Doing Business indicators, in capturing some key dimensions of regulatory environments for domestic businesses, provide useful data for benchmarking and research. Like with any other data it is important to familiarize oneself with the specificities and limitations of the indicators before using them for analysis. The About Doing Business and the Data Notes chapter of Doing Business 2020, and other information on the website, go into detail explaining these limitations and specificities. This page clarifies the most frequently heard misinterpretations of the Doing Business data.
Misconception #1: Doing Business ranking is a comprehensive measure of business environment
Doing Business does not measure all aspects of the business environment that matter to firms or investors—or all factors that affect competitiveness. It does not, for example, measure security, macroeconomic stability, corruption, labor skills of the population, underlying quality of institutions and infrastructure or the strength of the financial system. Doing Business focuses on 11 topics, with the specific aim of measuring the regulation and red tape relevant to the life cycle of a domestic small to medium-size firm.
Misconception #2: Narrow focus on increasing Doing Business ranking results in improvement of the overall business environment
While Doing Business is a powerful tool for catalyzing reforms in business regulation the indicators are not used by policy makers as the only source in structuring reform programs. Over the past fifteen years, most reforms relating to Doing Business topics were nested in broader programs of business regulatory reform aimed at enhancing economic competitiveness, as is the case, for example, in Colombia, Latvia, Rwanda and APEC.
Misconception #3: Doing Business indicators promote deregulation
Several of Doing Business indicator sets measure the strength of regulations; others focus on their efficient application. Accordingly, some Doing Business indicators give a higher score for more regulation, such as stricter disclosure requirements in related-party transactions. Some give a higher score for a simplified way of applying regulation with lower compliance cost for firms, for example, if firms can comply with business start-up formalities in a one-stop shop or through a single online filing portal.
