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The UK has held on to seventh place in the World Bank’s annual rankings for Ease of Doing Business; New Zealand topped the list, with Singapore, Denmark, Hong Kong and South Korea claiming the next four spots; the US leapfrogged the UK to take 6th.
The World Bank’s rankings are now in their fifteenth year; the biggest difference between today’s economies and 2003, when the first rankings were published, has predictably been attributed to breakthroughs in information technology.
The report measures performance across 5 key areas; starting a business, getting a location, accessing finance, dealing with day to day operations, and operating in a secure business environment.
Countries implementing reforms have performed particularly well, with points being awarded for progress made, which helps to explain how countries such as Georgia, who came 9th on the list, have been able to outperform more established economies such as France, Germany and Japan.
Overall, sub-Saharan Africa implemented the most reforms, followed by East Asia and the Pacific, and Europe and Central Asia. Three Sub-Saharan African countries were amongst the top 10 most improved nations, with Brunei the only high-income economy to make the top 10 of this list.
The World Bank’s report suggests that the best regulatory practices are to be found in OECD high-income economies, and the economies of Europe and Central Asia, whilst the widest variation in overall performance was to be found in Sub-Saharan Africa; the region’s highest ranked country, Mauritius, ranks 25th, whilst its lowest, Somalia, came in 190th and last place.
South Asia is the only region to have no representatives in the top 50 – but can take consolation from the steady improvement of India – which now occupies 100th place in the rankings. China is 78th, and Russia 35th.
The report also makes the claim that a country experiencing some form of crisis is more likely to call for reform. The World Bank says that the “evidence shows that an economic crisis creates a stronger motivation for reform than a change of government.”
In general, the World Bank says, better performing countries in its list are associated with lower levels of unemployment and poverty.
The report also underlines the importance of economic stability and infrastructure; “When business regulation is overly cumbersome, entrepreneurs and workers are pushed out of the formal sector and must resort to operating in the informal sector. This is characterised by a lack of regulation, minimal social protection and increased levels of poverty”.
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Although these rankings from the World Bank may give extra weight to emerging economies, it is encouraging to see how much progress the less developed countries and regions are making. In Africa, the rise of mobile banking and e-wallets are finally giving individuals a financial say and companies a way to reach out to the “unbanked” – individuals that, until recently, did not have a formal bank account, or means to store money digitally.