Singapore Is The Best Place In The World To Do Business

The World Bank’s ease of doing business report has just come out. Doing Business 2015 is a detailed nuts and bolts analysis of 189 economies. Once again, Singapore comes top of the tree. Here is the top 20:

1. Singapore
2. New Zealand
3. Hong Kong
4. Denmark
5. Korea
6. Norway
7. United States
8. United Kingdom
9. Finland
10.  Australia
11. Sweden
12. Iceland
13. Ireland
14. Germany
15. Georgia
16. Canada
17. Estonia
18. Malaysia
19. Taiwan
20. Switzerland

The headline may be a crude ranking but there is a huge amount of detailed research underneath. But this detail matters. As the World Bank’s Kaushik Basu notes in the foreword:

The laws that determine how easily a business can be started and closed, the efficiency with which contracts are enforced, the rules of administration pertaining to a variety of activities—such as getting permits for electricity and doing the paperwork for exports and imports—are all examples of the nuts and bolts that are rarely visible and in the limelight but play a critical role.

A year isn’t a long time in international affairs, but in that time the economies of more than 80% of the countries improved, according to this report. This means it’s now easier to do business in most parts of the world.

So where have we seen the biggest improvements?

Due to the ground they have to make up, most of the leaps forward have come from countries lower down the rankings, though there are a couple of notable exceptions. For example, Switzerland made starting a business easier by introducing online procedures and strengthened minority investor protections by increasing the level of listed company transparency. Sweden made a significant reform by making registering property easier through a new online system.

The report pinpoints 10 economies where reforms have improved things the most: Tajikistan, Benin, Togo, Côte d’Ivoire, Senegal, Trinidad and Tobago, the Democratic Republic of Congo, Azerbaijan, Ireland and the United Arab Emirates.

Tajikistan has implemented a one-stop-shop for business registration, reduced fees on construction permits, improved access to credit information and introduced an electronic system for filing business taxes.

Ireland has improved its credit information system by passing a new credit registry act. Trinidad and Tobago has introduced a new insolvency law, strengthening protections of secured creditors’ rights in insolvency proceedings. It has also made resolving insolvency easier.

Azerbaijan has made it easier to register property and Senegal has made property transfers easier by eliminating the requirement for tax authorization. Benin and Côte d’Ivoire introduced reforms to make it easier to trade across borders.  Benin also improved the enforcement of contracts by creating a commercial section within its court of first instance.

These nuts and bolts of reforms might be a little on the dull side but there is good reason to get excited about them. As the report claims:

• Reforms simplifying business registration lead to more firm creation.
• Increasing trade openness has greater effects on growth where labor markets are more flexible.
• Cumbersome, poorly functioning business regulation undermines entrepreneurship and economic performance.
• Introducing collateral registries and debt recovery tribunals leads to better-performing credit markets.
• Reforms improving access to credit and the efficiency of property registration are correlated with product and process innovation by young firms.

Small reforms, perhaps, but enough of them will result in giant leaps for mankind.