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Business jump: Russia climbs 20 points in WB ranking

Published time: October 29, 2013 15:11
Edited time: October 30, 2013 08:28

Russia has entered the top hundred countries in the Doing Business ranking – the list President Putin uses as a barometer of the country’s economic success. The country climbed 19 points to 92th place sandwiched between Serbia and Barbados.

The research by the World Bank and the International Financial Corporation (IFC) studies progress in 10 industries in a country; Singapore, Hong Kong and New Zealand took the top three positions.

Russia came as one of the leaders in terms of reform. It has put in reforms in five industries; the only countries to do better are Ukraine and Ruanda which both reformed 8 industries.

Easier connection to electricity grid was the key breakthrough for Russia, as the country was in last place on the indicator two years ago. Now it's ranked 117th, showing the best improvement.

Power supply is now a worldwide problem, with 109 countries saying it was the key setback for running business.

In 2012 Russian President Vladimir Putin set the goal of raising the country’s position in the Doing Business ranking from 120th place to 20th by 2018. In terms of progress, Russia has approached its goal by 3.6 percent, which is three times faster than the world’s average of 1.2 percent, according to the report’s co-author Valentina Saltane.

The introduction of an electronic declaration system in Russia reduced the time to process import paperwork by a half to 21 days. It is still a long time but shifted Russia up 5 positions to 157th place. In the leader Singapore it takes 4-6 days. The number of procedures needed to get construction permission decreased from 42 to 36, while the price was cut by 30%.

The IFC report highlights 238 reforms last year in business regulation undertaken in the listed countries. “If economies around the world were to follow best practices in regulatory processes for starting a business, entrepreneurs would spend 45 million fewer days each year satisfying bureaucratic requirements,” the report says.

In order to facilitate the development of business and increase their rating, countries primarily lower bureaucratic barriers: minimize the number of procedures, reconsider tariffs, and introduce electronic systems. “That’s easier than the improvement of legal institutions, requiring active reforms from year to year”, says rating co-author Valentina Saltane. The high rank in the list partly demands legal reforms, which account for only a third of total improvements. Simple solutions are over, recognizes Nikitin, the strategic initiatives director to Vedomosti, “Further will be harder”.

However the ranking system is criticized for being insufficient. Doing Business does not measure all aspects of the business environment that matter to firms and investors. For example, it does not measure the quality of fiscal management, other aspects of macroeconomic stability, the level of skills in the labor force, or the resilience of financial systems.

Its findings have stimulated policy debates worldwide and enabled a growing body of research on how firm-level regulation relates to the economic outcome across economies.


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