Ease of doing business index parameters

Ease of business index and Investment attraction UPSC

Business index - FACTS TO KNOW

Ease of doing business index:

What is The ease of doing business index?

It is an index that measures the business friendliness of a nation’s policies and promptness of decision making. It includes such factors as institutional support, competitive tax rates, law and order, law transparency, clarity, etc. Index includes criterion, that can make  a country attractive destination for inflow of capital for investment

Who created the index?

Three leading economists at the World Bank Group Simeon Djankov, Michael Klein, and Caralee mcliesh, created the index in 2002. this report at times is released with the Flagship publication world development report (WDR).


What are the ranking factors in the index?

A nation's ranking on the index was based on an average of 10 sub-indices:

    • Starting a business – Procedures, time, cost, and minimum capital to open a new business
    • Dealing with construction permits – Procedures, time, and cost to build a warehouse
    • Getting electricity – procedures, time, and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse
    • Registering property – Procedures, time, and cost to register commercial real estate
    • Getting credit – Strength of legal rights index, depth of credit information index
    • Protecting investors – Indices on the extent of disclosure, the extent of director liability, and ease of shareholder suits
    • Paying taxes – Number of taxes paid, hours per year spent preparing tax returns, and total tax payable as a share of gross profit
    • Trading across borders – Number of documents, cost, and time necessary to exportand import
    • Enforcing contracts – Procedures, time, and cost to enforce a debt contract
    • Resolving insolvency – The time, cost, and recovery rate (%) under a bankruptcy proceeding

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