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Cost of doing business index in Latin America

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Abstract

The World Bank's Ease of Doing Business Index (EDBI) has been widely used in analyzes of attracting investments and formulating public policies. Despite its importance in signaling the quality of the countries' business environment, research shows that EDBI does not always offer reliable analyzes. The literature shows that the use of EDBI is associated with several problems, among which is the comparison of different countries, the utilization of variables that do not represent all companies and cities in the country, the disregard of the influence or weight of each variable in the composition of the index and the compensatory aggregation of variables. The present work results reflect the extent to which each of the problems associated with EDBI impairs its ability to signal the quality of the countries' business environment. These results show that eliminating the problems related to EDBI can increase the index's capacity to capture unemployment indicators, gross domestic product per capita, foreign direct investment, government effectiveness, and corruption levels. This research contributes to a more reliable indication of the quality of the business countries' environment by subsidizing decisions such as private investments and company internationalization and government strategies such as assessing and proposing laws to reduce efforts to do business.

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http://dx.doi.org/10.17632/b3yvn2pph9.1.

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Acknowledgements

We are grateful to the three anonymous reviewers for their constructive comments. The remaining errors are ours.

Funding

The work of Matheus Pereira Libório was supported by the Coordenação de Aperfeiçoamento de Pessoal de Nível Superior, Brazil (CAPES), under Finance Code 001. The work of Petr Ekel was supported by the Brazilian National Council for Scientific and Technological Development (Conselho Nacional de Desenvolvimento Científico e Tecnológico, CNPq) under grant 311032/2016–8 and by Companhia Vale – Brasil (Vale)—P&D 2019–2022 “Pesquisa em Planejamento e Suporte a Tomada de Decisão” [Research in Planning and Decision Making Support].

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  1. Pontifical Catholic University of Minas Gerais, Belo Horizonte, 30535-012, Brazil

    Patrícia Bernardes, Petr Iakovlevitch Ekel, Sérgio Fernando Loureiro Rezende, Joel Gomes Pereira Júnior, Angélica Cidália Gouveia dos Santos, Maurício Andrade Rodrigues da Costa, Rafael Lopes Carvalhais & Matheus Pereira Libório

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  1. Patrícia Bernardes
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Bernardes, P., Ekel, P.I., Rezende, S.F.L. et al. Cost of doing business index in Latin America. Qual Quant 56, 2233–2252 (2022). https://doi.org/10.1007/s11135-021-01221-8

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