Arnold Kling  

Business Regulation and Economic Development

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A World Bank Study is filled with information on the cost of doing business in various countries. For example, they rank countries using an overall index.

New Zealand has the most business-friendly regulation in the world, as measured by the Doing Business indicators (table 1.2). Singapore is the runner-up. The United States is third. Five other East Asian countries--Hong Kong (China), Japan, Thailand, Malaysia and Korea--are among the top 30. So are the Baltic countries--Lithuania, Estonia and Latvia. Their ranking is a remarkable achievement, as only a decade has passed since they first began reforms.

But the rankings on the ease of doing business also show that many reformers still have a long way to go. Although Eastern Europe was the top reforming region, some of its countries still rank poorly on the ease of doing business. For example, Serbia and Montenegro's rank is 92, Croatia's is 118 and Ukraine's 124. Egypt, another top reformer in 2004, ranks 141. And India, though making big gains on collateral recovery and ease of registering property, ranks 116--25 places behind China.

Thanks to Greg Mankiw for the pointer.

UPDATE*** An alert commenter points out that the above refers to last year's report. The latest report is here. Greg also quoted last year's report, and he had to update his post as well.

UPDATE II: See also the latest report on Economic Freedom of the World. Thanks to Robert Lawson for the pointer.

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TRACKBACKS (2 to date)
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The author at Truck and Barter in a related article titled The Road Less Traveled of Business Regulatory Reform writes:
    According to the Bank World’s Doing Business 2007, the four steps to successful business regulatory reform; • Start simple and consider administrative reforms that don’t need legislative changes. • Cut unnecessary procedures, reducing the numbe... [Tracked on September 7, 2006 12:42 AM]
The author at Pienso... in a related article titled 2006 Economic Freedom of the World Report writes:
    Don Boudreaux writes in TCS Daily: As shown again and again by researchers who study the relationship between prosperity and economic freedom, the greater is economic freedom, the greater and more widespread is prosperity. Among the best of these studies [Tracked on September 7, 2006 3:29 PM]
COMMENTS (6 to date)
Eric Crampton writes:

I'm a bit surprised that New Zealand continues to track so well on these studies. The very flexible Employment Contracts Act 1991 was replaced with the rather more rigid Employment Relations Act in 2000. Costs of complying with the Resource Management Act seem to have been going up as well: any kind of development requires getting a consent via the RMA, and the number of potential veto players is quite large. See here for example.

Susan writes:

Wow - Venezuela fell a full 20 spots from last year!!! Crazy Chavez. Though I guess those barriers he raises keeps that 50% + 1 happy enough.

Omer K writes:

Are these rankings trustable?
For instance ho does the EEOC and "affirmative action" factor into all this? I believe Malaysia has massive "affirmative action".
Do they really look into all the factors in all the countries?

Frank Jones writes:

FYI you have linked to the old rapport (2006). The one for 2007 can be found here.

RogerM writes:

This thread ties in well with the previous thread on the state of growth economics very well. Is this type of research affecting theory any?

RogerM writes:

This shows the problem with many countries and to some degree our own. A lot of people want growth for the whole country, but they want everyone to get richer by the exact same amounts at exactly the same time. They don't want the entrepreneur to gain any more than non-entrereneurs. But as these types of studies show, you can't squash the entrepreneur and have the country grow. Any growth theory that forgets the entrepreneur is doomed.

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