The Effect of Ease of Doing Business on Firm Creation

Document Type


Publication Date



This paper looked at the effect of ease of doing business on firm creation. Using a nine-year panel data of about 120 countries from the World Bank’s Ease of Doing Business Reports, results suggest that overall ease of doing business has a positive effect on business creation. This relationship is most strongly driven by the Starting a Business component, but Paying Taxes is also important. In addition, the effect of the Starting a Business component is driven by the financial cost rather than the time and administrative cost. Finally, results change when the analysis is applied to non-high-income countries only.