The Doing Business Indicators, Economic Growth and Regulatory Reform

Abstract

The World Bank Group’s Doing Business Indicators (DBIs) have become an important guide and benchmark for investment climate reform. This article discusses the role of the DBIs in the reform process and informs this discussion with an empirical analysis of the impact of individual indicators and their components on economic performance. It is argued that the political economy of the policy environment has to be conducive for reforms. Reforms can then either be aimed at improving the DBI ranking to enhance the visibility of a government’s general reform efforts; or they can be aimed at maximizing the impact of reform on economic growth. In this case, the analysis suggests that focusing on DBIs relating to credit and the enforcement of contracts are the most important. DBI components focusing on cost have the largest potential for fostering growth.

Keywords: doing business indicators, regulatory reform, economic growth, investment climate

JEL Classification: O12, O17, O50, P48