Cost of doing business index in Latin America

Published: 22 September 2020| Version 1 | DOI: 10.17632/b3yvn2pph9.1
Contributor:
Matheus Libório

Description

Researchers claim that the Ease of Doing Business (EDBI) is an index that represents only one facet of the conditions of the business environment because the data is collected from companies of a certain size and city. When considering the problem of the representativeness of the EDBI, researchers assume that all the variables in the index vary according to the size of the company or city. In fact, many EDBI variables vary according to the size of the company or city e.g. variables related to public bureaucracy and which are measured by the time and the number of procedures required to do business (World Bank 2018). However, another part of the EDBI variables fits into the classic definition of Transaction Costs. That is, non-operating costs present in all transactions and which resemble transport fees or taxes. Among the EDBI variables, seventeen variables fit this definition because they are precisely taxes and fees regulated by governments that affect companies across the economy (World Bank 2018). This data set is used to create a new index to better represent the conditions of the countries' business environment. The data from twenty countries of Latin America (LA) are retrieved from the World DataBank database (World Bank 2020), which excludes Cuba due to the unavailability of the data. The selected variables were weighted according to the opinion of ten experts. The evaluation data of these specialists, as well as the calculations used to find the weights are also available.

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Development of Economics

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