Singapore overtook New Zealand as the most business-friendly economy in the world in 2006, while the United States held steady in third place, according to the World Bank's Doing Business 2007 report - published today.
The dominance of the Anglo-Saxon and Nordic countries continues (see my post on last year's report). Other economies in the top ten for ease of doing business were: (4) Canada, (5) Hong Kong, (6) the United Kingdom, (7) Denmark, (8) Australia, (9) Norway, (10) Ireland.
The top 10 reformers were, in order, Georgia, Romania, Mexico, China, Peru, France, Croatia, Guatemala, Ghana and Tanzania. In Africa, a more business-friendly approach has seen the region move up from last place to the middle of the pack among world regions in carrying out changes that make it easier to start and run a business.
The report praised China's acceleration of reforms, which saw its ranking improve from 108th to 93rd:
Watch out, rest of the world: China is a top-10 reformer. The government sped business entry, increased investor protections and reduced red tape in trading across borders. China also established a credit information registry for consumer loans. Now 340 million citizens have credit histories.
Although reforms improved India's ranking over last year, "it still ranks relatively low at 134 and lies 41 places after China, which is reforming at a faster pace than India."
Among Europe's biggest economies, Germany ranked 21st, France 35th and Italy 82nd, down from 69th in the previous report. Meanwhile, Venezuela plunged to 164th from 144th.
Why does this matter? As the report notes:
Publishing comparative data on the ease of doing business inspires governments to reform. Since its start in October 2003, the Doing Business project has inspired or informed 48 reforms around the world. Mozambique is reforming several aspects of its business environment, with the goal of reaching the top rank on the ease of doing business in southern Africa. Burkina Faso, Mali and Niger are competing for the top rank in West Africa. Georgia has targeted the top 25 list and uses Doing Business indicators as benchmarks of its progress. Mauritius and Saudi Arabia have targeted the top 10.
Comparisons among states or cities within a country are even stronger drivers of reform. Recent studies across 13 cities in Brazil and 12 in Mexico have created fierce competition to build the best business environment. The reason is simple: with identical federal regulations, mayors have difficulty explaining why it takes longer or costs more to start a business or register property in their city. There are no excuses.