The Surprising Countries Where Doing Business Gets Easier

The Surprising Countries Where Doing Business Gets Easier

In 2019, a small country in West Africa cut the time it takes to register a business from 40 days to just six. It did not build a gleaming new tech hub. It did not hire consultants from McKinsey. Togo simply built a one-stop online portal and made sure government clerks actually used it.

That single reform pushed Togo into the ranks of the world's top 20 improvers in the World Bank's Doing Business 2020 report (World Bank, 2019). And it was not alone. The report, which measures business regulation across 190 economies, found that the fastest reformers in 2019 were not the usual suspects. They were Saudi Arabia, Jordan, Togo, Kuwait, and Bahrain. These are not countries you typically hear about in conversations about "ease of doing business." But they are the ones actually doing the work.

The Doing Business report has been published annually since 2003. It tracks 12 areas of regulation, from starting a business to enforcing contracts to getting electricity. The 2020 edition, which I am drawing from here, covers 190 economies and uses over 48,000 data points. The authors measured how many procedures, how much time, and how much cost are involved in each regulatory area. They also tracked an "ease of doing business score" from 0 to 100, with higher scores meaning simpler regulation.

What the authors found upended a lot of assumptions about where business reform happens.

The Reformers Nobody Expected

The top five improvers in the 2020 report were Saudi Arabia, Jordan, Togo, Kuwait, and Bahrain. Each implemented at least four regulatory reforms in the previous year. Saudi Arabia alone made eight changes, including making it easier to get construction permits and protecting minority investors.

Here is what is surprising: Three of these five countries are Gulf monarchies. Two are in sub-Saharan Africa. None are in Europe or North America. The United States did not make the top 20 improvers. Neither did Germany, Japan, or the United Kingdom.

The World Bank authors noted that the Middle East and North Africa region had the highest share of economies implementing reforms that year: 73 percent of economies in the region made at least one change (World Bank, 2019). That is higher than East Asia, higher than Europe, higher than Latin America.

Why would a country like Saudi Arabia, where the state controls most of the economy, suddenly care about making it easier to start a business? The answer is oil. Or rather, the answer is that oil prices crashed in 2014 and have not fully recovered. Countries that once relied on petrodollars to keep their populations employed now need private sector jobs. And private sector jobs require private sector businesses. You cannot have private sector businesses if it takes 40 days and seven trips to different government offices to register one.

So Saudi Arabia digitized its business registry. It eliminated the minimum capital requirement for starting a company. It made it possible to register a business in a single day. The country's ease of doing business score jumped from 67.4 to 71.6 in one year (World Bank, 2019). That is a bigger leap than any European country made in the same period.

What Actually Changed

The Doing Business report is not a survey of how businesspeople feel about regulation. It is a count of what regulation actually requires. The authors used a method called "case study" approach: they defined a standardized business (a limited liability company with 10 employees, a certain amount of capital, operating in the largest business city) and then measured what it takes to get that business running.

For starting a business, they counted procedures, time, cost, and minimum capital. In 2019, the global average for starting a business was 5.1 procedures and 20.6 days. But the range was enormous. In New Zealand, you can do it in half a day with one procedure. In Venezuela, it takes 230 days and 17 procedures.

The biggest reforms in 2019 targeted these bottlenecks. Saudi Arabia reduced the time to register a business from 9.5 days to 1.5 days by creating a unified online portal. Jordan reduced the time to get a construction permit from 38 days to 18 days by streamlining approval processes. Togo eliminated the requirement to publish a notice of incorporation in a newspaper, which sounds small but saved business owners both time and money.

Kuwait made the biggest leap in the "getting credit" category. It passed a new secured transactions law that allowed businesses to use movable assets (like inventory or accounts receivable) as collateral for loans. This is the kind of reform that does not make headlines but fundamentally changes who can access capital. Before the reform, only businesses with real estate could get loans. After, a small retailer could borrow against their inventory.

Bahrain, meanwhile, focused on making it easier to pay taxes. It introduced an electronic system for filing and paying corporate income tax. The authors found that the time to comply with tax regulations in Bahrain dropped from 88 hours per year to 54 hours (World Bank, 2019). That is a full work week saved just by digitizing a form.

The Methodology Matters

The Doing Business report has been criticized, and fairly so. Some economists argue that it encourages a race to the bottom on regulation, where countries strip away protections for workers and the environment just to score higher. Others point out that the report only measures de jure regulation (what the law says) not de facto enforcement (what actually happens on the ground). A country can have great rules on paper and still be a nightmare to operate in if the rules are not enforced or if corruption is rampant.

The World Bank authors acknowledged these limitations. They wrote that the indicators "do not measure all aspects of the business environment that matter to firms" (World Bank, 2019, p. 1). They do not measure macroeconomic stability, infrastructure quality, security, or the skills of the workforce. A country can score 100 on ease of doing business and still be a terrible place to run a company if there is no reliable electricity or if armed conflict is ongoing.

But here is why the methodology still matters: It is objective. The authors do not ask businesspeople how they feel about regulation. They count procedures. They measure days. They calculate costs as a percentage of income per capita. This means the data can be verified. A government cannot claim it reformed if it has not actually reduced the number of steps or days.

And the data shows that reform is possible, even in countries with weak institutions. Togo, for example, has a GDP per capita of about $900. It ranks 137th out of 190 economies overall. But it made real, measurable progress on business registration. That progress did not require a massive budget. It required political will and a willingness to digitize.

What the Report Does Not Prove

The Doing Business report shows a correlation between simpler regulation and higher rates of business formation. But it does not prove causation. It is possible that countries with growing economies are simply more motivated to reform, not that reform causes growth.

The authors also did not measure what happens after a business is registered. They tracked how easy it is to start a business, get a permit, hire workers, and pay taxes. They did not track whether those businesses survive, grow, or create jobs. A country can make it trivially easy to register a business and still have a high failure rate because of other factors like lack of access to markets or skilled labor.

There is also an open question about what "better" regulation means. The report treats fewer procedures and less time as inherently good. But some regulations exist for good reasons. Environmental reviews take time because they matter. Worker safety inspections take time because they save lives. The report does not distinguish between red tape that is pointless and regulation that is protective.

The World Bank authors were careful to note that the indicators "do not measure the quality of business regulation" (World Bank, 2019, p. 7). They measure the ease of compliance. Those are different things.

The Pattern Behind the Reform

If you look at the top 20 improvers in the 2020 report, a pattern emerges. Most of them are middle-income countries that experienced an economic shock or a change in leadership. Saudi Arabia and the Gulf states were hit by low oil prices. Togo and Jordan were under pressure from international lenders. India, which ranked 63rd overall but made significant reforms, was responding to a political mandate for economic modernization.

The pattern suggests that reform happens when there is pain. Countries that are comfortable do not change. The United States has not made significant reforms to business registration in years because starting a business there is already relatively easy. But countries that are struggling have an incentive to remove barriers.

The other pattern is that digitization is the most common reform. Of the 115 reforms tracked in the 2020 report, 42 involved creating or improving online systems (World Bank, 2019). Digitization reduces corruption by removing human discretion. It reduces time by eliminating physical trips. It reduces cost by eliminating paperwork fees. And it is relatively cheap to implement compared to building new infrastructure.

Togo's one-stop shop cost about $2 million, funded by international donors. That is less than the cost of building one kilometer of paved road in a developing country. And it saved business owners an average of 34 days of waiting time.

What This Actually Means

The Doing Business 2020 report is not just a ranking. It is a map of where the barriers are and a record of how countries have removed them. Here is what the findings actually mean for governments, investors, and business owners:

• ▸The biggest barriers are not the laws themselves, but the procedures required to comply with them. Togo did not change its company law. It changed how people interact with the government. That is where the friction lives.

• ▸Digitization is the cheapest and most effective reform available. A country can move from the bottom quartile to the middle quartile just by putting forms online and making clerks use the system. No new legislation required.

• ▸Reform happens fastest in countries under economic pressure. If you want to know where business regulation will improve next year, look at which countries are struggling. They are the ones most likely to act.

• ▸The gap between the best and worst is enormous, but it is closing. In 2003, it took 152 days to start a business in the worst performing economy. By 2019, that number had dropped to 100 days. The global average has fallen from 51 days to 20 days. The world is getting faster, even if the leaders stay the same.

• ▸Measuring regulation objectively changes the conversation. Before the Doing Business report, governments could claim they were reforming without any data to back it up. Now they cannot. The report forces accountability by counting what actually happens, not just what is promised.

The countries that reformed in 2019 were not the ones with the best universities or the most venture capital. They were the ones that looked at their own bureaucracy and decided to kill it. That is a lesson that applies everywhere, even in countries that already think they are doing well.