The top ten list of most improved countries in the new Doing Business report from the World Bank includes some surprising members.
The World Bank has just put out its 2014 edition of Doing Business, and has stirred up some controversy in its conclusions. The report, published annually, measures 189 economies based on 11 distinctive indicator sets. While many of the assessments made are unsurprising (for example, Hong Kong and Singapore are still the most business friendly locations in the world), the eclectic nature of the top ten most improved countries warrants a second look. Though many of the most improved countries have been the subject of bad press, there is more than meets the eye.
Located just south of the Equator in central Africa, Rwanda continues to overcome every developmental challenge put in its way. The government’s commitment to establishing business institutions with a focus on designing and applying unique business regulation reform has created a firm foundation for a fluid and responsive economy. Coupled with a more streamlined credit system and simplified trade regulations, Rwanda is seen as a stable keystone country in the midst of a fragmented continent.
Currently the ninth easiest country to do business, the small republic has been slowly improving in every single measured indicator since 2005. By strengthening regulatory legal institutions and lowering the costs associated with regulation, Georgia has pushed for and achieved greater business transparency. As one of the easiest places to apply for and receive a construction permit, the country consistently encourages the investment from external business to develop a largely untouched market. Finally, Georgia ranks the seventh easiest country to start a business, beating economic powerhouses such as the United States and barely behind highly reputed markets such as Singapore and Hong Kong.
Despite being a mostly state-controlled enterprise, Belarus has been able to achieve great things since its economic slowdown in 2006. Like Georgia and Rwanda, Belarus is in the top ten easiest states for starting a business, and ranks third in ease of property registry. Considering the recent push in regulatory tax reform, the state’s enhanced electronic tax systems have allowed a reduction of the profit tax rate by more than 2%, which has in turn encouraged foreign direct investment. Finally, Belarus is responsible for positive changes in resolving insolvency and streamlining what is usually considered a difficult process. The trade-off for these achievements is a marginally more cost intensive business start-up procedure.
With little external demand and with an economy that has just come off paying far too much for Russian energy this past August, it is easy to overlook the fact that, from a retail perspective, Ukraine is showing a strong trend towards positive growth. Coupled with the mandatory usage of online tax filing systems for medium and large enterprise, Ukraine continues to encourage investment by creating a remarkably direct and efficient approach of regulating its domestic market.
5. Macedonia, FYR
Macedonia is currently fifth on the most improved countries in relation to the frontier (behind four other countries on this list). Although this terminology is ambiguous for those not in the economic field, the country also boosts an extremely easy to understand tax base (only a single figure per tax base). While many point to the improvements made as being done only for inclusion into the EU, Macedonia has managed to reduce, and in many instances overcome, the instability associated with the Balkan region.
6. Burkina Faso
The Burkinabe government has made great strides in attracting the interest of green energy firms in recent years and is distinguishing itself in sub-Saharan Africa. By increasing efficiency in property tax policy, the country also has streamlined the process for resolving insolvent investors. Finally, while foreign investments are still under optimum levels, Burkina Faso has increased transparency in their business regulatory practices.
7. Kyrgyz Republic
Although getting electricity in-country is still difficult, the Kyrgyz Republic has cut the process for investment in-country to unprecedented levels. Additionally, providing legal protection for borrowers and lenders alike, Kyrgyzstan possesses one of the fastest legal systems for resolving contract enforcement issues.
Despite being in the lowest quartile of overall rankings, Tajikistan has improved towards the frontier by over 15.2 points, earning a top ten ranking on this list as well. Making a great push towards protecting business investors, Tajikistan has also simplified business registration procedures. In the end, this means that foreign investors have an excellent opportunity to engage with Tajikistan’s relatively untouched economy.
Lower than Tajikistan, Burundi has made interstate trading far easier by reducing market protection measures and courting foreign investment. Hailed as the most improved state in terms of starting a business, there are indications that Burundi is streamlining a formerly ponderous system into a far more fluid and responsive market. Finally, Burundi has made great strides in simplifying and encouraging in-country development through the easing of construction permit restrictions.
10. Egypt, Arab Republic
Perhaps the greatest surprise of this year’s report, Egypt has shown signs of improving productivity back to pre-revolution levels. The Egyptian stock exchange recently closed at its highest level since the fall of former president Hosni Mubarak, and the World Bank calls the country North Africa and the Middle East’s most improved country since 2005. Although the fate of country is still relatively unknown in the wake of the complex issues dealing with the Muslim Brotherhood, pushes to increase transparency while reducing systemic corruption place Egypt as an economy that may reclaim its former prominence in the near future.