Doing Business in 2004: For more information, visit our Understanding Regulation is website at: the first in a series of annual http://rru.worldbank.org/doingbusiness reports investigating the scope and manner of regulations that enhance business activity and those that constrain it. New quantitative indicators on business regulations and their enforcement can be compared across more than 130 countries, and over time. The indicators are used to analyze economic outcomes and identify what reforms have worked, where, and why. ISBN 0-8213-5341-1 Doingbusiness in 2004 Doingbusiness in 2004 Understanding Regulation A copublication of the World Bank, the International Finance Corporation, and Oxford University Press iii © 2004 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, D.C. 20433 Telephone 202-473-1000 Internet www.worldbank.org E-mail
[email protected] All rights reserved. 1 2 3 4 05 04 03 A copublication of the World Bank and Oxford University Press. The findings, interpretations, and conclusions expressed here are those of the author(s) and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank cannot guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply on the part of the World Bank any judgment of the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is copyrighted. No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or inclusion in any information storage and retrieval system, without the prior written permission of the World Bank. The World Bank encourages dissemination of its work and will normally grant permission promptly. For permission to photocopy or reprint, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978-750-8400, fax 978-7504470, www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, World Bank, 1818 H Street NW, Washington, D.C. 20433, fax 202-522-2422, e-mail
[email protected] Additional copies of Doing Business in 2004: Understanding Regulation may be purchased at http://publications. worldbank.org/ecommerce/catalog/product?item_id=1384804/. ISBN 0-8213-5341-1 ISSN 1729–2638 Library of Congress Cataloging-in-Publication data has been applied for. Contents Acknowledgments Preface viii Overview 1 vii xi Building New Indicators of Business Regulation 1 Doing Business Methodology 2 Other Indicators in a Crowded Field Notes 15 2 Starting a Business 7 17 How Easy Is Business Entry? 18 Are Entry Regulations Good? Some, Yes—Many, No What to Reform? 24 Notes 27 3 Hiring and Firing Workers 29 What Is Employment Regulation? 30 Large Divergences in Practice 33 What Are the Effects of Employment Regulation? What to Reform? 37 Notes 38 4 Enforcing Contracts 41 Which Courts Are Socially Desirable? 46 What Explains Differences in Court Efficiency? What to Reform? 49 Notes 53 5