Survey year

Policy uncer-
tainty

   


   

Major constraint
 %

Corrup-
tion
   
  

    
   

Major constraint 
%

Courts
     
     
     

Major constraint
%

Lack confidence courts uphold property rights
 %

Crime 

    
    

Major constraint %

Regulation
 and tax administration
   



Tax rates as major constraint
 %

Time dealing with officials
% of manag-ement
time

Average time to clear  customs days

Finance
 
 




Major constraint %

Electricity
     
     





Major constraint
%

Labor

Major constraint
%
Skills Regulation 
 
Afghanistan .. .. .. .. .. .. .. .. .. .. .. ..
Albania 2005 19.1 31.8 23.9 43.6 8.6 40.9 12.2 2.1 19.5 34.7 10.4 2.5
Algeria 2003 .. 35.2 .. 27.3 .. 44.8 .. 21.6 51.3 11.5 25.5 12.9
Angola .. .. .. .. .. .. .. .. .. .. .. ..
Argentina .. .. .. .. .. .. .. .. .. .. .. ..
Armenia 2005 12.2 20.1 12.4 47.5 2.3 38.4 10.4 4.4 20.8 3.2 2.3 2.9
Australia .. .. .. .. .. .. .. .. .. .. .. ..
Austria .. .. .. .. .. .. .. .. .. .. .. ..
Azerbaijan 2005 2.9 21.3 4.4 30.8 2.4 22.9 16.6 1.6 7.0 4.9 1.8 1.5
Bangladesh 2000 45.4 57.9 .. 83.0 39.4 35.8 4.6 11.5 45.7 73.2 19.8 10.8
Belarus 2005 23.4 6.6 3.0 33.4 2.9 20.4 8.3 4.4 22.5 0.9 6.6 3.4
Belgium .. .. .. .. .. .. .. .. .. .. .. ..
Benin .. .. .. .. .. .. .. .. .. .. .. ..
Bolivia 2004 .. .. .. .. .. .. .. 9.3 .. .. .. ..
Bosnia and Herzegovina 2005 35.1 24.7 21.5 41.6 19.9 15.6 9.5 2.6 25.8 8.2 3.6 3.2
Botswana .. .. .. .. .. .. .. .. .. .. .. ..
Brazil 2003 75.9 67.2 32.8 39.6 52.2 84.5 9.4 13.8 71.7 20.3 39.6 56.9
Bulgaria 2005 27.6 19.0 17.2 56.7 11.5 20.4 7.4 2.9 22.0 6.4 10.4 7.8
Burkina Faso .. .. .. .. .. .. .. .. .. .. .. ..
Burundi .. .. .. .. .. .. .. .. .. .. .. ..
Cambodia 2003 40.1 55.9 31.4 61.0 41.7 18.6 14.6 .. 9.9 12.7 6.6 5.9
Cameroon .. .. .. .. .. .. .. .. .. .. .. ..
Canada .. .. .. .. .. .. .. .. .. .. .. ..
Central African Republic .. .. .. .. .. .. .. .. .. .. .. ..
Chad .. .. .. .. .. .. .. .. .. .. .. ..
Chile .. .. .. .. .. .. .. .. .. .. .. ..
China 2002 32.9 27.3 .. 17.5 20.0 36.8 12.6 7.9 22.3 29.7 30.7 20.7
Hong Kong, China .. .. .. .. .. .. .. .. .. .. .. ..
Colombia .. .. .. .. .. .. .. .. .. .. .. ..
Congo, Dem. Rep. .. .. .. .. .. .. .. .. .. .. .. ..
Congo, Rep. .. .. .. .. .. .. .. .. .. .. .. ..
Costa Rica .. .. .. .. .. .. .. .. .. .. .. ..
Côte d’Ivoire   .. .. .. .. .. .. .. .. .. .. .. ..
Croatia 2005 17.9 18.5 29.3 26.0 3.9 12.0 7.5 3.7 12.7 2.1 7.2 3.0
Cuba   .. .. .. .. .. .. .. .. .. .. .. ..
Czech Republic 2005 22.0 20.5 25.2 53.1 15.8 59.1 7.1 5.1 17.4 15.5 12.5 15.6
Denmark .. .. .. .. .. .. .. .. .. .. .. ..
Dominican Republic   .. .. .. .. .. .. .. .. .. .. .. ..
Ecuador 2003 60.7 49.2 34.1 70.8 27.8 38.1 17.7 16.4 42.2 28.3 22.3 14.1
Egypt, Arab Rep. 2004 65.8 51.3 27.4 .. .. 81.8 .. 9.9 39.0 26.5 29.8 28.1
El Salvador 2004 28.4 35.1 16.4 46.6 49.0 22.6 9.3 6.2 29.6 21.5 20.0 3.9
Eritrea 2002 31.5 2.7 .. .. 1.3 31.1 5.9 9.1 53.7 38.2 41.0 5.2
Estonia 2005 5.3 4.3 2.0 29.6 1.9 3.0 5.7 1.9 6.1 3.3 7.1 18.8
Ethiopia 2002 39.3 39.0 .. .. 9.5 73.6 5.7 13.5 40.2 42.5 17.9 4.6
Finland .. .. .. .. .. .. .. .. .. .. .. ..
France .. .. .. .. .. .. .. .. .. .. .. ..
Gabon .. .. .. .. .. .. .. .. .. .. .. ..
Gambia, The   .. .. .. .. .. .. .. .. .. .. .. ..
Georgia 2005 45.2 20.1 13.5 29.0 24.5 35.7 12.2 2.8 25.4 33.5 14.1 7.6
Germany 2005 5.8 3.9 2.3 10.3 1.9 29.6 3.5 5.7 16.7 1.0 6.9 9.6
Ghana .. .. .. .. .. .. .. .. .. .. .. ..
Greece 2005 9.3 10.0 4.7 18.2 5.2 27.5 8.4 5.9 16.3 4.6 8.6 7.7
Guatemala 2003 66.4 80.9 31.2 71.3 80.4 56.5 17.4 9.3 38.7 26.6 31.4 16.7
Guinea .. .. .. .. .. .. .. .. .. .. .. ..
Guinea-Bissau .. .. .. .. .. .. .. .. .. .. .. ..
Haiti   .. .. .. .. .. .. .. .. .. .. .. ..
Honduras 2003 47.0 62.8 21.8 56.1 60.9 35.6 14.2 5.1 55.4 36.4 26.4 14.2
Hungary 2005 26.3 9.4 7.4 49.8 5.6 50.6 8.3 7.7 27.9 2.1 12.9 10.3
India 2003 20.9 37.4 .. 29.4 15.6 27.9 15.3 6.7 19.2 28.9 12.5 16.7
Indonesia 2004 48.2 41.5 24.7 40.8 22.0 29.5 14.6 5.8 23.0 22.3 18.9 25.9
Iran, Islamic Rep. .. .. .. .. .. .. .. .. .. .. .. ..
Iraq .. .. .. .. .. .. .. .. .. .. .. ..
Ireland 2005 5.6 3.0 2.8 28.3 4.8 17.4 5.8 3.3 9.0 6.4 15.6 9.6
Israel .. .. .. .. .. .. .. .. .. .. .. ..
Italy .. .. .. .. .. .. .. .. .. .. .. ..
Jamaica .. .. .. .. .. .. .. .. .. .. .. ..
Japan .. .. .. .. .. .. .. .. .. .. .. ..
Jordan .. .. .. .. .. .. .. .. .. .. .. ..
Kazakhstan 2005 9.2 12.7 8.2 42.7 5.3 15.6 10.7 6.0 14.9 2.7 8.6 2.5
Kenya 2003 51.5 73.8 .. 51.3 69.8 68.2 13.8 8.9 58.3 48.1 27.6 22.5
Korea, Dem. Rep. .. .. .. .. .. .. .. .. .. .. .. ..
Korea, Rep. 2005 40.9 8.5 3.6 37.2 3.5 15.1 1.3 8.0 12.5 8.3 6.8 4.1
Kuwait .. .. .. .. .. .. .. .. .. .. .. ..
Kyrgyz Republic 2005 33.2 32.8 17.1 50.8 19.4 31.3 16.1 5.4 23.1 4.0 18.9 2.5
Lao PDR .. .. .. .. .. .. .. .. .. .. .. ..
Latvia 2005 22.3 9.6 5.8 51.3 3.1 29.4 8.0 3.3 6.5 4.5 17.8 3.5
Lebanon .. .. .. .. .. .. .. .. .. .. .. ..
Lesotho .. .. .. .. .. .. .. .. .. .. .. ..
Liberia .. .. .. .. .. .. .. .. .. .. .. ..
Libya .. .. .. .. .. .. .. .. .. .. .. ..
Lithuania 2005 23.2 14.0 15.3 49.7 9.5 40.9 8.3 2.0 10.3 3.9 15.3 8.9
Macedonia, FYR 2005 27.9 34.7 31.0 55.4 12.8 20.7 15.6 3.1 31.6 12.0 6.1 9.2
Madagascar 2005 41.5 46.6 34.8 44.6 37.7 44.9 25.4 7.0 62.9 41.3 30.5 14.8
Malawi .. .. .. .. .. .. .. .. .. .. .. ..
Malaysia 2005 22.4 14.5 .. 19.1 11.4 21.7 10.2 3.7 17.8 14.8 25.0 14.5
Mali 2004 21.9 48.7 16.9 33.1 22.1 36.6 10.8 10.0 57.0 24.2 20.8 3.9
Mauritania .. .. .. .. .. .. .. .. .. .. .. ..
Mauritius .. .. .. .. .. .. .. .. .. .. .. ..
Mexico .. .. .. .. .. .. .. .. .. .. .. ..
Moldova 2005 31.6 17.6 22.1 64.2 10.1 37.8 10.9 2.8 31.9 2.9 12.0 8.2
Mongolia .. .. .. .. .. .. .. .. .. .. .. ..
Morocco 2004 .. 16.9 29.1 23.5 7.6 62.6 10.5 3.0 78.5 8.9 21.1 16.2
Mozambique .. .. .. .. .. .. .. .. .. .. .. ..
Myanmar .. .. .. .. .. .. .. .. .. .. .. ..
Namibia .. .. .. .. .. .. .. .. .. .. .. ..
Nepal 2000 .. .. .. .. .. .. .. .. .. 41.7 .. ..
Netherlands .. .. .. .. .. .. .. .. .. .. .. ..
New Zealand .. .. .. .. .. .. .. .. .. .. .. ..
Nicaragua 2003 58.2 65.7 33.3 60.4 39.2 34.7 17.3 5.8 57.6 34.7 17.0 6.9
Niger .. .. .. .. .. .. .. .. .. .. .. ..
Nigeria 2001 .. .. .. .. 36.3 .. .. 17.8 .. 97.4 .. ..
Norway .. .. .. .. .. .. .. .. .. .. .. ..
Oman 2004 20.7 11.9 14.9 12.9 8.6 20.7 .. 8.0 29.4 10.1 34.6 34.8
Pakistan 2002 40.1 40.4 .. 62.6 21.5 45.6 10.6 17.1 40.1 39.2 12.8 15.0
Panama .. .. .. .. .. .. .. .. .. .. .. ..
Papua New Guinea .. .. .. .. .. .. .. .. .. .. .. ..
Paraguay .. .. .. .. .. .. .. .. .. .. .. ..
Peru 2002 71.1 59.6 .. 34.7 51.6 .. .. 7.9 55.8 11.1 12.5 ..
Philippines 2003 29.5 35.2 .. 33.8 26.5 30.4 11.0 9.1 18.2 33.4 11.9 24.7
Poland 2005 42.7 18.2 21.0 47.4 15.0 57.7 7.2 3.8 39.6 4.1 15.3 17.9
Portugal 2005 22.2 15.4 17.8 47.7 15.7 20.5 5.8 6.0 18.3 7.8 12.4 18.1
Puerto Rico .. .. .. .. .. .. .. .. .. .. .. ..
Romania 2005 33.9 30.1 19.7 44.3 15.3 34.1 3.6 3.0 22.6 8.1 14.2 16.4
Russian Federation 2005 26.2 16.5 9.5 63.9 9.3 21.8 14.8 9.5 15.7 5.1 13.1 3.1
Rwanda .. .. .. .. .. .. .. .. .. .. .. ..
Saudi Arabia .. .. .. .. .. .. .. .. .. .. .. ..
Senegal 2004 31.3 39.9 13.3 40.5 15.4 50.8 13.8 7.0 60.3 30.7 18.5 16.3
Serbia and Montenegro 2005 61.2 25.5 30.0 43.1 13.5 29.5 12.4 5.7 43.9 4.7 10.7 13.4
Sierra Leone .. .. .. .. .. .. .. .. .. .. .. ..
Singapore .. .. .. .. .. .. .. .. .. .. .. ..
Slovak Republic 2005 13.0 10.6 13.1 44.4 5.1 8.3 9.3 3.9 7.9 2.7 8.2 4.6
Slovenia 2005 11.5 3.7 8.1 34.4 0.9 12.7 6.4 3.2 9.5 2.7 5.4 4.5
Somalia .. .. .. .. .. .. .. .. .. .. .. ..
South Africa 2004 17.9 16.1 8.8 20.8 29.0 18.6 10.7 6.5 14.5 9.0 35.5 32.9
Spain 2005 10.3 7.8 7.9 16.6 9.8 18.8 5.1 5.5 13.3 8.3 13.8 11.8
Sri Lanka 2003 34.0 16.9 .. 31.2 14.0 19.1 4.7 4.1 20.4 41.3 21.3 25.6
Sudan .. .. .. .. .. .. .. .. .. .. .. ..
Swaziland .. .. .. .. .. .. .. .. .. .. .. ..
Sweden .. .. .. .. .. .. .. .. .. .. .. ..
Switzerland .. .. .. .. .. .. .. .. .. .. .. ..
Syrian Arab Republic 2004 27.0 57.6 .. .. .. 62.5 14.5 15.8 24.8 57.5 36.3 33.8
Tajikistan 2005 5.6 15.7 4.9 35.9 4.1 22.2 8.1 5.9 7.2 10.1 4.6 1.5
Tanzania 2003 31.5 51.1 20.0 55.1 25.5 73.4 16.2 17.5 53.0 58.9 25.0 12.1
Thailand 2004 29.1 18.3 .. 25.8 10.3 24.4 2.9 4.6 15.2 25.6 30.0 11.4
Togo .. .. .. .. .. .. .. .. .. .. .. ..
Trinidad and Tobago .. .. .. .. .. .. .. .. .. .. .. ..
Tunisia .. .. .. .. .. .. .. .. .. .. .. ..
Turkey 2005 31.5 17.0 12.4 28.5 14.7 37.8 11.7 6.4 17.5 9.2 9.8 12.2
Turkmenistan .. .. .. .. .. .. .. .. .. .. .. ..
Uganda 2003 27.6 38.2 .. 30.1 26.8 48.3 5.0 .. 52.8 44.5 30.8 10.8
Ukraine 2005 31.3 22.6 15.2 48.2 12.3 45.7 13.7 6.8 29.9 4.9 19.8 6.5
United Arab Emirates .. .. .. .. .. .. .. .. .. .. .. ..
United Kingdom .. .. .. .. .. .. .. .. .. .. .. ..
United States .. .. .. .. .. .. .. .. .. .. .. ..
Uruguay .. .. .. .. .. .. .. .. .. .. .. ..
Uzbekistan 2005 11.5 8.9 6.6 41.7 8.9 18.3 7.7 8.7 12.5 7.2 4.6 3.0
Venezuela, RB .. .. .. .. .. .. .. .. .. .. .. ..
Vietnam 2005 14.7 12.8 5.5 23.1 4.0 13.8 6.9 4.5 30.3 15.7 22.3 10.9
West Bank and Gaza .. .. .. .. .. .. .. .. .. .. .. ..
Yemen, Rep. 2005 31.1 62.8 32.0 58.4 28.7 71.9 21.3 13.3 31.8 47.6 23.6 12.8
Zambia 2003 57.0 46.4 38.6 36.0 48.8 57.5 14.1 4.8 67.7 39.6 35.7 16.9
Zimbabwe .. .. .. .. .. .. .. .. .. .. .. ..
          
Footnotes
 
Note: Data are based on enterprise surveys conducted by the World Bank and its partners during 2001–05. While averages are reported, there are significant variations across firms. Surveys of Eastern Europe and Central Asia were conducted under the joint World Bank–European Bank for Reconstruction and Development Business Environment and Enterprise Performance Surveys Initiative.
 

 
 About the data
 
The table includes recently available data from World Bank–sponsored firm-level Investment Climate Surveys covering more than 50,000 firms in 63 developing countries for 2001–05. The data provide fresh insights into how investment climates vary around the world. In addition to these surveys, data from the Doing Business project, which benchmarks regulatory regimes in 155 countries, are presented in table 5.3.
 
A good investment climate requires government policies that provide an environment for firms and entrepreneurs to invest productively, create jobs, and contribute to growth and poverty reduction. The goal is to create a better investment climate that benefits society as a whole, not just firms.
 
Improving government policies and behaviors is key to shaping the investment climate because they are influential in driving growth and poverty reduction. Governments face four primary challenges in improving the investment climate and getting the balance right between society’s interests and firms’ incentives to invest. One is restraining corruption by public officials, firms, and other interest groups. Two is establishing credibility by maintaining economic and political stability and restraining arbitrary behavior by the key agencies of the state. Three is fostering public trust and legitimacy through open and participatory policymaking, transparency, and equity. Four is ensuring that government policies realistically reflect current conditions and continue to adapt to changing economic and business conditions.
 
Firms evaluating alternative investment options, governments interested in improving their investment climates, and economists seeking to understand the role of different factors in explaining economic performance have all grappled with defining and measuring the investment climate. The World Bank, working with client governments and others, recently pioneered new measures of the investment climate. The Investment Climate Surveys measure specific constraints facing firms and relate them to measures of firm performance, growth, and investment.
 
The indicators included in the table cover eight dimensions of the investment climate: policy uncertainty, corruption, courts, crime, regulation and tax administration, finance, infrastructure, and labor.
 
Firms in developing countries rate policy uncertainty as their dominant concern among investment climate constraints. It measures the credibility of governments and their policies and the ability to deliver what is promised. Corruption—the exploitation of public office for private gain—can harm the investment climate in several ways. It can distort policymaking, undermine government credibility, tax entrepreneurial activities, and divert resources from public coffers. Better courts reduce the risks firms face, so that firms are willing to invest more. And the importance of courts grows as the number of large and complex long-term transactions increases. Robbery, fraud, and other crimes against property and against the person undermine the investment climate. Crime retards entrepreneurial activity. In Latin America, more than 50 percent of surveyed firms judged crime to be a serious obstacle to doing business.
 
Most countries have room to improve regulation and taxation without compromising broader social interests. The investment climate is harmed when governments impose unnecessary costs, by increasing uncertainty and risk and by erecting unjustified barriers to competition. Improvements in the tax system may include broadening the tax base, simplifying tax structures, increasing the autonomy of tax agencies, and improving compliance through computerization. When financial markets work well, they connect firms to lenders and investors, which allows firms to seize business opportunities and grow their businesses. But too often government distortions introduced by state ownership or directed credit undermine financial sector development, productivity, and economic growth. Firms that have access to modern infrastructure—telecommunications, reliable electricity supplies, and efficient transportation—are more productive, and improvements in infrastructure services also benefit households. Ill-considered labor regulations can discourage firms from creating more jobs, and while some employees may benefit, the unemployed, the low skilled, and those working in the informal economy will not.
 
The Investment Climate Surveys follow a stratified random sampling methodology, drawing from registered establishments with at least 10 employees. Samples are stratified on sectors and size of firms. Sectors are selected based on their contribution to GDP and for comparability with sectors in other countries. Because the distribution of establishments in most countries is overwhelmingly populated by small and medium-size enterprises, surveys generally oversample large establishments. Sample sizes for recent surveys range from 250 to 1,800 businesses and average 550 establishments.
 
For more information on the investment climate, see http://econ.worldbank.org/wdr/wdr2005 and http://iresearch.worldbank.org/ics.
   

 
 Definitions
 
• Policy uncertainty measures the share of senior managers who ranked economic and regulatory policy uncertainty as a major or very severe constraint. • Corruption measures the share of senior managers who ranked corruption as a major or very severe constraint. • Courts measure the share of senior managers who ranked courts and dispute resolution systems as a major or very severe constraint. • Lack confidence courts uphold property rights measures the share of managers who do not agree with the statement: “I am confident that the judicial system will enforce my contractual and property rights in business disputes.” • Crime measures the share of senior managers who ranked crime, theft, and disorder as a major or very severe constraint. • Tax rates as major constraint measure the share of senior managers who ranked tax rates as a major or very severe constraint. • Time dealing with officials is the percentage of management time in a given week spent on requirements imposed by government regulations (taxes, customs, labor regulations, licensing and registration). • Average time to clear customs is the number of days to clear an imported good through customs. • Finance measures shares of senior managers who ranked access to finance or cost of finance as a major or very severe constraint. • Electricity measures the share of senior managers who ranked electricity as a major or severe constraint. • Labor skills measure the share of senior managers who ranked skills of available workers as a major or severe constraint. • Labor regulations measure the share of senior managers who ranked labor regulations as a major or severe constraint.
   

 
 Data sources
Data on the investment climate are from the World Bank’s Investment Climate Surveys (http://iresearch.worldbank.org/ics).