Business Environments in Failed States

Though it has many critics, the World Bank Group fulfills many key roles in the global system. One key role is provision of data to policy makers, citizens, and investors. One closely watched index is the “Doing Business” survey, which assesses how easy it is to start and operate a company in different countries. The index formally measures 10 indicators. Examples of these indicators include: ease of registering a new firm; accessibility of consistent electricity supply; credit availability; ease of trading across international borders; and the quality of courts. Each country receives an ordinal ranking, between 1 and 183, and a lower number indicates greater ease of doing business.

The Doing Business survey is another important way to assess the effectiveness of governance in various parts of the globe. While it is possible to have a middle ranking and still achieve strong economic growth (e.g. China, Brazil), states that perform poorly on this survey are generally stagnant. Following is a list of the worst 20 performers, starting from the very bottom:

Chad (183rd out of 183 states), Central African Republic, Republic of the Congo,

Eritrea, Guinea, Democratic Republic of the Congo, Venezuela, Guinea-Bissau, Benin,

Haiti, Niger, Angola, Zimbabwe, Djibouti, Burundi, Timor Leste (East Timor),

Cote d’Ivoire, Uzbekistan, Laos, and Iraq.

Many of these bottom 20 states have already been directly highlighted elsewhere in this blog. All on this list, however, have been indirectly discussed. Common struggles include: authoritarian tendencies in governance, lack of the rule of law, high levels of corruption, poor infrastructure, and arbitrary judicial proceedings.

Even so, some critically weak or failed states perform somewhat better on this World Bank survey. Though hardly excelling, Afghanistan is just outside the bottom 20, at 160th. Pakistan has a middle ranking (105th), and Nigeria (133rd) has made some significant progress since the end of military rule in 1999.

Other low-income and/or modestly weak states also perform fairly well in the ranking. These include: Georgia (16th), Colombia (42nd), Rwanda (45th), Mexico (53rd), Ghana (63rd), and Zambia (84th).

What are your thoughts about the Doing Business survey? Is it a helpful tool for assessing governmental effectiveness? Is the survey unduly biased towards free market-oriented principles? Do you have personal reflections that relate to doing business abroad?

*** Did you like what you read here? You might be interested in the new book by this blog’s author, Failed States: Realities, Risks, and Responses.

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