Doing Business 2011 – the eighth in a series of annual reports published by the World Bank and International Finance Corporation (IFC) – benchmarks the regulations that improve business activity and those that constrain it. The report presents nine quantitative indicators on business regulation and protecting property rights. It looks at regulations which apply to the life cycle of a small and medium-sized enterprise, in 183 economies. Economies are ranked in the following nine areas of regulation:

• starting a business
• dealing with construction permits
• registering property
• getting credit
• protecting investors
• paying taxes
• trading across borders
• enforcing contracts
• closing a business

A fundamental premise of Doing Business is that economic activity needs good rules. Good rules establish and clarify property rights and reduce the cost of resolving disputes; they also increase the predictability of economic forces and provide contractual partners with certainty and protection against abuse. The objective is regulation that is efficient, accessible to all and simple to carry out. With clear rules entrepreneurs spend less time dealing with administration and more time doing business.

Doing Business supplies business leaders and policymakers with a fact base to aid policy decision making. It also provides open data for research on how business regulations and institutions affect such economic outcomes as productivity, investment, informality, unemployment and poverty. The information does not go unnoticed. In a recent article, The Economist noted that “the bank’s report has succeeded in putting the issue of business red tape on the international political agenda”.

Over the past seven years Doing Business has tracked changes to business regulation around the world, recording more than 1,500 important improvements since 2004. Doing Business has found that 85% of economies, from the 183 measured, have made it easier to do business over the past seven years. In particular, Doing Business 2011 finds that policymakers around the world continue to improve business regulation, in some areas at an even faster pace than before. Between June 2009 and May 2010 governments in 117 economies completed 216 business regulation improvements. More than half those policy changes eased start-up, trade and the payment of taxes. And all this is taking place despite a global economic crisis.

Ultimately, Doing Business is about people. The economic crisis has made it more important than ever to create new jobs and preserve existing ones. With public budgets tighter because of stimulus packages and contracting fiscal revenues, governments must now do more with less.

Unleashing the job creation potential of small private enterprises is vital. Small and medium-sized businesses have great potential to create jobs. They account for an estimated 95% of firms and 60% to 70% of employment in OECD high-income economies and 60% to 80% of employment in such economies as Chile, China, South Africa and Thailand. It makes sense for policymakers to help such businesses grow. Improving their regulatory environment is one way of supporting them.

In 2005, starting a business in Rwanda took nine procedures and cost 223% of income per capita. Today, entrepreneurs can register a new business in three days, paying official fees that amount to 8.9% of income per capita. More than 3,000 entrepreneurs took advantage of the efficient process in 2008, up from an average of 700 a year previously.

One of the nine measures in the Doing Business report is Paying Taxes. This measures payments, time and the total tax rate borne by a firm with 60 employees in a given year. In seven economies around the world, taxes and compulsory contributions add up to more than 100% of assumed profit, ranging from 108.2% to 339.7%. Where the indicator shows that taxes exceed profit, the company has to earn a gross profit margin of more than 20% to pay its taxes.

There is good news, however. In the past six years more than 60% of the economies covered by Doing Business made paying taxes easier or lowered the tax burden for local enterprises. Globally on average, businesses pay 47.8% of commercial profit in taxes and compulsory contributions, five percentage points less than in 2004.

The aim of Doing Business is to reflect the reality on the ground. The team is in direct communication with a network of 8,200 local experts who deal with business regulation every day. The report would not be possible without their expertise.

For more information on the Doing Business project please visit www.doingbusiness.org.

Russell Bedford International acted as a global contributor to Doing Business 2011.