The World Bank released its annual "Doing Business" report last week, and friends of the Obama Administration are crowing that it debunks the notion that the U.S. has become a regulatory jungle since President Obama took office. Maybe they should read it more carefully.
The report, which uses various indicators to rank 183 countries on the ease of doing business, puts the U.S. in fourth place for 2012, behind Singapore, Hong Kong and New Zealand. That's up a notch from its fifth-place finish last year, but down one from third place in 2007.
But then there are the trend lines in the sub-rankings. In 2007, the U.S. ranked third in the "ease of starting a business" category. This year it ranks 13th. On the "paying taxes" front we've dropped to 72nd place from 63rd. The cost of starting a business, measured as a percentage of per capita income, has doubled to 1.4% from 0.7% in 2007. On "ease of registering property" the U.S. has dropped to 16th from tenth. In the "trading across borders" category, we've dropped nine spots to 20th. In 2007, the "cost to import," as measured in dollars per container, was $625. Today it's more than doubled to $1,315.
The rankings are relative to the rest of the world. And it's good news that policy makers in 163 countries have made domestic regulations more business-friendly in the past six years, with the outliers being the likes of Venezuela and Zimbabwe. But that makes it all the more imperative for the U.S. to compete in a global economy that isn't sitting still. "Doing Business" is one of the few things the World Bank does well. Its message is that the U.S. needs to be doing better.
WSJ Editorial, October 28, 2011