What gets measured gets done
| Author | Glenn Gottselig |
| Position | IMF External Relations Department |
| Pages | 309-324 |
Page 309
Competition among countries and comparative data are spurring reform. A recent Cato Institute event featured two publications that assess the quality of business environments and rank country performance. James Gwartney (see photo) and Simeon Djankov-coauthors of, respectively, Economic Freedom of the World and Doing Business-presented the most recent findings and highlighted progress in many African countries.
Page 324
The quality of business environments is drawing increasing attention from both investors and governments. A recent Cato Institute forum spotlighted two well-known reports that are helping spur reforms by ranking crucial elements in private sector environments. Simeon Djankov of the World Bank and James Gwartney of Florida State University presented the latest findings of, respectively, the joint International Finance Corporation-World Bank Doing Business 2007 and the Fraser Institute sponsored Economic Freedom of the World 2006. Both draw attention to the progress being made in many African countries.
In many ways, Gwartney argued, economic freedom "is as important as democracy." Economic Freedom of the World seeks to measure the degree to which a country's policies and institutions contribute to growth and prosperity. The report's index analyzes 38 data points in five areas: size of government; legal structure and security of property rights; access to sound money; freedom to trade internationally; and regulation of credit, labor, and business. In the latest report, Hong Kong SAR retained the highest ranking for economic freedom, followed by Singapore, New Zealand, Switzerland, and the United States.
The greatest progress-that is, the largest upward movement in the ranking-was made by Ghana, Israel, Uganda, Jamaica, and Hungary.
Doing Business, launched in 2004, ranks 175 economies on the ease of doing business. Its 2007 report focuses on regulatory reform, examining 213 reforms in over 100 economies and highlighting best practices for governments.
The philosophy behind quantitative measurements and rankings is, as one of the report's authors observed, "what gets measured gets done." Comparative data can both spur competition and give governments and policymakers the ability to learn from other countries and prioritize reforms. The rankings are having an...
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