Which countries are the best for starting a Business?
A Global Snapshot of where its the easiest & the most difficult to get your business started
Coming from a developing country to settle in the West, one of the biggest differences that one might see is the ease of doing business. The excessive red tape in the developing and/or lesser developed countries not only hinders the process of starting a business, it outrightly discourages people to do so. While in the West it is streamlined like any other service, which creates a vibrant economic culture promoting innovation & growth.
The first & foremost part of doing any business is establishing one. And this may differ widely depending on your geographic location. Generally speaking developed countries or developing countries with vibrant economies are the ones which make it easiest to establish business entities.
Today’s visualization (below) gathers data from the World Bank’s annual Doing Business 2020 report (17th edition), which looks into the details of starting a business in different countries of the World by looking at the following 12 indicators.
These quantitative indicators have been designed after extensive research. Higher scores are given for more regulated & better-functioning institutions, stricter disclosure requirements & a simplified way of applying regulation among others.
① Starting a business ② Dealing with construction permits
③ Getting electricity ④ Property Registration ⑤ Getting the credit
⑥ Paying taxes ⑦ Protecting minority investors ⑧ Cross border trading
⑨ Enforcing contracts ⑩ Resolving insolvency issues
⑪ Employing workers ⑫ Contracting with the government
The Infographic has three parts — first showing the top 20 nations for doing business, the second chart visualizes the comparison cost of starting a business in low/middle-income countries to high-income countries. And the final chart shows the ten economies which improved the business climate the most in the last year.
- Topping the list is New Zealand for the fourth year in a row with a score of 86.8— the country boasts of setting a new up a new business up & running in half a day. Compare this to some of the lower-ranked countries like Luxembourg or Argentina, where it may take a year or more for the same process.
- Singapore (86.2) & Hong Kong (85.8) stole the second & third spot respectively. Most of the countries in the Top 20 came from Western Europe, Far East, Oceania & North America.
- Of the 190 countries reviewed last year, only 115 made it easier for entrepreneurs to do business.
- Only two African countries of Rwanda & Mauritius made it to the top 50 countries, with the small island nation of Mauritius being the only one to make it to the top tier with a score of 81.5 sitting at the 13th spot.
- South American countries couldn’t make their mark in the top ranking as most of the Latin countries have huge bureaucratic barriers in the way of starting a business.
Looking at the bigger picture, the cost of starting a business in low/middle-income countries has dropped significantly in the past decade and a half. This convergence of business starting cost towards high-income economies has fueled innovation & economic growth.
Having said that, a significant disparity still remains — while an entrepreneur will spend about 50% of per capita income (PCI) to launch a venture in a low-income economy, a similar endeavor would only cost only 4% PCI in a high-income country.
The final chart showcases the 10 countries that improved the business climate & processes the most in the past year. Saudi Arabia topped the list adding 7.7 points to its previous score, while Bahrain improved the most in 9 metrics while adding 5.9 points to its previous score. China, India & Pakistan were the other notable entries.
The rankings illustrate the relationship between doing business & economic growth. A lot of developing countries have done well to remove barriers to business entry to spur economic growth, but a lot of work still needs to be done to make these actions sustainable.