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Did improving ‘doing business’ scores boost growth?

In this article, we have discussed the significance of Doing Business ranking and how it reflects India’s growth story

What is the context?

In 2018, India secured its ranking in top 50, in the Ease of Doing Business Ranking released by the World Bank. The key goal of Economy is to bring policies and institutions to help a country in achieving higher GDP per capita and living standards. Many institutions claimed to that roles played by the free market, effective regulation and democracy is essential for economic development. But, World Bank and IMF give heavy emphasis on the idea of a business-friendly environment to promote economic growth. It needs to inculcate structural reforms in basic structure of the economy.

Growth Vs. Economic Development

To establish a close linkage between country’s business environment and its level of economic advancement is not an easy task. There is no comparative data is available which can link cross country regulatory framework and business environment. The gap filled by the Ease of Doing Business Report released by the World Bank.

Facts & Figures

The Ease of Doing Business report primarily examines the cost of starting a business and the ability to enforce contracts. The other aspects also included in the report ranking for effective comparison in later time. Other indicators which added later are – the ability to obtain credit, the efficiency of the insolvency procedure and the efficiency of tax collection. 

Significance of the Report

The multiple research papers used these report findings. The set of score on 50 different indicators categorized in 10 sections cover overall economic change of any nation. The uniqueness of the ranking is to have constructed on distance to frontier, approach. 

Real GDP and the Real Data

The data of Real GDP is essential in estimating the growth rate. The Ease of doing Business Report consist Real GDP data as its primary measure. The data is collected by the World Bank missions. They collected data from national statistical organizations. While data of selected high economies are collected from OECD.

Country Specific Data and PPP based Calculation

The Ease of Doing Business report of World Bank consist growth rate in both terms – PPP as well as in Market Exchange rate. This initiative helps in broader understanding of the growth of any nation. Besides this the data separated in country to country is also beneficial for further improvement on global scale for any aspirational country.

India’s Ranking and Performance

India consistently is performing well in doing business ranking. In the last report, India got 63rd rank in the 2019 report. However, in 2021, World Bank declared to stop further publication of the report because of some discrepancies.

 

 

 

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