BOFIT Viikkokatsaus / BOFIT Weekly 2019/50

Both annual comparisons were released in October. The World Bank’s survey of 190 economies in Doing Business 2020 shows Russia rising from 31st place last year to 28th this year, while China climbs from 46th to 31st in the rankings. Among the 141 economies covered in the World Economic Forum’s (WEF) Global Competitiveness 2019, no changes in the rankings are reported for Russia, which remains at the 43rd spot, while China holds at 28th.

The World Bank’s business-friendliness assessment looks at factors such as official practices, regulation and judicial system. Indicators are illustrated through case examples. For instance, “trading across borders” is evaluated in terms of the ease of importing auto parts, while “dealing with construction permits” considers the time, cost and ease of building a warehouse. The assessments concern each country’s largest or two largest cities. The World Bank claims that this practice makes its comparison studies feasible. On the other hand, the cases do not provide a comprehensive assessment of the business environment. The comparison also ignores e.g. corruption.  Countries can improve their score by making small, targeted reforms. The report notes Russia’s reform of its tax-payment system. China wins praise for easing registration and permitting burdens, as well as simplifying tax payments.

The WEF competitiveness study considers such factors as institutions, infrastructure and market functionality. Larger economies benefit from the fact that size of the economy is weighted in the index. Russia failed to make it into the top 90 economies in such categories as security, independence of the judiciary, corruption, press freedom, property rights, openness to foreign trade and financial market stability. China performed poorly in such sub-categories as social capital, press freedom, adult internet use and financial system stability.