The Role of Governance in the Ease of Doing Business: International Perspectives

Abstract

The country's operational business environment is summarized by the ease of doing business index. The study aims to examine the role of governance indicators in the ease of doing business among certain countries in the world. Regulatory quality, voice and accountability, political stability, rule of law, government effectiveness, and corruption control are all taken into account as global governance indicators. Also, Ease of doing business was taken as a dependent variable. Five-year World Bank data (2016–2020) of 40 countries from all economic development levels were used. To measure the ease of doing business, the World Bank’s ease of doing business index score was used. The pooled Ordinary Least Squares model, the Fixed Effects model, and the Random Effects models were used. The result of each independent variable is corruption control, regulatory quality, and voice and accountability which had significant and positive effects on the ease of doing business. Additionally, the model results show that high-income countries have stronger business-friendly environments than low-income countries. Governments should take steps to improve the overall position about the best regulatory performance in terms of ease of doing business. Finally, this study will be significant for policymakers, government leaders, program developers, entrepreneurs, and analysts.