The Ease of Doing Business: Czech Republic Finishes 65th
Despite climbing two places to 65th in the 2012 report, the Czech Republic still ranked lower than Ghana, Belarus and Rwanda. What is more, Italy and Greece were the only OECD countries that fared worse than we did, although not a word of this has been mentioned by the Czech public or government.
About the Index
National economies are ranked from 1 to 185 based on the ease of doing business there. A high ranking in the index means the regulatory environment is more conducive to starting and operating a local business. The ranking is the simple average of the 10 percentile rankings under each category, which include starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.
It is worth noting, however, that the index leaves out several important aspects, such as the relevant economy’s proximity to large markets, the quality of its infrastructure, the strength of its financial system, macroeconomic conditions and the performance of its major institutions.
Czech Republic Compared to the Rest of Central Europe
While the Czech Republic ranked 65th overall, other CE countries did noticeably better. Poland’s 55th position was one step behind Hungary, which came in 54th. Slovakia was the best among the Visegrad Four, reaching 46th, while Austria and Germany finished 29th and 20th, respectively. Of the countries just mentioned, the Czech Republic failed to achieve the best score in any category. In fact, it was considered the worst for starting a business, getting electricity, paying taxes and enforcing contracts.
The points awarded to certain countries could be subject to further discussion, but it remains an open question whether those submitting their country’s data applied uniform standards and benchmarks. Whether doing business in the Czech Republic is actually worse than in Belarus or Rwanda is certainly debatable. Regardless of the results, such a discussion would be helpful as it would allow the general public to consider the importance of a well-functioning government, not only in terms of business but also the country’s quality of life. Although some of the results in the Ease of Doing Business ranking may be surprising, two things are clear: 1) doing business is easier in more affluent countries, and 2) countries that lack legal awareness and that are tied to unpredictable bureaucracy stay poor, both in terms of the prosperity of their people and their businesses.
Let us hope that our less than ideal ranking helps political players in our country to see the correlation between our laws and institutions on the one hand and our nation’s prosperity on the other. The ranking also reveals those high performers who can offer advice and guidance. Above all, our ranking perhaps illustrates that we should pay greater attention to how things are done beyond our own borders.