Whenever Hungary is ranked in some global survey the results are always pounced on in the local media (and, if the news is good, by the government) as being oh so important. In the case of the Doing Business 2009 survey just released by the World Bank, which tracks the supposed ease of doing business in 181 countries, I’m tempted to jump on the bandwagon. From my experience in these things – which includes working for the World Bank on surveys like this – highlighting the relative successes and failures of countries is a useful prod for reform and improvement. Still, I don’t see all that much to cheer about in the news that Hungary has crept up a few places – from #45 to #41 – in this year’s survey of the ease of doing business.
For one thing, I am unsure if the elements that go into a country’s overall rating are correctly weighted. (They include starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.) And, of course, there is the issue of whether the data “inputs” accurately reflect reality: Does it really take 930 hours’ worth of an entrepreneur’s time to deal with taxes in the Czech Republic, versus just 330 in Hungary?
But there is another, more glaring problem with Hungary’s “improvement.” From what I can tell, the country’s edging up from 45 to 41 seems to have been caused by two specific leaps: a 45-position jump in starting a business, and a 41-place advance in registering property.
While both of these things are obviously good news, they are sort of irrelevant if everything else either stays the same, or gets worse. (“Trading across borders” took the biggest hit, of minus 19, which seems odd given that Hungary is now in a free-trade zone – the EU – with most of its key trading partners.)
Put another way, you’d hardly rush to invest in the Democratic Republic of Congo (which finished in overall last place this year) just because they made starting a business easier than in New Zealand or the US. On the other hand, if your only option was setting up shop in Hungary…