Business Removing

9
Measuring
with impact
How are the indicators constructed?
How is the methodology being improved?
What is new?
In 1908 the first Model T came off the Ford Motor Company’s
factory floor. The time to produce a single car:
12 ½ hours. The price: $825. Few people could afford
one. Realizing this, in 1911 Henry Ford asked Frederick
Taylor, the creator of time-and-motion studies, for help.
After studying the production process from beginning
to end, Taylor divided it into separate procedures and
assigned workers to each. By 1914 it took 93 minutes to
produce a Model T, and the price fell to $440. Ford produced
261,000 that year, nearly as many produced by the
other 300 car manufacturers combined.
In 1986 Hernando de Soto published The Other
Path, using a time-and-motion study to show the prohibitive
obstacles to establishing a business in Peru. De
Soto’s research team followed all necessary bureaucratic
procedures in setting up a one-employee garment factory
in the outskirts of Lima. It took 289 days and $1,231
for the business to legally start operations.
Doing Business is a time-and-motion study which
measures, across 145 countries, the obstacles faced by
an entrepreneur performing standardized tasks: starting
a business; hiring and firing workers; obtaining business
licenses; getting credit; registering property; protecting
investors; enforcing contracts; and closing down
a business. It takes 7 procedures and 8 days and costs
1% of income per capita to register a business in Singapore;
41 procedures, 455 days and 10% of the debt
to enforce a debt contract in Oman; 5 procedures, 49
days and 4% of the property value to register property
in Pakistan; and 16 procedures, 121 days and 13% of income
per capita to recover collateral in Mexico (figure 2.1).
The Doing Business research is conducted in coop-
FIGURE 2.1
Complex procedures to recover collateral in Mexico
Days
Percentage of income per capita
120
12
90
9
Cost
60
6
Time
30
3
0
1 4 8 12 16
0
Procedures
Source: Doing Business database.
1. Filing of complaint before judge.
2. Writ of the court in which the complaint is admitted.
3. Judicial request for payment of the encumbered assets.
4. Answer to the claim. The debtor may oppose defenses.
5. Court admits or dismisses the answer.
6. Notice to the creditor of the opposed defenses.
7. Hearing of admission of evidence.
8. Court renders judgement.
9. Decision to proceed to asset sale.
10. Determination of asset value.
11. Decision on method of sale.
12. Arrangement for public auction.
13. The debtor is notified of the date for the public auction.
14. Publication of legal notices for potential buyers.
15. Public sale.
16. Creditor reimburses the exceeding amount to the debtor.