China Belt And Road Initiative Countries Up 244 Places In World Bank Ease of Doing Business Rankings

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Op/Ed By Chris Devonshire-Ellis 

China’s Belt & Road Initiative was originally launched, albeit known as the ‘One Belt One Road’ back in 2013. Now we are seven years down that path, and able to measure to some degree, the success, failure – and impact of these investments.

One way of doing so is to examine the differences in each countries World Bank ‘Ease Of Doing Business’ rankings since 2013 and to look at any difference. There are 135 countries that have both signed up to China’s Belt & Road and that are also monitored by the World Bank.

Ease of Doing Business rankings are important because they shed some light on how economies are developing, and the standards employed within local commerce and trade. Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.

A nation’s ranking on the index is based on the average of 10 subindices:

  • Starting a business – Procedures, time, cost, and minimum capital to open a new business
  • Dealing with construction permits – Procedures, time, and cost to build a warehouse
  • Getting electricity – procedures, time, and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse
  • Registering property – Procedures, time, and cost to register commercial real estate
  • Getting credit – Strength of legal rights index, depth of credit information index
  • Protecting investors – Indices on the extent of disclosure, extent of director liability, and ease of shareholder suits
  • Paying taxes – Number of taxes paid, hours per year spent preparing tax returns, and total tax payable as share of gross profit
  • Trading across borders – Number of documents, cost, and time necessary to export and import
  • Enforcing contracts – Procedures, time, and cost to enforce a debt contract
  • Resolving insolvency – The time, cost, and recovery rate (%) under bankruptcy proceeding

One way in that rankings can be used is to examine whether there has been any change in these parameters because better or new infrastructure has or is being put in place, although the actual Ease of Doing Business Rankings concentrate on the regulations directly affecting businesses and do not directly measure more general conditions such as a nation’s proximity to large markets or quality of infrastructure.

However, comparing the Ease of Doing Business Rankings with the development of nations within China’s Belt & Road Initiative will tell us if there is any meaningful impact. I have made simple comparisons between their rankings in 2013 and 2020, based upon the Ease of Doing Business Rankings as produced by the World Bank. 2014 figures are based on statistics collected in 2013, and 2020 figures (the latest available) based on measurements during 2019.

Belt & Road Countries Development: Ease Of Doing Business Rankings
Country 2014 2020 Change
Afghanistan 164 173 -9
Albania 90 82 +8
Algeria 153 157 -4
Angola 179 177 +2
Antigua and Barbuda 71 113 -42
Armenia 37 47 -10
Austria 30 27 +3
Azerbaijan 70 34 +36
Bahrain 46 43 +3
Bangladesh 130 168 -38
Barbados 91 128 -37
Belarus 63 49 +14
Benin 174 140 +25
Bolivia 162 150 +12
Bosnia and Herzegovina 131 90 +41
Brunei Darussalam 59 66 -7
Bulgaria 58 61 -3
Burundi 140 166 -26
Cabo Verde 121 137 -16
Cambodia 137 144 -7
Cameroon 168 167 +1
Chad 189 182 +7
Chile 34 59 -25
China 96 31 +65
Comoros 158 160 -2
Congo, Rep. 183 180 +3
Costa Rica 102 74 +28
Côte d’Ivoire 167 110 +57
Croatia 89 51 +38
Cyprus 39 54 -15
Czech Republic 75 41 +34
Djibouti 160 112 +48
Dominica 77 111 -34
Ecuador 135 129 +6
Egypt 128 114 +14
El Salvador 118 91 +27
Equatorial Guinea 166 178 -12
Estonia 22 18 +4
Ethiopia 125 159 -34
Fiji 62 102 -40
Gabon 163 169 -6
Gambia 150 155 -5
Georgia 8 7 +1
Ghana 67 118 -51
Greece 72 79 -7
Grenada 107 146 -39
Guinea 175 156 +19
Guyana 115 134 +19
Hong Kong 2 3 -1
Hungary 54 52 +2
Indonesia 120 73 +47
Iran 152 127 +25
Iraq 151 172 -21
Italy 65 58 +7
Jamaica 94 71 +23
Kazakhstan 50 25 +25
Kenya 129 56 +73
Kiribati 122 164 -42
Korea, South 7 5 +2
Kuwait 104 83 +21
Kyrgyzstan 68 80 -12
Laos 159 154 +5
Latvia 24 19 +5
Lebanon 111 143 -32
Lesotho 136 122 +14
Liberia 144 175 -31
Libya 187 186 +1
Lithuania 17 11 +6
Luxembourg 60 72 -12
Madagascar 148 161 -13
Malaysia 6 12 -6
Maldives 95 147 -52
Mali 155 148 +7
Malta 103 88 +15
Mauritania 173 152 +21
Micronesia 156 158 -2
Moldova 78 48 +30
Mongolia 76 81 -5
Montenegro 44 50 -6
Morocco 87 53 +34
Mozambique 139 138 +1
Myanmar 182 165 +17
Namibia 98 104 -6
Nepal 105 94 +11
New Zealand 3 1 +2
Niger 176 132 +44
Nigeria 147 131 +16
North Macedonia 25 17 +8
Oman 47 68 -21
Pakistan 110 108 +2
Panama 55 86 -31
Papua New Guinea 113 120 -7
Peru 42 76 -34
Philippines 108 95 +13
Poland 45 40 +5
Portugal 31 39 -8
Qatar 48 77 -29
Romania 73 55 +18
Russia 92 28 +64
Rwanda 32 38 -6
Samoa 61 98 -37
Saudi Arabia 26 62 -36
Senegal 178 123 +55
Serbia 93 44 +49
Seychelles 80 100 -20
Sierra Leone 142 163 -21
Singapore 1 2 -1
Slovakia 49 45 +4
Slovenia 33 37 -4
Solomon Islands 97 136 -39
South Africa 41 84 -43
South Sudan 186 185 +1
Sri Lanka 85 99 -14
Sudan 149 171 -22
Suriname 161 162 -1
Tajikistan 143 106 +37
Tanzania 145 141 +4
Thailand 18 21 -3
Timor-Leste 172 181 -9
Togo 157 97 +60
Tonga 57 103 -46
Trinidad and Tobago 66 105 -39
Tunisia 51 78 -27
Turkey 69 33 +36
Uganda 132 116 +16
Ukraine 112 64 +48
United Arab Emirates 23 16 +7
Uruguay 88 101 -13
Uzbekistan 146 69 +77
Vanuatu 74 107 -33
Venezuela 181 188 -7
Vietnam 99 70 +29
Yemen 133 187 -54
Zambia 83 85 -2
Zimbabwe 170 140 +30

The results are a mixed bag, but do show that overall, the countries that have signed off with China’s Belt & Road Initiative have seen collective ease of doing business rankings improve by 244 places. This at least indicates that China holds the overall balance in its favor in terms of having partnered with developing economies, although it is not a spectacular gain.

Adjusting the picture regionally presents a rather different figure:

Region Performance
Europe (inc. Caucasus Russia & Turkey) +374
Africa +171
Central Asia +115
South-East Asia +115
North Africa & Middle East -107
South America -203
Others (mainly smaller island economies) -241

Overall, the picture is positive, with apparent ease of business gains being made in much of the global regions that China has signed up BRI partners. What is dragging the position down appear to be political issues in the Middle East, which includes a heavily US sanctioned Iran, coupled with a poor ranking from Saudi Arabia where previous freedoms have recently been significantly curtailed. South America also performs poorly, however many LatAm countries have suffered with poor economic performance, corruption and US sanctions. China is also a late investor in the region with results from BRI projects still yet to be realized.

To China’s credit, it has also invested in truly difficult markets, which have also dragged down its overall score. Some of these, such as Afghanistan (which shares a border with China) and some of the North African and Middle Eastern nations with political and conflict problems such as Sudan, will take years to put right. Others are smaller economies whose performance has suffered in the past seven years due to political instability, the financial crisis or natural disasters.

Yet the overall improvements of countries within the European sphere – including a heavily sanctioned yet improving business environment in Russia, Turkey and the EU in general is highly positive. So too are many of the African nations part of China’s BRI, whose own regulatory and commercial performance shows a great deal of encouragement. The same is true in Central Asia, and especially of Uzbekistan and Kazakhstan, where regime changes and reform are having a significant impact.

All in all however, despite the fact it is a diverse group of results, China’s Belt & Road Initiative is on the right side of the Ease of Doing Business Rankings. My own view is that as increasing numbers of projects start to come to fruition, this correlation should become more apparent. We will be revisiting these numbers again, twelve months from now.

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About Us

Silk Road Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Asia, and assists foreign investors into the region. For strategic advisory and business intelligence issues please contact the firm at silkroad@dezshira.com or visit www.dezshira.com

 

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