A “Firm-Based” ease of doing business index

Abstract

World Bank’s Ease of Doing Business Index is one of the most commonly cited indicators for the business suitability of a country. In order to calculate this Index, representatives from the World Bank conduct interviews with government officials at local, state and national levels. Various questions pertaining to taxes, property, start-ups etc… are asked. Along with this data, other secondary data such as number of businesses paying taxes on time is also collected form official sources. Using all this data, a composite indicator is created and used to create the final rankings that we often see in news. The above method has a problem. The rankings thus created are from the perspective of the government. I.e., the correct interpretation of Ease of Doing Business Index is that it represents the ease from the government’s angle. The actual firms are not considered. In this paper, we go about addressing this issue. Our intent is to create an Ease of Doing Business Index using survey data from firm representatives. For this purpose, we use the World Bank’s ESI (Enterprise Survey of Industries) database. This database contains survey interviews of over 9000 firms throughout India, each survey consisting of 300 questions. We have sliced and diced this data to create a framework for a Firm-Based Ease of Doing Business Index.