Senegal madeproperty transfers easier by eliminatingthe requirement for authorization bythe tax authority. Now applicants for aproperty transfer need only notify thetax authority before proceeding withthe property transaction at the landregistry.Two of the 10 top improvers imple-mentedreforms making it easier totrade across borders. Benin reducedthe number of documents needed forcustoms clearance of imports. Thetechnical standard or health certifi-cateis now no longer required exceptfor food imports. Cte dIvoire simpli-fiedthe process for producing theinspection report for imported cargoand lowered port and terminal han-dlingcharges at the port of Abidjanby introducing new customs and portmanagement.Among the areas with the fewestreforms by the 10 top improvers areenforcing contracts, with 2, and re-solvinginsolvency, with 1. Benin madeenforcing contracts easier by creatinga commercial section within its courtof first instance. Trinidad and Tobagomade resolving insolvency easier byintroducing a statutory mechanismfor rehabilitation of insolvent compa-niesas an alternative to previouslyavailable voluntary and court-orderedwinding-up proceedings. (For more de-tailon the reform patterns in the pastyear, see the chapter on reforming thebusiness environment.)WHAT DO THE NEW DATASHOW ABOUT DIFFERENCESBETWEEN CITIES?Subnational Doing Business reportshave covered more than 300 cities in55 economies in the nearly 10 yearsthat they have been published. For thefirst time this year, the global DoingBusiness report also extends its cover-agebeyond the largest business city ineach economy. For the 11 economieswith a population of more than 100million, Doing Business now covers thesecond largest business city as well asthe largest one. The data provide newinsights into the variability of businessregulation within economies.The sets of indicators showing limitedvariability across cities in the sameeconomy tend to be those measuringthe strength of legal institutionsgetting credit, protecting minorityinvestors, enforcing contracts andresolving insolvency, which mainlydraw from national laws with generalapplicability (figure 1.6). Variability ismore common for the sets of indicatorsmeasuring the complexity and costof regulatory processesstarting abusiness, dealing with constructionpermits, getting electricity, registeringproperty, paying taxes and tradingacross borders. But this variabilityis more likely to be in time and costthan in the number of procedures,suggesting that in most cases the lawis the same across cities though itsimplementation may vary.In all 11 economies the data for gettingcreditboth on the strength of legalrights and on the depth of creditinformationare the same for the 2cities covered. This is easy to explain.Credit information systems tend tooperate at the national level, not atthe city or state level. Collateral lawsalso tend to be national, and even inthe United States, where these lawsare under state jurisdiction, there isenough legal harmonization so thatthe 2 cities in the sample have thesame score on the strength of legalrights index. In the area of protectingminority investors all 11 economiesagain show no difference betweenthe 2 cities in the aggregate score.In the United States, however, thereare differences in some of the dataembedded in the indicators for LosAngeles and New York Citybecausecompany law is under state jurisdictionand there are measurable differencesbetween the California and New Yorkcompany law.In the area of resolving insolvency only4 of the 11 economies have a differencebetween the 2 cities in the recoveryrate and none have a difference inthe strength of insolvency frameworkindex. The pattern is different in thearea of enforcing contracts. Only 4 ofthe 11 economies have a difference inthe number of procedures to resolvea commercial dispute. In all 4 of theseeconomies one of the pair of citieshas a specialized commercial court(Rio de Janeiro, Monterrey, Lagos andNew York City) while the other doesnot (So Paulo, Mexico City, Kano andLos Angeles). But the time and costto resolve a commercial dispute dif-ferbetween the 2 cities in 7 of the 11economies and the differences in timecan be significant. In Nigeria, for ex-ample,resolving a commercial disputetakes 720 days in Kano but 447 daysin Lagos.There is also more variation at thecity level in the other indicators. For 20. OVERVIEW 9example, only 4 economies have thesame tax system in both the 2 majorbusiness citiesBangladesh, India,Indonesia and Nigeria. In all the otherlarge economies the total tax ratediffers between the 2 cities. In thearea of starting a business the paid-inminimum capital requirement is thesame in the 2 cities in all 11 economies,and the number of procedures differsin only 4 economies. But the time andcost to start a business differ betweenthe 2 cities in 8 economies. Only inBangladesh and Pakistan is the pro-cessthe same in the 2 cities. Similarly,the procedures to transfer a propertybetween 2 firms differ in only 4 econo-miesbut the cost to do so differs in 9economies. Only in Japan and Russiais the process the same in the 2 cities.In dealing with construction permitsand getting electricity 10 economiesshow some degree of differencebetween the 2 cities, and in tradingacross borders all 11 economies do so.These are the areas of regulation mea-suredby Doing Business where locationmatters the most. Building permits arecommonly issued by municipalities.Similarly, electricity connections areoften provided by local utilities. Andthe distance to the nearest port is animportant factor in determining thetime and cost to export and import,leading to differences even within thesame economy.Labor market regulation can also varyacross cities within an economy. In 6 ofthe 11 economiesBrazil, China, India,Indonesia, Japan and Russiathe 2cities in the sample have differentminimum wage levels. This is mainly toaccount for differences in the cost ofliving. In all these cases except Braziland India, the largest business cityhas a higher minimum wage than thesecond largest one. In addition, in Indiathe largest business city (Mumbai) haslonger paid annual leave, with 21 days,than the second largest one (Delhi),with 15.Does city size matter for havingbusiness-friendly regulations? At firstglance the data suggest that it doesnot. In 6 of the 11 economies the larg-estbusiness city performs better onthe Doing Business indicators overallthan the second largest one, while inthe other 5 the second largest busi-nesscity has the higher score. And inthe economies where the second larg-estbusiness city has a substantiallysmaller population (at most 30% of thelargest business citys population), thesecond city has more business-friendlyregulations overall. This is the case forKano, Monterrey and Surabaya.Among the 11 economies, the UnitedStates has the highest number ofdifferences between the largest andsecond largest business cities: LosAngeles and New York City differ in9 of the 10 topics (while the 2 citieshave the same overall score on thestrength of minority investor protec-tions,they have differences in theunderlying indicators). Japan has thefewest: Osaka and Tokyo differ in only4 topicsstarting a business, gettingelectricity, paying taxes and tradingacross borders. Overall, the differ-encesbetween cities within the sameeconomy are very small, as shown infigure 3.2 in the chapter on what ischanging in Doing Business.WHAT IS THERELATIONSHIP BETWEENEFFICIENCY AND QUALITY?One of the big innovations in this yearsreport is the expansion of the data onthe quality of regulation. Measuringaspects of the quality of regulation isnot new for Doing Business; some indi-catorsets, such as getting credit andprotecting minority investors, alreadyincluded a focus on regulatory quality.But starting this year a systematic ef-fortis being made to include measuresof quality in most of the indicator sets.This years report introduces a newmeasure of quality in the resolvinginsolvency indicator set and expandsthe measures of quality in the gettingFIGURE 1.6 Indicators measuring the strength of legal institutions show lessdifference between cities within economies than those measuring the complexity andcost of regulatory processesStarting a businessDealing withconstruction permitsGetting electricityRegistering propertyGetting creditProtecting minorityinvestorsPaying taxesTrading acrossbordersEnforcing contractsResolving insolvency910109784110 1 2 3 4 5 6 7 8 9 10 11Distance to frontier score differs betweenlargest and second largest business citiesAverage difference indistance to frontier score(absolute value)2.996.967.534.840.000.000.344.183.060.55Distance to frontier score is the same forlargest and second largest business citiesNote: The figure shows data for the 11 large economies for which Doing Business covers both the largest and the secondlargest business city.Source: Doing Business database. 21. 10 DOING BUSINESS 2015credit and protecting minority inves-torsindicator sets. Next years reportwill add measures of regulatory qualityto the indicator sets for dealing withconstruction permits, getting electric-ity,registering property, paying taxesand enforcing contracts.The results so far suggest that effi-ciencyand quality go hand in hand. Forresolving insolvency the data show thatthere is a positive correlation betweenthe recovery rate for creditors and thestrength of the legal framework forinsolvency (figure 1.7). The recoveryrate measures the cents on the dollarrecouped by secured creditors throughinsolvency proceedings and is a measureof efficiency because time and cost are 2important components. The strength ofinsolvency framework index measureshow well insolvency laws accord with in-ternationallyrecognized good practicesand is therefore a proxy for quality.Very few economies have an insolvencysystem with both high efficiency (arecovery rate of more than 50 cents onthe dollar) and low quality (a score on thestrength of insolvency framework indexof less than 8 of the possible 16 points).But many economies have an insolvencysystem with low efficiency and highquality. These are economies that havewell-designed laws but face challengesin implementing them effectively.These results suggest that well-designedlaws are necessary but notsufficient to achieve efficiency in an in-solvencysystem. The Federated Statesof Micronesia, for example, has a scoreof 11.5 on the strength of insolvencyframework index, yet creditors in thatcountry should expect to recover only3.3 cents for every dollar they haveloaned to a firm that becomes insol-vent.So an insolvency law of above-averagequality does not necessarilymean above-average recovery rates forcreditors. On average, though, econo-mieswith better-designed laws tend tohave higher recovery rates.FIGURE 1.7 Better insolvency laws, higher recovery rateHigh quality,low efficiencyPreliminary data for a new indicatorbeing developed to measure regula-toryquality in registering propertyreinforce the idea that efficiency andquality go hand in hand: economiesthat offer a simple, fast and inexpen-siveprocess for transferring propertyare also likely to have a land adminis-trationsystem providing reliable landrecords (figure 1.8).The new indicator under developmentmeasures the reliability, transpar-encyand geographic coverage of landadministration systems as well as ele-mentsof land dispute resolution. Theindicator focuses on such aspects aswhether the land registry and mappingsystem (cadastre) have adequate infra-structureto guarantee high standardsof quality for the information recorded,whether information is easily acces-sibleto the public and whether the landregistry and cadastre cover the entireterritory of the economy. Preliminarydata show that virtually all economiesthat score well on the overall quality ofland administration (with a distanceto frontier score above 50 for theindicator) also score well on efficiencyin transferring property (with an aver-agedistance to frontier score above 50for the procedures, time and cost).But many economies have a propertytransfer process that is efficient yetlacks quality. Thus while these econo-miesmake the transfer of propertysimple, fast and inexpensive, the lackof quality in the land administrationsystem is likely to undermine the valueof the property title. In the Republicof Yemen, for example, a transfer ofproperty between 2 firms takes 6procedures and only 19 days and costs1.8% of the property value. But the landadministration system keeps most ofthe land records on paper and does notassign a unique, searchable numberto land parcels, making it difficult toprovide reliable information.Efforts are ongoing for other DoingBusiness topics as well. Preliminary datafor a new measure of judicial quality andcourt infrastructure show a clear posi-tivelink between efficiency and qual-ityin the area of enforcing contracts.Micronesia, Fed. Sts.CanadaCyprus0 10 20 30 40 50 60 70 80 90 1001614121086420Venezuela, RBLow quality,low efficiencyHigh quality,high efficiencyLow quality,high efficiencyStrength of insolvencyframework index (016)Recovery rate (cents on the dollar)Note: The correlation between the strength of insolvency framework index and the recovery rate is 0.59. Therelationship is significant at the 1% level after controlling for income per capita.Source: Doing Business database. 22. OVERVIEW 11Economies that make resolving a com-mercialdispute simpler, faster and lessexpensive also tend to have a judicialsystem that follows well-establishedgood practicessuch as having a spe-cializedcommercial court or division,having a small claims court, offeringarbitration and voluntary mediation andmaking judgments in commercial casesavailable to the general public.Unlike for resolving insolvency andregistering property, however, forenforcing contracts the economiesare more evenly spread across the 4quadrants of quality and efficiency(figure 1.9). Singapore is among thosethat combine high efficiency and highquality. In that country resolving thestandard commercial dispute in theDoing Business case study takes only21 procedures and 150 days and costs25.8% of the value of the claim. And notsurprisingly, the judicial system followsseveral internationally recognized goodpractices, such as having a separatecommercial court, providing arbitra-tion,making judgments available tothe public, using case managementand allowing plaintiffs to file their initialcomplaint electronically. On the otherhand, the judicial system in Mongolia,with no specialized commercial courtor small claims court, can resolve thestandard commercial dispute through32 procedures in 374 days and at acost of 30.6% of the claim value.WHAT ARE THE BENEFITSOF MORE BUSINESS-FRIENDLYREGULATIONS?As earlier Doing Business reports havediscussed, the benefits of business-friendlyregulations are well establishedin the economic literature. To name justa few: Reforms simplifying business regis-trationlead to more firm creation.5 Increasing trade openness hasgreater effects on growth wherelabor markets are more flexible.6FIGURE 1.8 Better land administration system, faster property transfersDistance to frontier score for overallquality of land administration10090807060504030201000 10 20 30 40 50 60 70 80 90 100Distance to frontier score for registering propertyHigh quality,low efficiencyLow quality,low efficiencyLow quality,high efficiencyBelgiumSwedenYemen, Rep.AfghanistanHigh quality,high efficiencyNote: The figure compares the distance to frontier score for the existing registering property indicators with thedistance to frontier score for the new indicator on the quality of land administration (to be published for the firsttime in Doing Business 2016). The data for the new indicator are obtained through a set of questions on reliability,transparency, coverage and dispute resolution. For example, an economy receives 1 point if it has a functionalelectronic database for encumbrances, 1 point if it makes the documents and fee schedules for property registrationpublicly available (online or on public boards), 1 point if it compiles statistics on land transactions and makes thempublicly available, and so on. The correlation between the 2 distance to frontier scores is 0.56. The relationship issignificant at the 1% level after controlling for income per capita.Source: Doing Business database.FIGURE 1.9 Better courts, faster courtsDistance to frontier score forjudicial quality indexSingaporeBelizeMongoliaAngola0 10 20 30 40 50 60 70 80 90 1001009080706050403020100Distance to frontier score for enforcing contractsHigh quality,low efficiencyLow quality,low efficiencyHigh quality,high efficiencyLow quality,high efficiencyNote: The figure compares the distance to frontier score for the existing enforcing contracts indicators with the distanceto frontier score for the new index on judicial quality (to be published for the first time in Doing Business 2016). The indexmeasures such aspects as whether the judicial system has a specialized commercial court or division, has a small claimscourt, offers voluntary mediation and arbitration and makes judgments in commercial cases available to the generalpublic. The correlation between the 2 distance to frontier scores is 0.41. The relationship is significant at the 1% level aftercontrolling for income per capita.Source: Doing Business database. 23. 12 DOING BUSINESS 2015 Cumbersome, poorly functioningbusiness regulation underminesentrepreneurship and economicperformance.7 Introducing collateral registries anddebt recovery tribunals leads tobetter-performing credit markets.8 Reforms improving access to creditand the efficiency of property regis-trationare correlated with productand process innovation by youngfirms.9In addition, with the time series ofDoing Business data now available, itis possible to study how changes inregulations within an economy overtime lead to changes in developmentoutcomes in that economy. Onestudy shows, for example, that animprovement of 10 points in the overalldistance to frontier score is linked toan increase in new firm density (thenumber of new firms created in a yearper 1,000 adults) of around 0.5 (figure1.10). And while small changes in theoverall distance to frontier score mayhave a negligible link with growth,moving from the lowest quartile ofimprovement in business regulationsto the highest quartile is associatedwith a significant increase in the an-nualper capita growth rate of around0.8 percentage points.10These results apply for different typesof indicators but their intensity varies.For example, an increase of 10 points inthe average distance to frontier scorefor the indicators measuring the com-plexityand cost of regulatory processesis associated with an increase in newfirm density of about 0.2. The equiva-lentresult for the indicators measuringthe strength of legal institutions thatsupport business regulation, such ascommercial courts and credit bureaus,is 0.4. These results suggest that com-bininggood regulations across differentareas is important for business entryand that piecemeal regulatory reformsmay be less effective than a broad re-formprogram.FIGURE 1.10 Combined regulatory reforms are likely to have greater effects on newbusiness registration than isolated ones0 0.1 0.2 0.3 0.4 0.5Distance to frontier score for indicatorsmeasuring the complexity andcost of regulatory processesDistance to frontier score for indicatorsmeasuring the strengthof legal institutionsThese results encourage further researchto better understand the mechanismsbehind the link between business regula-tionsand firm creation and potentiallyeconomic growth. Firm-level data canprovide some insights into these mecha-nisms.The analysis combined data fromWorld Bank Enterprise Surveys for morethan 40,000 observations (across firmsand years) with Doing Business data totest how business regulations affectthe performance of firms of differentsize classes. The analysis used distanceto frontier scores to measure businessregulations in the areas covered by DoingBusiness and growth in sales and em-ploymentto measure firm performance.The results show that improvementsin the distance to frontier score havegreater effects on sales and employ-mentgrowth for small firms than forlarge ones.11These results indicate that sound busi-nessregulations in the areas measuredby Doing Business benefit small firmsmore than large ones. This is in line withearlier research findings. One studyfound that a heavy regulatory burdenmeasured by the share of managementtime spent dealing with regulationsor inspectionscan stunt the growthof small firms.12 Another found that ingeneral there is a significant relation-shipbetween entrepreneurial activityand indicators of the quality of the legaland regulatory environment and gover-nance.13 The finding that good businessregulations in areas such as those mea-suredby Doing Business benefit smallfirms more than large ones is an impor-tantonesince small firms account forthe largest shares of job creation and thehighest growth in sales and employmentin developing economies.14HOW HAVE BUSINESSREGULATIONS CHANGEDOVER THE PAST DECADE?Among the more encouraging trendsshown by Doing Business data over thepast decade is the gradual improve-mentin economies performance inthe areas tracked by the indicators.Moreover, economies with the weak-estregulatory institutions and themost complex and costly regulatoryprocesses tend to focus on the areaswhere their regulatory performance isworse, slowly but steadily beginningto adopt some of the better practicesseen among the best performers.Overall distance tofrontier scoreIncrease in new firm density associated with10-point increase in distance to frontier scoreNote: New firm density is defined as the number of newly registered limited liability companies per 1,000 working-agepeople (ages 1564). Indicators measuring the strength of legal institutions are those on getting credit, protectingminority investors, enforcing contracts and resolving insolvency. Indicators measuring the complexity and costof regulatory processes are those on starting a business, dealing with construction permits, getting electricity,registering property, paying taxes and trading across borders. The analysis uses data from 200313 for all economiescovered by Doing Business.Source: Divanbeigi and Ramalho 2014. 24. OVERVIEW 13FIGURE 1.11 Strong convergence across economies since 2005Averages by group8006004002002502001501005070605040302010Best 3 quartilesWorst quartileBest 3 quartilesWorst quartileBest 3 quartilesCost to start a business(% of income per capita)3002502001501005002005 2006 2007 2008 2009 2010 2011 2012 2013 20141401201008060402040035030025020015010050605040302010Worst quartileBest 3 quartilesCost to register property(% of property value)1816141210864202005 2006 2007 2008 2009 2010 2011 2012 2013 2014Time to import(days)02005 2006 2007 2008 2009 2010 2011 2012 2013 2014Time to export(days)02005 2006 2007 2008 2009 2010 2011 2012 2013 2014Time to register property(days)02005 2006 2007 2008 2009 2010 2011 2012 2013 2014Time to deal withconstruction permits (days)02005 2006 2007 2008 2009 2010 2011 2012 2013 2014Time to pay taxes(hours per year)02005 2006 2007 2008 2009 2010 2011 2012 2013 2014Time to start a business(days)02005 2006 2007 2008 2009 2010 2011 2012 2013 2014Worst quartileWorst quartileBest 3 quartilesBest 3 quartilesWorst quartileWorst quartileBest 3 quartilesWorst quartileBest 3 quartilesNote: Economies are ranked in quartiles by performance in 2005 on the indicator shown. The data refer to the 174 economies included in Doing Business 2006 (2005). Fifteeneconomies were added in subsequent years.Source: Doing Business database. 25. 14 DOING BUSINESS 2015This process is leading to a conver-gencetoward best practices. Here is anexample: In 2005 the time to transferproperty averaged 235 days among theeconomies ranking in the worst quartileon this indicator. Among the best 3quartiles it averaged 42 days. Todaythat gap is substantially narrower.While the difference is still substantialat 62 days, it is considerably smallerthan the 193 days in 2005 (figure 1.11).Similar trends can be seen in other in-dicatorsmeasuring the complexity andcost of regulatory processes.WHAT IS IN THIS YEARSREPORT?This years report presents several casestudies focusing on legal and regulatoryfeatures covered by new or expandedindicators being introduced this year ornext year. One case study, on protect-ingminority investors, discusses theimportance of corporate governancerules that are now being measured.Another discusses the importance of astrong legal framework for insolvency,also among the features being mea-suredby new indicatorswhile a thirdexamines the new components of thegetting credit indicators. A fourth casestudy analyzes good practices in landadministration systems that will bemeasured in Doing Business 2016.These case studies provide new insightsfrom the newly collected data. The casestudy on resolving insolvency shows,for example, that OECD high-incomeeconomies have the highest averagescore on the strength of insolvencyframework index. And economies thathave reformed their insolvency lawsin the past several years score sub-stantiallyhigher on this index thaneconomies with outdated insolvencyprovisions. This is important, becauseeconomies with better insolvency lawsas measured by Doing Business tendto have more credit available to theprivate sector.Other case studies in this years reportfocus on good practices in the areasof business regulation covered. A casestudy on starting a business analyzesgood practices in operating a companyregistry and the benefits of those prac-tices.This case study discusses howcompany registries empower businessesto operate in the formal economy, al-lowingthem to reap the benefits thatcome with formalization, and how onlineplatforms for company incorporationmake the process faster and cheaper. Acase study on zoning regulations looksat good practices that can increase ef-ficiencyin construction permitting.Another case study analyzes the timeseries of data on paying taxes with anemphasis on patterns before, duringand after the global financial crisis. Thiscase study shows that over the 9-yearperiod ending in 2012, the global aver-agetotal tax rate as measured by DoingBusiness fell by 9.1 percentage points,with the fastest rate of decline occur-ringin the years immediately followingthe crisis. The reduction was accompa-niedby a tangible improvement in thequality of tax administration in manyeconomies thanks to their adoptionof the latest technologies to facilitateonline filing and payment.The report also presents a case studyon enforcing contracts that analyzesnew data on freedom of contract. Thesenew data will not be included in theenforcing contracts indicators; theywere collected solely for research, withthe aim of better understanding thelink between contract enforcement andfreedom of contract.Finally, this years report presents asummary of some of the research pre-sentedat the Doing Business researchconference that took place in February2014. This research used Doing Businessdata or studied areas relevant tothe Doing Business indicators. DoingBusiness will continue to monitor prog-ressin business regulation in economiesaround the world with the aim of keep-inggovernments informed about goodpractices and enabling researchers tofurther our knowledge of how laws andregulations affect development.NOTES1. For information on the Independent Panelon Doing Business, see its website at http://www.dbrpanel.org/.2. The distance to frontier score shows how faron average an economy is at a point in timefrom the best performance achieved by anyeconomy on each Doing Business indicatorsince 2005 or the third year in whichdata for the indicator were collected. Themeasure is normalized to range between 0and