I have written about why this index is pretty useful:
First, elites pay a lot of attention to it. Several countries – including Russia, Kazakhstan, and India – have made climbing up the Doing Business rankings a matter of national economic planning.
Second, all else equal, more economic freedom really is “better” than less economic freedom. You do not need to be some kind of neoliberal hypercapitalist to appreciate that having more layers of bureaucracy, more hops you need to jump through to start a business or enforce a contract, as benefitting anyone other than the bureaucrats who create these rules in the first place. Indeed, when adjusted for differing GDP per capita levels, there is a strong correlation between a country’s place on the Doing Business rankings and its reported incidences of bribery/corruption, presumably because the more regulations you have the more opportunities bureaucrats have to shake businesses down. …
It is also highly objective. You look at the legal documents, count the number of steps and/or days required to set up a business or enforce a contract, and tally the whole thing. Necessarily more subjective assessments of the degree of corruption or the prevalence of the rule of law – important, but prone to bias – don’t enter the equation.
Regulations have been falling and ease of business has been improving throughout the entire world, as can be confirmed by looking at the historical data. The pace of change is rapid and there is nary an exception, which may explain a parallel, little rarely noticed collapse in business corruption.
To be fair, this isn’t the full story. To some extent, these rankings can be gamed – e.g. India does this – and the quality of bureaucrats also matters – e.g., Chinese bureaucrats are much easier to work with than Russian ones, even though China is lower in the rankings:
He said he had visited Vladivostok regularly since the early 1990s and could not fathom why Russia had lagged so far behind China in building its economy. “It feels like a developing country here. This is how China was decades ago,” he said. He added that he had tried to set up a small business in Vladivostok but had despaired at all the red tape: “What you can do in a day in China takes weeks here.”
But still, fewer regulations are almost always good. At the very least, it reduces the number of spokes bureaucrats can put in the wheels of commerce.
PS. Speaking of Russia, it has continued improving in the rankings, and now occupies 31st position out of 190 countries, wedged in between Spain and France – and up from 120/183 in 2012. when Putin started his 3rd term..
As we can see, Russia is now fully within the “range” of First World – not as business-friendly as the United States, with its age-old reputation for free-wheeling commerce, but more so than Italy, with its reputation for bureaucratic tyranny. It’s the best performer amongst the BRICS, and one of the best in East-Central Europe.
But otherwise, this is the sort of quiet but very real “reform” that Russia needs at the micro level, but that remarkably few of Putin’s liberal critics seem to notice.
In my last article, I noted that despite these improvements, Putin had formally failed to fulfill his ambitious 2012 election promise of climbing into 20th position on this ranking by 2018. However, one commenter on Facebook noted that the 2018 survey really referred to the year 2017. Well, this year’s survey, the 2019 one, refers to data for 2018, so we can now conclusively that he failed. Still, rising from 120th to 31st in the world within six years is so impressive that the failure to do even better shouldn’t be held against him.