Analyzing the link between EDB and economic growth

Abstract

There are many factors that affect the growth in a country’s GDP. This paper aims to investigate the relationship between Ease of doing business (EDB) rankings on the economic growth in a sample of 44 countries chosen randomly from 183 countries. GDP per capita, Average growth (2004-2013) and EDB rankings were chosen as the variables on the basis of the significance for the ease of doing business to work out the regressions. The regression results indicated that the variable of EDB ranking has no statistically significant effect on GDP. One would expect that improvement in the EDB rankings would positively cause an increase in GDP; however it is understood that EDB rankings do not actually capture the GDP growth. EDB rankings are just the relative rankings and cannot be useful for predicting GDP growth. The World Bank Group’s Doing Business reports have become an important guide and benchmark to inform regulatory reforms aimed at unleashing the potential for development. However, the Doing Business reports can be used for guidance in making investment related-decisions