Economic Expansion and Ease of Doing Business

Abstract

Using panel data from the World Bank's Doing Business report spanning 2006 to 2016, I calculate the influence of ease of doing business on the per capita growth rate of GDP. To account for out-of-strategy-state dynamics and extra business climate indicators, the study includes supplementary explanatory variables, namely the lagged value of log GDP per capita and the Worldwide Governance Indicators (WGI). I gather critical evidence that the ease of doing business has a statistically significant impact on the annual growth rate of GDP per capita. The estimated coefficients of the Doing Business indicators, on the other hand, had no statistically significant impact on the yearly growth rate of GDP per capita for the entire sample. Subsample indicators, on the other hand, have a statistically significant influence. Furthermore, when the sample was subdivided according to country income group classifications, a diverse range of results appeared. Certain metrics appeared to have an adverse relationship with the pace of growth in per capita GDP. Based on hypothetical growth rates expected for 2006 calculated from the Doing Business indicators for 2016, certain countries have enjoyed economic growth as a result of improvements in the ease of doing business. The findings support the premise that the ease of doing business has a major impact on economic growth; however, the impact varies among country groupings.