Business Removing

MEASURING WITH IMPACT 11
How are the indicators constructed?
The methodology for each of the topics in Doing Business
has 6 features:
• The team, with academic advisers, collects and analyzes
the laws and regulations in force.
• This analysis yields a survey designed for local professionals
experienced in their fields—such as incorporation
lawyers and consultants for business entry, litigation
lawyers and judges for contract enforcement,
officials in land registries and real estate lawyers for registering
property.
• The survey utilizes a standardized business case to
ensure comparability across countries and over time—
with assumptions about the legal form of the business,
its size, location and nature of operations.
• The local experts have several rounds of interaction
with the Doing Business team, typically 4.
• The preliminary results are presented to both academics
and practitioners for refinements in the survey
and further rounds of data collection.
• The data are subjected to numerous tests for robustness,
which lead to subsequent revisions or expansions
of the collected information. For example, the initial
contract enforcement study collected and analyzed data
for the recovery of a debt in the amount of 50% of income
per capita, as well as for 2 other cases—the eviction
of nonpaying tenants and the recovery of a smaller
debt claim (5% of income per capita). After the release
of Doing Business in 2004, it became clear that court and
attorney fees were often too high to expect small debt
cases to reach the court. As a result, the debt amount was
increased fourfold in this year’s report.
FIGURE 2.3
Enforcing a contract in Poland—1,000 days
Days
1,000
800
600
400
200
Filing of complaint 90 days
0
1
Procedures
41
Source: Doing Business database.
Trial and judgment
730 days
Enforcement 180 days
The result is a set of indicators that is easy to verify
and replicate. And extending the dataset to obtain other
benchmarks is straightforward. For example, the Doing
Business case studies assume a certain type of business—
usually a domestic limited liability company. Analysts
can follow the methodology, adjust the assumption and
construct the same benchmarks for other standardized
cases, for example sole proprietorships and foreign companies.
The methodology for one project—enforcing a contract—illustrates
the general approach. The indicators
for contract enforcement are constructed by studying
a standardized case of a payment dispute in the amount
of 200% of income per capita in a country’s most populous
city. The data track the procedures to recover the
debt through the courts or through an administrative
process, if such a process is available and preferred by
creditors. The plaintiff has fully complied with the contract
(and is thus 100% in the right) and files a lawsuit to
recover the debt. The debtor attempts to delay and opposes
the complaint. But the judge or administrator decides
every motion for the plaintiff.
The data come from readings of the codes of civil
procedures and other court regulations, as well as from
administering surveys to local litigation attorneys, with
at least 2 lawyers participating in each country. In 30
countries the surveys are also completed by judges to see
whether their answers are similar to those of attorneys.
They are. As with all of the Doing Business in 2005 topics,
the data are for January 2004.
Based on the survey responses, 3 indicators of the
efficiency of commercial contract enforcement are developed:
• The number of procedures, mandated by law or
court regulation, that demand interaction between the
parties or between them and the judge (administrator)
or court officer.
• The time of dispute resolution in calendar days,
counted from the moment the plaintiff files the lawsuit
in court until the moment of settlement or, when appropriate,
payment. (This includes the days when actions
take place and the waiting periods between actions.)
• The official cost of court procedures, including
court costs and attorney fees, where the use of attorneys
is mandatory or common, or an administrative debt recovery
procedure, expressed as a percentage of the debt.