# 4.1.1 Business environment

For the private sector to flourish and generate productivity growth, it must operate in an environment conducive to business. This includes regulations and arrangements that make it easy to start a business, access electricity and the internet, register property, and obtain construction permits. It also includes having a tax system that provides appropriate incentives, raises revenue efficiently, and is viewed as fair. In these respects, the general business environment in the average EMDEs has improved since the global recession, with its score improving on average by 13 percentage points since DB2008 (Figure 9).<sup>22</sup> The largest gains in business regulatory environment scores occurred during and after the global financial crisis when the number of business-friendly reforms increased from 102 in DB2008 to 147 in DB2010. The share of EMDEs undertaking at least one business-friendly reform measure increased from 57 percent in DB2008 to 73 percent in DB2010; the share of EMDEs undertaking at least three reform measures increased from 15 percent in DB2008 to 25 percent in 2010. Since DB2010, the number of economies undertaking reforms has slowed such that the average improvement in between DB2013 and DB2020 was a third smaller than the seven years prior to DB2013. The number of reforms has not surpassed its DB2010 peak, with reforms slowing significantly to a low in DB2013.

EMDEs have also seen an increase in the use of internet among the population with more individuals and businesses using the internet. The average share of the population using internet in EMDEs rose from just under 12 percent in 2006 to 45 percent in 2017. This remains below the 85 percent average in advanced economies.

# 4.1.2 Financial environment

The global recession placed a spotlight on gaps in financial regulation and supervision. In response, financial sector reform accelerated globally, especially among the major economies, with the adoption of Basel III and improvements in the Global Financial Safety Net. Many EMDEs also accelerated financial environment reforms, but improvements in financial aspects of business including ease of getting credit, minority investor protection, resolving insolvencies, and contract enforcement indicators have been mixed. On average, EMDEs have improved their scores related to the financial regulatory environment (including the ease of getting credit, minority investor protection, and resolving insolvencies) by 10 percentage points between DB2009 and DB2020. Scores have improved by a greater margin in the seven years between DB2013 and DB2020, than the seven prior. EMDEs have done particularly well in improving business access to credit, with the score improving by over 20 percentage points over this same period. Contract enforcement, on the other hand, has not materially changed since the global recession. Unlike in business environment reforms, the number of EMDEs undertaking financial reforms have improved more consistently over the post-recession period and the number of reforms reached a peak in DB2019.

> 22 An economy’s score is indicated on a scale from 0 to 100, where 0 represents the lowest performance and 100 the frontier, which is constructed from the best performances across all economies and across time. The number of reforms is calculated using the business reforms by year and by country as listed in the World Bank’s Doing Business publications.