Changes to the Methodology, 2005 - 2017

Doing Business 2017

Doing Business 2017 has two major innovations. First it expands the paying taxes indicator set to also cover postfiling processes. Paying taxes is the final indicator set to be changed as part of the methodology update initiated inDoing Business 2015. Second, three indicator sets (starting a business, registering property and enforcing contracts) were expanded to cover a gender dimension, in addition to labor markets regulation which was expanded last year. Starting a business was expanded to also measure the process of starting a business when all shareholders are women. Registering property now also measures equality in ownership rights to property. And enforcing contracts was expanded to measure equality in evidentiary weight for men and women.

Despite the changes in methodology introduced this year, the data under the old and new methodologies are highly correlated. Comparing the ease of Doing Business rankings as calculated using the Doing Business 2016 data and methodology with the rankings as calculated using the Doing Business 2016 data but the Doing Business 2017 methodology shows a correlation very close to 1. In previous years the correlations between same-year data under the methodology for that year and the methodology for the subsequent year were even stronger.

The correction rate between Doing Business 2016 and Doing Business 2017 is 7.1%.

Doing Business 2016

As part of a two-year update in methodology, Doing Business 2016 expanded the focus of five indicator sets (dealing with construction permits, getting electricity, registering property, enforcing contracts and labor market regulation), substantially revises the methodology for one indicator set (trading across borders) and implements small updates to the methodology for another (protecting minority investors).

The indicators on dealing with construction permits now include an index of the quality of building regulation and its implementation. The getting electricity indicators now include a measure of the price of electricity consumption and an index of the reliability of electricity supply and transparency of tariffs. The registering property indicators include an index of the quality of the land administration system in each economy in addition to the indicators on the number of procedures and the time and cost to transfer property. And for enforcing contracts an index of the quality and efficiency of judicial processes has been added while the indicator on the number of procedures to enforce a contract has been dropped. The scope of the labor market regulation indicator set has also been expanded, to include more areas capturing aspects of job quality. The labor market regulation indicators continue to be excluded from the aggregate distance to frontier score and ranking on the ease of doing business. The case study underlying the trading across borders indicators has been changed to increase its relevance. For each economy the export product and partner are now determined on the basis of the economy’s comparative advantage, the import product is auto parts, and the import partner is selected on the basis of which economy has the highest trade volume in that product. The indicators continue to measure the time and cost to export and import.

Beyond these changes there is one other update in methodology, for the protecting minority investors indicators. A few points for the extent of shareholder governance index have been fine-tuned, and the index now also measures aspects of the regulations applicable to limited companies rather than privately held joint stock companies. The correction rate between Doing Business 2015 and Doing Business 2016 is 5.3%.

Doing Business 2015

Doing Business 2015 report launched a process of introducing improvements in 9 of the 10 Doing Business indicator sets—to complement the emphasis on the efficiency of regulation with a greater emphasis on its quality. This year’s report and Doing Business 2016 are introducing changes in dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, trading across borders, enforcing contracts and resolving insolvency. Doing Business 2017 will introduce changes in paying taxes.

Doing Business 2015 incorporates 7 important changes. First, the ease of Doing Business ranking as well as all topic-level rankings are now computed on the basis of distance to frontier scores. Second, for the 11 economies with a population of more than 100 million, data for a second city have been added to the data set and the ranking calculation. Third, for getting credit, the methodology has been revised for both the strength of legal rights index and the depth of credit information index. Fourth, the name of the protecting investors indicator set has been changed to protecting minority investors to better reflect its scope—and the scope of the indicator set has been expanded to include shareholders’ rights in corporate governance beyond related party transactions. Fifth, the resolving insolvency indicator set has been expanded to include an index measuring the strength of the legal framework for insolvency. Sixth, the calculation of the distance to frontier score for paying taxes has been changed. The total tax rate component now enters the score in a nonlinear fashion, in an approach different from that used for all other indicators. Finally, the name of the employing workers indicator set has been changed to labor market regulation, and the scope of this indicator set has also been changed. The indicators now focus on labor market regulations applying to the retail sector rather than the manufacturing sector, and their coverage has been expanded to include regulations on labor disputes and on benefits provided to workers.