Cost of doing business index in Latin America

Patrícia Bernardes (), Petr Iakovlevitch Ekel (), Sérgio Fernando Loureiro Rezende (), Joel Gomes Pereira Júnior (), Angélica Cidália Gouveia Santos (), Maurício Andrade Rodrigues Costa (), Rafael Lopes Carvalhais () and Matheus Pereira Libório ()
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Patrícia Bernardes: Pontifical Catholic University of Minas Gerais
Petr Iakovlevitch Ekel: Pontifical Catholic University of Minas Gerais
Sérgio Fernando Loureiro Rezende: Pontifical Catholic University of Minas Gerais
Joel Gomes Pereira Júnior: Pontifical Catholic University of Minas Gerais
Angélica Cidália Gouveia Santos: Pontifical Catholic University of Minas Gerais
Maurício Andrade Rodrigues Costa: Pontifical Catholic University of Minas Gerais
Rafael Lopes Carvalhais: Pontifical Catholic University of Minas Gerais
Matheus Pereira Libório: Pontifical Catholic University of Minas Gerais

Quality & Quantity: International Journal of Methodology, 2022, vol. 56, issue 4, No 18, 2233-2252

Abstract: Abstract The World Bank's Ease of Doing Business Index (EDBI) has been widely used in analyzes of attracting investments and formulating public policies. Despite its importance in signaling the quality of the countries' business environment, research shows that EDBI does not always offer reliable analyzes. The literature shows that the use of EDBI is associated with several problems, among which is the comparison of different countries, the utilization of variables that do not represent all companies and cities in the country, the disregard of the influence or weight of each variable in the composition of the index and the compensatory aggregation of variables. The present work results reflect the extent to which each of the problems associated with EDBI impairs its ability to signal the quality of the countries' business environment. These results show that eliminating the problems related to EDBI can increase the index's capacity to capture unemployment indicators, gross domestic product per capita, foreign direct investment, government effectiveness, and corruption levels. This research contributes to a more reliable indication of the quality of the business countries' environment by subsidizing decisions such as private investments and company internationalization and government strategies such as assessing and proposing laws to reduce efforts to do business.

Keywords: Business environment; Composite indexes; Latin America; Transaction costs; Non-compensatory aggregation (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11135-021-01221-8

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