I wrote about why good scores on this indicator are pretty useful two years ago:
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.
Well, the good news is that Russia has continued its strong trend of improvement since the start of Putin’s third term, and is now in the uppermost quintile of all the world’s economies in terms of ease of doing business.
This is especially impressive since the entire world has been getting far more business friendly in the past decade, as institutions such as this very index spur on even the more recalcitrant nations to adopt First World best practices (fewer pointless regulations).
Russia’s immediate neighbors now – France, The Netherlands, Japan, Czechia – are no longer cause to be ashamed, as was the case around 2010, when it instead neighbored models of bureaucratic efficiency such as India and Nigeria.
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.
Since the mid-2010s, Russia has been doing far better better than its fellow BRICS members.
Russia is now also doing about as well as the average for Eastern Europe’s successful reformers – worse than free trade entrepot Estonia and libertarian nirvana Georgia, but at about the same level as Poland, Czechia, Kazakhstan, Belarus; somewhat better than Hungary, which has lagged on reform; and far better than in the Ukraine or in Uzbekistan.
Analyzing by subcomponents, only two sectors where Russia still does quite badly – worse than the global median – are in “Dealing with Construction Permits” and “Trading Across Borders,” both notoriously corrupt sectors of the Russian economy. They urgently need attention.
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.
Although Putin has formally failed to fulfill his ambitious 2012 election promise of climbing into 20th position on this ranking by 2018, an improvement from around 120th position to 35th position is still more than respectable.