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Improving Ease of Doing Business Index

Improving Ease of Doing Business Index

Ease of Doing Business Index (EDBI) measures different aspects of business regulation, including commencing business activity, obtaining construction permits, getting electricity connections, registering property, accessing finances, protecting investors, paying taxes, trading across borders, enforcing contracts, resolving solvency and regulating labour market, which are of utmost importance for the entrepreneurship as well as for enhancing business activity in any jurisdiction.

As better EDBI ranking stimulates business activity, which, in turn, accelerates economic growth, many research studies have found positive relationship between ease of doing business indicators and economic growth. For example, the relationship between better regulations and economic growth is empirically found to be consistently significant. Fairly robust body of evidence exists for the significant and reasonably large positive impact of regulatory reforms on economic growth. These ease of doing business indicators, e.g. such as registering property and trading across borders, are found to have significant positive impact on economic growth.

This is ample proof of the fact that countries wishing to boost economic growth can reform and improve business environment by utilizing EDBI data of the World Bank.

Improving EDBI ranking of a country is, therefore, inevitable to boost investment and business activity that is essential for getting a better place on the Human Development Index (HDI) on which Pakistan was at 150th place – out of 189 countries – in 2018, the lowest among the South Asian nations except Afghanistan which was at 168th place. Other South Asian countries on the list were ranked as: Sri Lanka (76th) – the star performer of the region – Maldives (101st), India (130th), Bhutan (134th), Bangladesh (136th) and Nepal (149th). Pakistan falls in the bottom quartile of countries in terms of human capital index (HCI) launched by the WB and it could be an important factor contributing to the country’s low GDP per capita ($1,541). Poor HCI also evidences low level of investment in human resource development. For example, education spending is less than even a mere 2.5% of GDP. On the other side, it may not be possible to accelerate economic growth and boost per capita income without raising HCI and HDI. Empirically, the impact of human capital development on economic growth rate is positive and significant and that human resource is the source that is crucial to economic growth.


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About Bilal Hassan

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The writer is a graduate in Taxation Policy & Management from Keio University Japan and has certification in International Economics and Law & Economics from Faculty of Economics Keio University, JAPAN. He can be accessed at bilalhassan70@yahoo.com

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