Doing Business — Updated 1-16

As a follow up to the story in the Wall Street Journal (paywall), I’ve been delving into the details of the calculations behind the World Bank’s Doing Business rankings for Chile. I thought it would be helpful to illustrate what the rankings would be under an unchanging measure of the business climate.

To be specific, what I decided in advance was to pick all of the underlying variables for Doing Business indicators that are available for all 5 years, DB 2014-2018. Because some of variables used in the past have been discontinued, and some have been added, sticking with a fixed set of variables means that I will not replicate the ranking in the report from any year.

This approach is only one of many different ways to see what the trend would be in Chile’s ranking when we hold the underlying indicators constant. There are other ways to do this that will generate different levels of for the ranking. The only general result that is worth considering from such an exercise is that the change in rank for Chile is smaller under any of these methods that the methods constant.

So with these caveats in mind, here is what I found:



Here are links for two files. The first goes to a github page from which you can view or download a Jupyter notebook that anyone can run if they have a local install of Python 3.6. (I used the Anaconda distribution of Python.)

Jupyter Notebook

The second is a PDF printout of the results from the notebook.

PDF printout of Notebook

The comments in the notebook help illustrate the specifics that one must set to generate a ranking of this type. It shows how I departed from the exact procedures that the Doing Business team uses to calculate the distance to the frontier. So these are not in any sense official calculations. Rather, they are illustrations of how anyone can calculate their own ranking from the underlying data.

In a separate post, I point out that in my attempt at promoting clarity, I failed to live up to the well established rule for an author, “show, don’t tell.”