Quality Assessment of Entrepreneurship Indicators

The National Agency for
Enterprise and
Construction’s Division for
Research and Analysis
International Consortium for Dynamic

Benchmarking of Entrepreneurship
Quality Assessment
of Entrepreneurship
Indicators
Version 2
#16
October
2006
16
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Anders Hoffmann
Morten Larsen
Anne Sophie Oxholm
Quality
Assessment of
Entrepreneurship
Indicators
Version 2
Introduction
Effective decisions and solid policy making require clear, compre-

hensive and reliable data and information. For this reason, more and
more countries have constructed large national indicator systems to
measure their current stage and progress in various areas. The overall
validity of these efforts depends amongst others on the quality of
each of the individual indicators.
This paper deals with indicators related to entrepreneurship. The

paper has four main parts. First, the paper briefly introduces a dicho-
tomy for entrepreneurship indicators, which provide a starting point
for collecting and analysing entrepreneurship indicators for policy
purposes. Second, the paper introduces a quality framework. Third,
the paper applies this quality framework to grade entrepreneurship
indicators. Forth, the paper illustrates how the evaluation can be
used to evaluate the quality of policy analysis by examining the qua-
lity of the Danish Entrepreneurship Index.
All of the discussed indicators are collected in a database, which is

available to members of the International Consortium on Dynamic
Benchmarking who has financed the work. The Consortium includes
Canada, Denmark, Finland, the Netherlands, Norway, Sweden and
the United Kingdom.
The paper has three purposes. First, it aims at providing a compre-

hensive overview of all available policy relevant indicators relating
to entrepreneurship. Second, it rates the quality of each of these
indicators in order to enable policy makers to evaluate the quality of
policy analysis based on a given set of indicators. Third, the overview
combined with the dichotomy can serve as a starting point for future
indicator development to ensure new indicators address issues that
are need-to-know for policy purposes.
4
The current paper is a second version of the documentation of en-
trepreneurship indicators. This version has benefited from comments
from the Consortium members and has received valuable input from
Lars-Bjørn Larsen, Peter Nelleman, Nikolaj Vibe Michelsen and An-
ders Munk Ebbesen. A few new indicators are added, some have been
removed and a few mistakes have been corrected. All comments are
welcome: Anders Hoffmann (ah@ebst.dk).
5
Table of Contents
A Dichotomy for Entrepreneurship Indicators 10
Part 1 The Quality Framework 14

1.1 Gatekeeper Requirements 18
Part 2 Quality Assessment of Each Indicator - an Overview 20
Part 3 Quality Assessment of Each Performance Indicator

3.1 Entry Rates 26
3.2 Total Entrepreneurial Activity 28
3.3 Share of High-Growth Firms (Turnover) 30
3.4 Share of High-Growth Firms (Employees) 32
Part 4 Quality Assessment of Each Framework Condition Indicator

Opportunities 4.1 University/Industry Research Collaboration 34
4.2 Barriers to Competition 36
4.3 Public Ownership 38
4.4 Public Involvement in Business Operation 42
4.5 Minimum of Capital Required for Starting a Business 46
4.6 Import Burdens 48
4.7 Export Burdens 52
Capital 4.8 Capital Access Index 54
4.9 Private Credit 58
4.10 Interest Rate Spread 60
4.11 Cost to Create Collateral 62
4.12 Country Credit Rating 64
4.13 Legal Rights Index 66
4.14 Venture Capital - Early Stage 68
4.15 Venture Capital - Expansion Stage 70
4.16 Capitalisation of Secondary Stock Market 72
4.17 Market Capitalisation of Newly-Listed Companies Relative to GDP 74
4.18 Capitalisation of Primary Stock Market 76
4.19 Turnover in Primary Stock Market 78
4.20 Buyouts 80
4.21 Revenue from Bequest Tax 82
4.22 Revenue from Net Wealth Tax 84
4.23 Taxation of Dividends - Top Marginal Tax Rate 86
4.24 Taxation of Dividends - Top Marginal Tax Rate for the Self-Employed 88
4.25 Taxation of Stock Options 90
4.26 Taxation of Capital Gains on Shares - Short Term 92
4.27 Taxation of Capital Gains on Shares - Long Term 94
Abilities 4.28 Possibility for a Fresh Start 86
4.29 Entrepreneurship Education at Primary and Secondary Levels 100
4.30 Entrepreneurship Education at Higher Levels 103
4.31 Quality of Management Schools 106
4.32 Government Programmes 108
Incentives 4.33 Total Tax Revenue as Percentage of GDP 111
4.34 Highest Marginal Income Tax plus Social Contributions 113
4.35 Average Income Tax plus Social Contributions 115
4.36 SME Tax Rates 117
4.37 Taxation of Corporate Income Revenue 120
4.38 Actual Cost to Close a Business 122
4.39 Actual Time to Close a Business 126
4.40 Bankruptcy Recovery Rate 130
4.41 Number of Procedures for Starting a Business 133
4.42 Number of Days for Starting a Business 137
4.43 Costs Required to Start a Business 139
4.44 Regulatory and Administrative Opacity Index 142
4.45 Registering Property 147
4.46 Procedures, Time and Costs to Build a Warehouse 151
4.47 Enforcing Contracts 155
4.48 Time It Takes to Prepare, File and Pay the Corporate Income Tax,
the VAT and Social Security Contributions 158
4.49 Difficulty of Hiring 161
4.50 Difficulty of Firing 165
4.51 Rigidity of Hours Index 168
4.52 Number of Administrative Procedures when Recruiting First Employee 170
4.53 Number of Administrative Procedures when Recruiting
Additional Employees 172
Culture 4.54 Cultural and Social Norms 174
4.55 Entrepreneurial Motivation 177
4.56 Self-Employment Preferences 179
4.57 ”The Wish to Own One’s Own Business” 181
4.58 Desirability of Becoming Self-Employed 183
4.59 Risk for Business Failure 185
A Dichotomy for Entrepreneurship Indi-
cators
Available indicators relating to entrepreneurship measure every-

thing from personal attributes of the entrepreneurs like gender to
outcome of the entrepreneurial process like start-up rates. Effective
policy thinking requires focus, so this section develops a dichotomy,
which can be deployed to divide entrepreneurship indicators into
four policy relevant categories. The dichotomy can be used to struc-
ture scoreboards and other publications presenting indicators. The
four categories are:
Performance indicators – includes all indicators related to the out-

come of the entrepreneurial process like number of startups, growth
among new firms, job creation. These performance indicators should
ideally be linked to either productivity growth or job creation, as
these are key policy objectives for entrepreneurship. These indica-
tors are essential for the analysis and understanding of the macro
economic effects of entrepreneurship. This type of indicators should
be given the highest priority in any effort to develop and improve
entrepreneurship indicators.
Business environment indicators – includes all indicators relating to

changeable factors affecting the success of the entrepreneurs like ac-
cess to capital, regulation and administrative burdens. The business
environment indicators measure a myriad of underlying environmen-
tal and sociological factors, which affect the performance indicators.
No single paradigm or definition of what constitute the business en-
vironment exists, but many important contributions to the literature
have been made. This paper is based on the framework developed in
Gabr and Hoffmann 2006. The theoretical model allows for a further
separation of the business environment indicators into five main ca-
tegories, opportunities, skills, capital, incentives and culture. These
indicators are a mix of market outcomes, such as the venture capital
market size and the quantification of policies, such as the time credi-
10
tors can lay claims on assets after a bankruptcy. These indicators are ex-
ternal to the firm and vary across countries or regions. Furthermore, all
business environment indicators can be affected by policy action. These
indicators are essential for the analysis and the understanding of what
drives difference in entrepreneurship performance across countries or
regions and thereby the understanding of policy on entrepreneurship.
This type of indicators should also be given high priority in any effort
to develop and improve entrepreneurship indicators.
Attribute indicators – includes personal and firm specific characteristic

like gender and age of the entrepreneurs. These indicators measure fac-
tors that are firm and individual specific and therefore vary across firms
within a given region or country. Most of these characteristics cannot
be changed by policy but they can nevertheless be important for the
performance of the firm. These indicators are essential for the analysis
and understanding of differences in success among firms within a given
business environment. From a policymaker’s perceptive these indicators
are more nice-to-know than need-to-know.
Context indicators – includes indicators related to the overall macro-

economic environment and institutional context like unemployment
rate and GDP growth. These indicators cover the “larger picture” of the
various economies. These indicators are already available.
Most indicators fall naturally into one of the four categories but a few
exceptions are worth discussing. Several indicators exist on the struc-
ture of the firms and their actions like share of debt financing or share
of new firms with export. These indicators are not really performance
indicators as capital structure and export are not outcome of the en-
trepreneurial process but they are not business environment indicators
either, as they are a result of for example how the capital market func-
tion. These indicators fall in the attribute indicator category.
Another large set of indicators relate to people’s perception of and their

attitudes towards entrepreneurship. These indicators can be argued to
belong to both the business environment indicators (as they affect the
willingness to start) and the attribute indicator (as they are characte-
ristics of individuals). Most of these indicators will be placed in the
business environment category as they directly affect performance, can
11
be affected by policy and are collected to measure perception and attitudes
in a given country or region.
The following manual will focus on performance and business environ-

ment indicators, as these are most directly relevant for policy.
12
13
Part 1 The Quality Framework
Quality is defined as “fitness for use” in terms of user needs (OECD,

2003). This definition is broader than has been customary used in
the past when quality was equated with accuracy. It is now generally
recognised that there are other important dimensions. Even if data is
accurate, it cannot be said to be of good quality if it is produced too
late to be useful, or cannot be easily accessed, or appear to conflict
with other data. Thus, quality is viewed as a multi-faceted concept.
The most important quality characteristics depend on user perspec-
tives, needs and priorities, which vary across groups of users.
It is important to note that each indicator must be evaluated in its

context; in this case it would be entrepreneurship. Consequently, an
indicator used in this quality assessment may be applied and asses-
sed differently in other studies focusing on other issues (for instance,
innovation, human resources, etc.). Thus, the quality measure for
an indicator is meant to guide the policy maker on issues related to
entrepreneurship rather than the statistician.
The quality framework draws on experience from the OECD, Euro-

stat and the US Key Indicator Project (OECD, 2003; Wallman et
al, 2004; Munoz, 2004). The quality framework focuses on three
quality dimensions: relevance, accuracy and availability. Each indi-
cator is evaluated by grading it for each dimension and by an over-
all assessment. If considered useful, further qualitative information
may be taken into account in the evaluation of the indicator. This
implies that room is provided to describe other characteristics which
may lead to restricting or increasing the use of a given indicator, re-
lating for example to the complexity of an indicator, to a lack of an
unambiguous scientific basis or to the lack of coherence with other
existing indicators, etc.
14
1. Relevance
The relevance of an indicator is a qualitative assessment of the value
contributed by the indicator. That is, the evaluation depends on the
proximity between what the indicator measures and the framework
condition it is supposed to measure. It is desirable for the indicator
to be as close as possible to the framework condition it is intended
to measure (Table 1.1).
Table 1.1
The Indicator’s Direct Measure Proxy Measure Assessment of Relevance
Proximity to the
Framework Condi-
tion it is Supposed
to Measure
Mark A B
An example is the indicator labeled Barriers to Competition. Here

the level of legal barriers to entry and number of antitrust exemp-
tions is a direct measure of the level of barriers to competition in
existing markets.
Relevance has one more dimension. If an indicator is applied as a me-

asure for a specific policy, it is useful to know whether a policy initia-
tive has a direct or indirect impact on the indicator (Table 1.2).
Table 1.2
Policy Initiatives’ Direct Impact Indirect Impact
Assessment of Policy
Impact on Indicator Indicator Typology
Mark A B
For example, for Barriers to Competition changing formal regulation

concerning entry barriers and antitrust exemptions will have direct
impact on the size of the barriers to competition.
2. Accuracy
The accuracy of an indicator is the degree to which the indicator
correctly estimates or describes the quantities or characteristics it is
designed to measure. Accuracy has two dimensions: data collection
method and degree of cross-country standardisation.
15
a) Data Collection Method
The data collection method is sound if data correctly estimates or de-
scribes the quantities or characteristics that it is designed to measure.
Thus, accuracy based on data collection method refers to the close-
ness between the values provided and the (unknown) true value.
Major sources of error in data collection include coverage, sampling,

non-response, response, processing and problems in dissemination.
Addressing these standard problems are common for national stati-
stical offices and international governmental institutions. Data from
these sources should not suffer, in general, from these problems,
whereas data from other sources should be evaluated on a case-by-
case basis.
The appraisal of accuracy is based on the method used in collecting

the data. Almost all indicators are based on surveys, polls or cen-
suses. This framework distinguishes among three types: fact-based,
action-based and opinion-based surveys.
Fact-based surveys relate to easy quantifiable aspects, in which
different people would give the same response to a question.
The OECD Regulatory Database is an example of this type
because respondents are asked about whether or not a country
has a given regulation.
Action-based surveys concern issues where respondents are
asked if they have performed a given action within a given time
period or not. The European Community Innovation Survey is
an example of this type of survey. In this survey, firms are asked
whether they have introduced new or technologically improved
products or processes on the market during the last year.
Opinion-based surveys deal with questions asking for a subjec-
tive evaluation of a given aspect of the economy. The World
Economic Forum’s Executive Survey is an example of this type
of survey. It asks executives about their opinion of the functio-
ning and the quality of various aspects of the economy.
The accuracy of data collection methods can be evaluated as very

good, good, acceptable (Table 1.3).
16
Table 1.3
Data Collec- National stati- A c t i o n - b a s e d O p i n i o n - b a - Assessment of Accuracy
tion Method stical offices/ survey sed surveys
fact-based sur-
veys
Mark A B C
These scores can be clarified as follows:
• Very good: the indicator originates from national statistical

offices or international government institutions; or the indi-
cator stems from a fact-based survey.
• Good: the indicator comes from an action-based survey.
• Acceptable: the indicator comes from an opinion-based sur-
vey.
b) Cross-country Comparability
Whether an indicator is comparable across countries requires conside-
ration as to the method of data collection in the concerned countries.
For example, an indicator is comparable if the same question is asked in
all the countries in the same way and by the same means. It is desirable to
have the highest degree of comparability across countries (Table 1.4).
Table 1.4
The Indicator is Fully Comparable Comparable to some
Assessment of Cross-
Crosscountry Com- extent Country Comparability
parable
Mark A B
3. Availability
The concept of availability relates to the accessibility of a given indi-
cator in various countries and for a given time frame. It is desirable
to have data from as many countries as possible (Table 1.5). In addi-
tion, an indicator available beyond the initial benchmark year is bet-
ter than one that is only available beyond for one year (Table 1.5).
17
Table 1.5
Assessment of Availability The Share of OECD 100-76% 75-50%
Across Countries Countries for
Which the Indica-
tor is Available
Mark A B
Table 1.6
Assessment of Availability
The Number of Ye- Beyond the initial The initial bench-
over Time ars the Indicator is benchmark year mark year
Available for
Yes No
Mark A B
4. Overall Quality Assessment

The overall quality assessment is divided into three categories: good,
acceptable and questionable (Table 1.7).
Table 1.7
Name of Indi- Good Acceptable Questionable
Overall Evaluation
cator
Indicator A A B C
Clarification of the three indicator score categories:

• Good (A): at least 5 A’s and no C’s
• Acceptable (B): at least 3 A’s and no C’s
• Questionable (C): less than 3 A’s or one or more C’s.
1.1 Gatekeeper Requirements

For an indicator to be included in the Quality Manual it has to
fulfill four minimum requirements:
• The Indicator must originate from a reliable source, i.e. from a

well-known, verifiable and well-documented source.
• The method for collecting data must be standardised to som ex-

tent across countries in order to increase cross-country comparabi-
lity based on the indicator.
18
• The indicator must be available for at least 50 percent of coun-
tries in the study.
• The indicator must be interpretable a priori as to whether a high

value is to be preferred over a lower value or the other way around.
19
Part 2 Quality Assessment of Each Indicator
- an Overview
This manual focuses on two categories of entrepreneurship indica-

tors - performance and business environment indicators. 4 perfor-
mance indicators and 60 business environment indicators are inclu-
ded in this year’s manual. All of the performance indicators are new
to the manual and so are 13 of business environment indicators. 7
of last year’s indicators are not included in this year manual as they
are no longer updated (Technological Co-operation, Procurement
Regulation, Export Credits and Insurance, Extent of Guarantees for
SMEs, Top Marginal Bequest Tax Rate, Claims on a Bankruptcy’s
Assets – Length of Time and The Costs of Firing) and 3 indicators
have been joined in a new indicator (Enforcing Contracts). Import
burdens and export burdens are other additions to this year’s ma-
nual
The performance indicators is lacking in quality (Table 2.1). None

of the indicators are evaluated to be of good quality mainly due to a
lack of comparability across countries. Entry rates are evaluated to
have the highest quality, as these are collected by national statisti-
cal agencies and are based on registrar data although differences in
definitions exist among countries.
20
Tabel 2.1
Overall Grade
Rele- Accur- Availa- Overall Quality As-
vance acy bility sessment of Available
Entrepreneurship
Relevance
Policy Relevant
Data Collection
Comparability
Across Countries
Over time
Indicators
Indicator
Entry Rates** B A B A B B A
Total Entrepreneurial Activity** C B B B B A A
Share of High-Growth Firms (Tur- B A B A B B A
nover)**
Share of High-Growth Firms (Emplo- B A B A B B A
yee)**
Note: ** New indicator
The business environment indicators can be divided into five main

categories - opportunities, capital, abilities, incentives and culture.
The division of indicators into the five categories is based on Gabr
and Hoffmann, 2006. All categories are measured by at least six
indicators (Table 2.2). The areas of ability and culture are in most
need of further development of indicators. All of the areas of abi-
lities are measured by subjective judgments, which make compa-
rison across countries and time difficult. Culture is also measured
by subjective indicators but this is less problematic. The culture
component of the model is a judgment of peoples’ perception of for
example entrepreneurs and risks, which is subjective by nature.
21
Table 2.2
Overall Grade
Rele- Accur- Availa-
Overall Quality Assess-
ment of Available Entre- vance acy bility
preneurship Indicators
Relevance
Policy Relevant
Data Collection
Comparability
Across Countries
Over time
Indicator
1. Technology Transfer Regulation
a. University/Industry Research C A B C A A A
Collaboration*
2. Entry Barriers
a. Barriers to Competition A A A A A A A
b. Public Ownership A A A A A A A
c. Public Involvement in Business A A A A A A A
Operation
d. Minimum of Capital Required A A A A B A A
for Starting a Business*
3. Access to Foreign Markets

a. Import Burdens** A A A A A A A
b. Export Burdens** A A A A A A A
4. Capital Access
a. Capital Access Index** A A B A B A A
5. Loans
a. Private Credit* A A B A A A A
b. Interest Rate Spread* B B B A A A A
c. Cost to Create Collateral A B A A A A A
d. Country Credit Rating* C B B C A A A
e. Legal Rights Index** A B A A A A B
22
6. Venture Capital
a. Venture Capital - Early Stage* B A B A A A A
b. Venture Capital - Expansion B A B A A A A
Stage*
7. Exit Markets
a. Capitalization of Secondary B A B A A A B
Stock Market
b. Market Capitalisation of Newly A A B A A A A
listed Companies Relative to
GDP**
c. Capitalisation of Primary Stock A A B A A A A
Market*
d. Turnover in Primary Stock Mar- A A B A A A A
ket*
e. Buyouts** B A B A B A B
10. Wealth and& Bequest Taxes

a. Revenue from Bequest Tax* A A A A A A A
b. Revenue from Net Wealth Tax* A A A A A A A
9. Capital Taxes
a. Taxation of Dividends – Top B B A A A A B
Marginal Tax Rate*
b. Taxation of Dividends – B B A A A A B
Top Marginal Tax Rate for Self-
employed
c. Taxation of Stock Options B A A A A B B
d. Taxation of Capital Gains on B A A A B A B
Shares – Short Term
e. Taxation of Capital Gains on B A A A B A B
Shares – Long Term
10. Restart Possibilities

a. Possibility of a Fresh Start** A A A A A A B
11. Entrepreneurship Education

a. Entrepreneurship Education at C A B C A A A
Primary & Secondary Level
23
b. Entrepreneurship Education at C A B C A A A
Higher Levels
12. Traditional Business Education

a. Quality of Management C A B C A A A
Schools*
13. Public Entrepreneurship Infra-

structure
a. Government Programs C A B C A A A
14. Total Tax Revenue

a. Total Tax Revenue as Percentage A A A A B A A
of GDP**
15. Personal Income Tax

a. Highest Marginal Income Tax A A A A A A A
Plus Social Contributions*
b. Average Income Tax Plus Social A A A A A A A
Contributions*
16. Business Tax

a. SME Tax Rates* A A A A A A B
b. Taxation of Corporate Income A A A A A A A
Revenue*
17. Bankruptcy Legislation

a. Actual Cost to Close a Business* B B A B A A A
b. Actual Time to Close a Busi- B B A B A A A
ness*
c. Bankruptcy Recovery Rate** A A A A A A A
18. Administrative Burdens - Start-

up
a. Number of Procedures for Star- A A A A A A A
ting a Business*
b. Number of Days for Starting a A A A A A A A
Business*
24
c. Costs Required to Start a Busi- A A A A A A A
ness*
19. Administrative Burdens - Pro-

duction
a. Regulatory and Adm. Opacity A A A A A A B
b. Registering Property** A A A A A A A
c. Procedures, Time and Costs to A A A A A A A
Build a Warehouse**
d. Enforcing Contracts** A A A A A A A
e. Time it takes to Prepare, File A A A A A A B
and Pay Corp. Income Tax, the
VAT and Social Contributions**
20. Labour Market Regulation

a. Difficulty of Hiring* A A A A B A A
b. Difficulty of Firing* A A A A B A A
c. Rigidity of Hours Index* A A A A B A A
d. Number of Administrative A A A A A A B
Procedures when Recruiting First
Employee
e. Number of Administrative Pro- A A A A A A B
cedures when Recruiting Additio-
nal Employee
21. Entrepreneurial Culture

a. Cultural and Social Norms C A B C A A B
b. Entrepreneurial Motivation C A B C A A B
c. Self-employment Preference C A B C A B A
d. “The wish to own one’s own C A B C A B A
Business”
e. Desirability of becoming Self- C A B C A B A
employed
f. Risk for businees failure C A B C A B A
Note: : *indicator updated, **new indicator
25
Part 3 Quality Assessment of Each Performan-
ce Indicator
3.1 Entry Rates
Definition:
Entry rates are measured by the business demography indicator
“Birth Rate of Enterprises”. The indicator measures the number of
new enterprises as a share of the company base.
Assessment Grade
Overall B
1. Relevance a) Assessment of Relevance A
The indicator is a direct measure of the
start-up rates of new firms.
b) Assessment of the Type of Policy Indicator B

Policy focused indicator. Policy initiatives
targeted towards improving the environ-
ment for new companies will have an indi-
rect impact on the start-up rates.

2. Accuracy The data is fact-based. Data originates A
from Eurostat and is based upon registrar
data.
Data is not fully comparable since there are B
cross-country differences in the definition
of entry rates.
26
3. Availabi- a) Availability across Countries B
lity Data is available for 15 OECD countries.
A
b) Availability over Time
The indicator is available for the time pe-
riod 2001 to 2003 and will be updated.
Source Eurostat, INDUSTRY, TRADE AND SERVICES.

Business demography: Birth rate of enterprises.
Available online:
http://epp.eurostat.ec.europa.eu/por tal/page?_
pageid=1996,45323734&_dad=portal&_
schema=PORTAL&screen=welcomeref&open=/
&product=Yearlies_new_industry&depth=3
Entry Rates
16
14
12
10
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ed do
Sw Po
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27
3.2 Total Entrepreneurial Activity
Definition:
The TEA index is the combined count of nascent entrepreneurs and
new business owners. The indicator measures the share of the popu-
lation who are starting a new company or runs a new company (a new
company is defined as being maximum 3 ½ years old).
Assessment Grade
Overall C
1. Relevance a) Assessment of Relevance B
The TEA index is an indirect measure of
the start-up rates of new businesses.

ment for new companies will have an indi-
rect impact on the total entrepreneurship
activity.

2. Accuracy B
The data is computed from an action-ba-
sed survey. Interviews are made among a
representative section of the 16-64 years
old. Data originates from the Global En-
trepreneurship Monitor.
b) Cross-country Comparability B
Data is not fully comparable since there
are cross-country differences in how a re-
presentative section of the population is
selected.
3. Availabi-
lity a) Availability across Countries A
Data is available for 23 OECD countries.
b) Availability over Time A

Data is available for the period 2000 to
2005. Updates are made annually.
28
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h t t p : / / w w w. g e m c o n s o r t i u m . o r g / d o w n -
29
3.3 Share of High-Growth Firms (Turnover)
Definition:
The indicator defines high-growth firms (turnover) as the share of firms
with a growth rate in turnover higher than 60 % over a three-year period
and with a growth rate of at least 20 % each year.
The indicator is calculated using data for firms, who have gone into
business in the period 1997 to 2001 and where there are at least 15 full-
time positions.
Assessment Grade
Overall B
The share of firms with a high-growth in
the company turnover is a direct measure
of the growth in new companies.
b) Assessment of the Type of Policy Indicator
Policy focused indicator. Policy initiatives B
ment for new companies will have an in-
direct impact on the companies’ growth in
turnover.
30
2. Accuracy A
The data is fact-based. Data is based upon
registrar data and is collected by Bureau
Van Dijk (BvD), an electronic publishing
firm and documented in Hoffmann and
Junge (2006). BvD specialises in cleaning
and organising data supplied by national
information providers (e.g., Companies
House in the UK, INPI in France, Natio-
nal Bank in Belgium).
b) b) Cross-country Comparability B
Data is provided from databases that have
a different coverage rate of SMEs, which
makes a cross-country comparison not
fully accurate.
3. Availabi-
lity a) Availability across Countries B

Data is available for the time period 2002
to 2004. Updates are possible.
Source
The indicator has been constructed by Hoffmann
and Junge, 2006.
Growth in New Companies - Turnover
35
30
25
20
15
10
0
nd
Lu K p an
m rea
ep a
er n
Fr nd
un e
N an d
P ay
n i ng y
Ja ly
Ic ary
Ire nd
er ce
va o d
S w in
Fi ark
ch Ca m
ep a l
N Me urg
N he ico
G an y
A lia
el a
al s
te T nd
S l ic
en lic
S m
s
U Ki ke
R n ad
itz e
H ec
lo P olan
Ze nd
B tri
Ita
te
pa
R g
u
la
w ed
a
G an
d o
tra
ub
D ub
la
et x
xe o
g
k rtu
m
gi
us
bo
d ur
re
ta
nl
te d
el
m
or
a
us
e w rl
S
A
ze
ni
C
U
S
31
3.4 Share of High-Growth Firms (Employees)
Definition:
The indicator defines high-growth firms (employee) as the share of firms
with a growth rate in employees higher than 60 % over a three-year pe-
riod and with a growth rate of at least 20 % each year.
The indicator is calculated using data for firms, who have gone into
business in the period 1997 to 2001 and where there are at least 15 full-
time positions.
Assessment Grade
Overall B
The share of firms with high-growth
in employees is a direct measure of the
growth in new companies.
b) Assessment of the Type of Policy Indicator

B
ment for new companies will have an in-
direct impact on the companies’ growth in
employees.
2. Accuracy a) Data Collection Method A

The data is fact-based. Data is based upon
registrar data and is collected by Bureau
Van Dijk (BvD), an electronic publishing
firm and documented in Hoffmann and
Junge (2006). BvD specialises in cleaning
and organising data supplied by national
information providers (e.g., Companies
House in the UK, INPI in France, Natio-
nal Bank in Belgium).
is provided from databases that have a dif-
ferent coverage rate of SMEs, which makes
a cross-country comparison not fully accu-
rate.
32
3. Availabi-
a) Availability across Countries
lity B
b) Availability over Time

A
Data is available for the time period 2002
to 2004. Updates are possible.
Source The indicator has been constructed by Hoffmann

and Junge, 2006.
Growth in New Companies - Employee
12
10
0
n
ea
en
ay
nd
y
d
ce
in
k
um
y
nd
om
s
pa
l
ar
an
an
nd
tri
Ita
te
pa
w
or
ed
an
la
la
m
gi
us
Ja
ta
gd
ol
m
or
rla
K
er
w
Fr
el
en
Fi
S
P
er
in
he
itz
B
d
G
K
w
te
et
d
S
ni
N
te
U
ni
U
33
Part 4 Quality Assessment of Each Framework
Condition Indicator
4.1 University/Industry Research Collaboration
Definition:
The indicator measures business executives’ perceptions of the level
of collaboration between their firm and local universities when con-
ducting research and development (R&D).
The indicator is based on the Executive Opinion Survey, which is

part of the Global Competitiveness Report. Business executives are
asked whether their business collaborates with local universities. The
ranking goes from 1 (non-existing) to 7 (intensive and ongoing).
Assessment Grade
Overall C
The level of R&D collaboration between
firms and local universities is a direct
measure of an effective knowledge transfer
regulation.
Effective collaboration between R&D ori-
ented companies and local universities is an
important outcome of an efficient know-
ledge transfer regulation and, thus, not
a direct measure of the regulation per se.
Furthermore, the indicator is opinion-ba-

sed. Policy measures can only have an in-
direct impact on the opinions of business
executives.
34
2. Accuracy a) Data Collection Method C
The indicator is opinion-based as the in-
formation is provided by leading business
executives and entrepreneurs responding
to the Executive Opinion Survey, which is
part of the Global Competitiveness Report
2003-2004.
A
Fully comparable. The same methodology
is used in every country.
3. Availabi- a) Availability across Countries A

lity The indicator is available for 102 industri-
alised and emerging countries.

The indicator is based on a survey disse-
minated in 2005. It will be updated an-
nually.
Source The indicator is published in the Global Competi-

tiveness Report 2005 – 2006, World Economic Fo-
rum, no 3.08.
University-Industry Research Collaboration
0
D Ko da
n in
rl an
ec Po ub y
SwGer do n
M eec y
la y
St d
or d
u d
Be ran ia
N alana
el d
N giu e
d w rk
e ny
ov H S nd
et J m
te nl d
te S ma a
g
h rt lic
Tuxico
N Aupub al
itz ma m
na s
e e
Ze tral c
es
Cz Rep gar
in de
G Ital
i
Po rke
Ire wa
d an
A an
l c
Ic lan
en re
Caand
ni Fi rlan
ur
ew s li
ak u pa
F str
Re ug
he ap
at
K e
bo
g
r
m
xe
Lu
U
ni
Sl
35
4.2 Barriers to Competition
The Indicator consists of two low level indicators called Legal Bar-
riers to Entry (weight 0,3) and Antitrust Exemptions (weight 0,7).
Definition:
Legal barriers indicator: Measures whether national, state or provin-
cial laws or other regulations restrict the number of competitors al-
lowed to operate a business in some markets in 24 manufacturing
and service sectors – two response categories (yes = 6 or no = 0) for
each sector.
Antitrust exemptions: Measures the scope of exemptions to competi-

tion law for public enterprises or government mandated behaviour
- two response categories (yes = 6 or no = 0) for each question (Ex-
hibit 1).
Exhibit 1: Questions Covering Antitrust Exemptions
Indicator
Measured by countries’ answers to the following four questions
(Weighted by % of business sectors in which the state controls at
least a firm):
• Is there a rule or principle providing for exclusion or
exemption from a liability under the general competition
law for conduct that is required or authorized by govern-
ment authority (in addition to exclusions that might apply
to complete sectors)?
• Publicly-controlled firms: Exclusion or exemption from
competition law: Cartel & other horizontal?
competition law: Vertical & abuse of dominance monopo-
lisation.
competition law: Merger?
36
Assessment Grade
Overall A
1. Relevance a) Assesment of Relevance A
The level of legal barriers to entry and
number of antitrust exemptions is a direct
measure of the level of barriers to competi-
tion in existing markets.
b) Assessment of Policy Indicator Typology A
Changing formal regulation concerning
entry barriers and antitrust exemptions will
have direct impact on the size of the indi-
cator for barriers for competition.
Fact-based indicator that measures whether
or not a country has formal exemptions or
formal legal barriers written into laws or
regulation.
Both indicators are measuring formal regu-

lation, not the quality of regulation or the
enforcement of the regulation.
b) Cross-country Comparability A
Fully comparable – fact-based questions
collected and computed using the same
methodology in all countries.
lity The indicator is available for most of the
OECD countries (30 countries).
The indicator is fact-based and available
for years 1998 and 2003.
The data will not be updated annually.

Some of the data may be updated at a later
stage.
37
Source The data is published in OECD re-
ports. ECO/WKP(1999)18. Available on-
line: http://www.olis.oecd.org/olis/1999doc.
nsf/c16431e1b3f24c0ac12569fa005d1d99/
5ef586bbe13dd52ac125684a003a8da0/
$FILE/00075836.PDF
New data: ECO/WKP(2005)6.
Barriers to Competition
3,5
3
2,5
2
1,5
1
0,5
0
itz ela a
h ng ain
N and n
Sw Ic adn
U A Fra ary
et J taly
Cz d aland
lg ey
y
ec Ki Sp d
er nd
H or ia
D Sta lia
Re ola d
Po ree y
te tr e
ex rk
N Fpub d
I m
us d
un ea
ov Irelurg
Ze lanic
Be rk l
o
G pub m
Swrwas
rt ce
G anc
M ma s
Tuuga
rl a
Caede
ni us nc
ak P an
A lan
n
en te
ic
mi
K tr
ew i l
iu
he ap
Re do
er l
d a
g
n
bo
o
m
xe
Lu
N
te
ni
Sl
Note: Lower values are assumed to be more conducive for entrepreneurship performance than
higher values for this indicator.
4.3 Public Ownership

The indicator consists of three low level indicators Scope of Public
Enterprise Sector (weight 0,3), Size of Public Enterprise Sec-
tor (weight 0,3) and Direct Control over Business Enterprises
(weight 0,4).
Definitions:
Scope of Public Enterprise Sector: Based on responses of OECD Mem-
ber countries to an ad hoc questionnaire (The OECD Regulatory
Indicators Questionnaire). Measures whether national, state or pro-
vincial government controls at least one firm in 24 different sectors
- two response categories (yes = 6 or no = 0) for each sector.
Size of Public Enterprise Sector measures the overall size of the state-
owned enterprises relative to the size of the economy. The indicator
38
is an OECD estimate based on CEEB 1997 (source not available)
and Gary & Larson 1997 (source not available). Index is scaled from
0 to 6 from smallest to largest size.
Direct Control over Business Enterprises measures the existence of gover-

nment special voting rights in privately-owned firms, constraints on
the sale of state-owned equity stakes, and the extent to which legis-
lative bodies control the strategic choices of public enterprises. - two
response categories (yes = 6 or no = 0)) for each question (exhibit 1).
Exhibit 1: Questions covering the direct control over

business enterprises indicator
General Constraints
• Legal or constitutional constraints to the sale of the stakes
held by government in these firms (weighed 0,3).
• Strategic choices of any publicly-controlled firms have to
be reviewed and/or cleared in advance by national, state, or
provincial legislatures (weighed 0,2).
Golden Shares
• National, state or provincial governments have special
voting rights (e.g. golden shares) in any firms within the
business sector (weighed 0,25).
Extent of the Special Voting Rights
• Special rights can be exercised in: (weighed 0,25)
o Merger with or acquisition by another company
(sub-question weight 0,25).
o Change in controlling coalition (sub-question
weight 0,25).
o Choice of management (sub-question weight 0,25).
o Strategic management decisions (sub-question
weight 0,25).
The second indicator (Size of Public Enterprise Sector) measures the

overall effect of direct and indirect initiatives on the size of the pub-
lic sector, while the first and third indicator measure formal regula-
tions of public influence in business sector.
39
Assessment Grade
Overall A
The scope and size of the public enterprise
sector and the level of direct public control
over business enterprises is a direct mea-
sure of the level of barriers to competition
in existing markets.
Low level indicators measure regulation
in a direct way. Changing formal regula-
tion concerning scope and size of public
enterprise and direct control over business
enterprises will have direct impact on the
size of the indicator for public ownership.
Fact-based indicator. Measuring the scope
and size of state control in the economy
and whether or not a country has special
voting rights in privately-owned firms,
constraints on the sale of state-owned
equity stakes etc. written into laws or regu-
lation.
NB: The sources for the second low level in-

dicator (Size of public enterprise sector) have
not been checked.
Fully comparable, fact-based questions col-
lected and computed using the same met-
hodology for all countries.
for years 1998 and 2003. The data will not
be updated annually. Some of the data may
be updated at a later stage.
40
Source The data is published in OECD re-
ports. ECO/WKP(1999)18: http://
www.olis.oecd.org/olis/1999doc.nsf/
c16431e1b3f24c0ac12569fa005d1d99/
5ef586bbe13dd52ac125684a003a8da0/
$FILE/00075836.PDF.
Public Ownership
4,5
4
3,5
3
2,5
2
1,5
1
0,5
0
h er a g
PoItaly
la y
F la y
M ed m
el rk
Popub ny
Beustom
Ct n
Re m in
N rannd
N itz reeico
U va w Z Koand
Fiurk al
D anates
Sl Ne Ireland
Swlgiuria
te Re al a
un ay
H orw ce
Ic ma a
nd
Luetheerla ce
te Ja ia
Sw Gex en
b s
rtu lic
K ub d
xe rla nd
Agd c
ec G Spour
r
n e
ni k e re
S a
en ad
m nd
d p an
in li
T g
ga
ni tral
d p
a
us
A
U
Cz
o
higher values for this indicator
41
4.4 Public Involvement in Business Operation
The indicator consists of the two low level indicators Use of
Command and Control Regulation (weight 0, 55) and Price Con-
trols (weight 0, 45).
Definition:
Use of command and control regulation: indicates the extent to which
government uses coercive (or incentive-based) regulation in general and
in specific service sectors – two response categories (yes = 0 or no = 6)
for each question (Exhibit 1).
Price controls: reflects the extent of price controls in specific sectors.

The indicator includes sector specific information – two response cate-
gories (yes/no) for each question (Exhibit 2).
Exhibit 1: Questions Covering the Use of Command and
Control Regulation Indicator
Questions Coding of
answers
Yes No
General information
• Regulations are required to assess alternative
policy instruments (regulatory and non-regu- 0 6
latory) before adopting new regulation.
• Guidance has been issued on using alternati-
0 6
ves to traditional regulation.
Sector-specific information
Road Freight
• Regulations prevent or constrain backhauling
6 0
(picking up freight on the return leg).
• Regulations prevent or constrain private car-
6 0
riage (transport only for own account).
42
• Regulations prevent or constrain contract
carriage (contractual relation between an
6 0
otherwise independent hauler and one ship-
per).
• Regulations prevent or constrain inter mo-
dal operations (operating or ownership links
6 0
between firms in different transportation
sectors).
Retail Distribution
• Shop opening hours are regulated. 6 0
• Government regulations on shop opening
6 0
hours apply at national level.
• The regulation of opening hours have become
0,5 1 0
more flexible in the last 5 years.
Air Travel
• Carriers operating on domestic routes are
subject to universal service requirements (e.g.
6 0
obligation to serve specified customers or
areas).
Railways
• Companies operating the infrastructure or
providing railway services are subject to uni-
6 0
versal service requirements (e.g. obligation to
serve specified customers or areas).
1 If answer is yes, 0,5 is subtracted from the industry-specific score.
Exhibit 2:
Questions Covering the Price Controls Indicator

Questions Coding of
answers
Yes No
Air Travel
• Prices of domestic air fares are regulated. 6 0
• 5 or 4 busiest international routes subject to (n/5)*6 or
price regulation (n/4)*6
43
Road Freight
• Retail prices of road freight services are regu-
6 0
lated in any way by the government.
• Government provides pricing guidelines to
6 0
road freight companies.
• Professional bodies or representatives of trade
and commercial interests are involved in
6 0
specifying or enforcing pricing guidelines or
regulations.
Retail Distribution
• Retail prices of the following products are
subject to price controls:
• - Retail prices of certain staples (e.g. milk and
6 0
bread).
• - Retail prices of gasoline. 6 0
• - Retail prices of tobacco. 6 0
• - Retail prices of alcohol. 6 0
• - Retail prices of pharmaceuticals. 6 0
• - Retail prices of other product. 6 0
Telecommunication
• Retail prices of digital mobile service in tele-
6 0
communications are regulated.
Assessment Grade
Overall A
The use of price controls and command
and control regulation is a direct measure
of the level of barriers to competition in
existing markets.
Policy focused indicator. Changing formal
regulation concerning price controls and
use of command and control regulation
will have direct influence of the size of the
indicator for barriers for public involve-
ment in business operation.
44
Fact-based indicator. Measuring whether or
not a country has price controls and use of
command and control regulation written
into laws or regulation.
Fully comparable fact-based questions col-
lected and computed using the same met-
hodology for all countries.
OECD countries.
for year 1998 and 2003. The data will not
be updated annually. Some of the data may
be updated at a later stage.
Source The data are published in OECD re-
ports. ECO/WKP(1999)18. Available on-
nsf/c16431e1b3f24c0ac12569fa005d1d99/
5ef586bbe13dd52ac125684a003a8da0/
$FILE/00075836.PDF.
Public Involvement in Business Operation

3,5
3
2,5
2
1,5
1
0,5
0
te rla rg
Po pai y
Jataly
H lgi ey
un um
Lu Reeal ark
K any
Re rw m
C ex d
G an ico
Be urkan
G lan n
Poerla nd
I al
Mnlanes
Cz Ki ed ia
ak Z m d
te SAus rea
F ub y
itz rela ce
m a
re d
e
Sl Ne DIce alia
ec Nng en
FiStatds
Sw I ranlic
N xe pu nd
rtu nd
U ethmbblic
S ar
er ad
ec
ov w en lan
p a
ni e ou
g
h o do
d w tr
T p
d n
a
g
o
tr
us
A
ni
U
45
4.5 Minimum of Capital Required for Starting a
Business
Definition:
The indicator measures the paid-in minimum of capital require-
ment that the entrepreneur needs to deposit in a bank before regi-
stration of the business starts (Exhibit 1). The amount of capital is
recorded as a percentage of the country’s income per capita.
Exhibit 1
This indicator assumes that the business:
• Is a limited liability company.
• Operates in the country’s most populous city.
• Is 100% domestically owned and has 5 owners, none of
whom is a legal entity.
• Has start-up capital of 10 times income per capita at the
end of 2005, paid in cash.
• Performs general industrial or commercial activities, such
as the production or sale of products or services to the
public. It does not perform foreign trade activities and
does not handle products subject to a special tax regime,
for example, liquor or tobacco. The business is not using
heavily polluting production processes.
• Leases the commercial plant and offices and is not a pro-
prietor of real estate.
• Does not qualify for investment incentives or any special
benefits.
• Has up to 50 employees 1 month after the commencement
of operations, all of them nationals.
Has a turnover of at least 100 times income per capita.
• Has a company deed 10 pages long.
46
Assessment Grade
Overall A
The indicator is a direct measure of a po-
tential entry barrier an entrepreneur must
overcome to incorporate and register a new
firm.
reducing the capital requirement will have
a direct impact on entry barriers.
The data is fact-based. Data originating
from the World Bank.
Many countries have a minimum capital
requirement but allow businesses to pay
only part of it before registration, with the
rest to be paid after the first year of opera-
tion. Countries that follow this procedure
naturally have a lower paid-in minimum of
capital requirement. The indicator is there-
fore comparable to some extent.
lity The indicator is available for all OECD
countries and for most World Bank coun-
tries.
The indicator is available for 2005 and will
be updated annually.
Source The World Bank. Doing Business, Explore topic:
Starting a Business.
Available online: http://www.doingbusiness.org/
MethodologySurveys/StartingBusiness.aspx
47
Minimum of Capital Required for Starting a Business as a percentage of
income per capita
350
300
250
200
150
100
50
0
te Z Ita a
lg an
e n
ov P u n
Lu Pree ry
d e ly
o y
n y
ec S rla d
g d
N rked
rla ia
St ia
Be Jap d
U Ne ana e
N A ank
et u y
M ium
h w nd
bo d
un ea
g
G nm lic
S co
D pu al
Iredom
H or s
xe ol ce
Fr ates
Re tug c
d
Ic pai
Sl Rep ede
Sw Fi rwa
Cz tze lan
in an
C anc
Tulan
n
er ar
K nd
m an
ur
ak or bli
he str
d al
G ga
la
e b
ex
K al
te tr
m
ni us
U A
i
ni w
4.6 Import Burdens
Definition:
The indicator is an average of three measurements: 1) Number of
all documents required to import the goods, 2) Number of signatu-
res required to import the goods, 3) Time necessary to comply with
all procedures required to import goods (Exhibit 1).
The three sub-indicators have been normalized on a scale from 1 to

100 before taking the average and thereby constructing the indica-
tor.
Exhibit 1
The indicator assumes the following in regards to the business and
the importing process:
• The business:
o Has 200 or more employees.
o Is located in the country’s most populous city.
o Is a private, limited liability company. It does not operate
within an export processing zone or an industrial estate
with special export or import privileges.
o Is domestically owned with no foreign ownership.
o Exports more than 10% of its sales.
48
• The traded product travels in a dry-cargo, 20-foot, full
container load. The product:
o Is not hazardous nor does it include military items.
o Does not require refrigeration or any other special env-
ironment.
o Does not require any special phytosanitary or environ-
mental safety standards other than accepted international
standards.
• All documents required to export and import the goods are
recorded. It is assumed that the contract has already been
agreed upon and signed by both parties. Documents in-
clude bank documents, customs declaration and clearance
documents, port filing documents, import licenses and
other official documents exchanged between the concerned
parties. Documents filed simultaneously are considered dif-
ferent documents but with the same time frame for com-
pletion.
• Time is recorded in calendar days. The time calculation for
a procedure starts from the moment it is initiated and runs
until it is completed. If a procedure can be accelerated for
an additional cost, the fastest legal procedure is chosen.
It is assumed that neither the exporter nor the importer
wastes time and that each commits to completing each
remaining procedure without delay. Procedures that can
be completed in parallel are measured as simultaneous for
the purpose of measuring time. The waiting time between
procedures (for example, during unloading of the cargo) is
included in the measure.
Assessment Grade
Overall A
The size of import burdens is a direct mea-
sure of an entrepreneur’s access to foreign
markets.
reducing the import burdens will have a
direct impact on entrepreneurs’ access to
foreign markets.
49
Fully comparable - collected and computed
using the same methodology for all coun-
tries.
tries.
Trading across borders. The three indicators used
to construct this indicator are available at:
http://www.doingbusiness.org/ExploreTopics/Tra-
dingAcrossBorders/
Import burdens
90
80
70
60
50
40
30
20
10
0
el a
St in
ew ng an
n
p ry
et m d
Be ustr y
ey
K and
lg ia
Ire and
pu lia
d J and
k
rl y
er ce
te Sp m
e d
ak un nd
r ea
itz ran c
h st al
G xico
Ze dom
or s
Tu ece
Caates
Po blic
Ic ad
Fi ede
N Ger lan
A wa
Sw ar
he an
Sw F ubli
N and
M lan
d a
Re ga
iu
ec Au tug
N Ki ap
rk
Po or
Re ra
ov H la
n
m
al
l
re
n
en
D
ni
te
U
ni
Cz
Sl
U
50
51
4.7 Export Burdens
Definition:
all documents required to export the goods, 2) Number of signatu-
res required to export the goods, 3) Time necessary to comply with
all procedures required to export goods (see Exhibit 1 for the indi-
cator import burdens).

tor.
Assessment Grade
Overall A
The indicator is a direct measure of an
entrepreneur’s access to foreign markets,
namely export burdens.
reducing the export burdens will have a
direct impact on entrepreneurs’ access to
foreign markets.
Fully comparable - computed using the
same methodology for all countries.
tries.
52
Trading across borders. The three indicators used
to construct this indicator are available at:
http://www.doingbusiness.org/ExploreTopics/Tra-
dingAcrossBorders/
Export burdens
100
90
80
70
60
50
40
30
20
10
0
U zech I tat a
et a in
n
us n
itz ran y
pu ly
Be rw d
lg ay
ey
A rlan d
n a
Po exi d
Ja lia
d p nd
m k
y
er ce
ew Sium
re d
un d
te an a
rk c
rtu co
H lan l
Ic dom
tra s
Re Ita e
te Re ela s
g c
d ad
Po ga
pa
A ede
Fi tri
Sw F gar
N lan
M lan
ni C ore
er ar
Sw an
Tu bli
us d
G lan
r e
ec
in li
N Ze pa
he la
K ub
G nm
e
K
o
S
e
D
ak
N
ov
ni
C
Sl
53
4.8 Capital Access Index
Definition:
The fundamental objective of the Capital Access Index (CAI) is to
evaluate the ability of new and existing businesses to access capital
in countries around the world. The Capital Access Index is calcu-
lated using the weighted average of the seven subcategories: Macro-
economic Environment, Institutional Environment, Financial and
Banking Institutions, Equity Market Development, Bond Market
Development, Alternative Sources of Capital and International Ac-
cess (Exhibit 1).
Exhibit 1
Description of the seven subcategories
• The Macroeconomic Environment (ME) category captu-
res the extent to which a country’s macroeconomic env-
ironment is favourable to the running and financing of a
business. Macroeconomic variables include low and stable
inflation and interest rates, low tax rates, and a level of fi-
nancial sophistication compared with international norms.
• Institutional Environment (IE) reflects the extent to which
a country has the institutions needed to support and en-
hance business financing activities. That includes enforcea-
ble property rights, an efficient judicial system, efficient
bankruptcy procedures and a low-corruption environment.
• Financial and Banking Institutions (FI) measures the level
of involvement of deposit-taking institutions in financing
businesses. Some of the variables included in FI are the
level of private sector credit extended by deposit taking in-
stitutions, the soundness of financial institutions, the ease
of access to bank loans, and the efficiency of the banking
system.
• Equity Market Development (EM) reflects the extent to
which financing of business operations is important for
a given country. Some of the EM variables include: stock
market capitalization to GDP, the liquidity of the stock
market, and changes in the number of listings.
54
• Bond Market Development (BM) captures the importance
of bond financing of business operations. Some of the BM
variables include: the size of private and public bonds to
GDP and the securitized asset issuance to GDP.
• Alternative Sources of Capital (AC) measures a country’s
use of such financing tools as venture capital, private place-
ments and credit cards.
• International Access (IA) measures the level of foreign
capital available to businesses in a particular country and
includes variables such as the volatility of exchange rates,
international reserve holdings, portfolio and FDI capital
inflows and outflows, and sovereign ratings.
The calculations of the various scores:

• Step 1:
The non-surveyed or missing variables in FI, EM, BM,
AC and IA sub-categories are assigned a score of zero. This
reflects the fact that the industry or sector in question is
either missing or so small that its effect on capital access is
immaterial.
• Step 2:
The variables are ranked by every decile according to the
directional relationship to capital access. The resulting
scores of one to 10 are then assigned for countries ranking
lowest to highest in terms of capital access. The score for
each sub-category is calculated by a simple average of the
variables, but only if the data in the category is greater or
equal to 50 percent of the total variables in that category.
• The Capital Access Index is calculated using the weighted

average of the seven subcategories. The first two subcate-
gories–ME and IE–are weighted 25 percent each, and the
other five sub-categories—FI, EM, BM, AC and IA– each
are weighted as 10 percent of the final CAI score. Theo-
retically, the scores can range from zero to 10. However,
because every country has some kind of macroeconomic
and institutional structure, the minimum for each of these
two categories is one; therefore the lowest possible score
can only be 0.5.
55
Assessment Grade
Overall A
The Capital Access Index is a direct measu-
re of the efficiency and strength of coun-
tries financial markets.
b) Assessment of Policy Indicator Typology B
The ability of new and existing businesses
to access capital is the outcome of an ef-
ficient policy framework for getting access
to capital and thus not a direct measure of
the regulation per se.
Policy initiatives will only have an indirect

impact on an indicator measuring the out-
come of regulation.
Fact-based indicator. Based on the statistics
from the following corporations: Interna-
tional Financial Statistics,
Heritage Foundation, World Economic
Forum, World Bank Doing Business Da-
tabase, International Country Risk Guide,
Moody’s Ratings, Thomson Financial SDC
Platinum, S&P Emerging Market Fact
book, Bank of International Settlements,
Thomson Financial Data stream, The
Nilson Report, Fitch Ratings and Standard
and Poor’s Ratings
The capital access index is not fully com-
parable across countries.
lity Except from Iceland and Luxembourg the
indicator covers all OECD countries.
The indicator is available for 2005. The
data will be updated annually.
Source Milken institute. Best Markets for entrepreneurial
finance, 2005 Capital Access Index – Securitization
in financing economic Activities.
56
Tu
0
1
2
3
4
5
6
7
8
9
r
Sl Po key
ov M la
ak e nd
Re xic
Cz p o
ec Hu ubl
h n ic
Re ga
pu ry
bl
ic
G Ital
r
Be eec y
l e
Po giu
rtu m
K gal
o
A rea
us
Fr tria
an
Ja ce
pa
n
N Ge Spa
ew rm in
N Ze an
et a y
Swher lan
itz land d
er s
Capital Access Index
Caland
n
Ire ada
l
Fi an
n d
N lan
o
A rw d
u a
D stra y
en li
m a
U Un Sw ar
ni ite e k
te d d
d S en
K ta
in te
gd s
om
57
4.9 Private Credit
Definition:
The indicator measures the ratio of credit towards the private sector
from deposit-taking financial institutions relative to GDP.
Assessment Grade
Overall A
The ratio of private credit relative to GDP
is direct measure of the supply of debt-ca-
pital.
The ratio of private credit relative to GDP
is the outcome of an efficient policy fra-
mework for getting access to capital and
thus not a direct measure of the regulation
per se.

come of regulation.
The indicator is fact-based.
tries.
The indicator is updated annually.
Source The indicator is updated annually by FORA based
on data from IMF International Financial Stati-
stics. Available online: http://papers.ssrn.com/sol3/
papers.cfm?abstract_id=637301.
58
M
Sl e
0
0,2
0,4
0,6
0,8
1
1,2
1,4
1,6
1,8
2
ov Tx
Cz ak urkico
ec R Pol ey
h ep an
Re ub d
Hpublic
u l
Fingaic
Be nla ry
l n
G giu d
Careecm
na e
N Itada
or l
Fr wa y
a y
K nce
o
J re
A apaa
S us n
A we tria
u d
Lu Gestra en
N xe rm lia
Private Credit
ew m a
Ze bo ny
al urg
U Spand
ni
te PIrel ain
d o a
N Ki rtu nd
et ng ga
he d l
SwDerlanom
U it nm ds
ni ze a
te rl rk
d an
S
Ic tat d
el es
an
d
59
4.10 Interest Rate Spread
Definition:
The indicator measures the lending rate minus deposit rate based
on an average of annual rates for each country.
Assessment Grade
Overall B
1. Relevance a) Assesment of Relevance B
The interest rate spread reflects the level
of price competition in the credit markets,
but is only a proxy measure of the supply
and accessibility of debt-capital.
The interest rate spread relative to GDP
is the outcome of an efficient policy fra-
mework for capital markets and thus not a
direct measure of the regulation per se.

come of regulation.
tries.
The indicator is accessible for the years
1995 - 2004 and will be updated annually.
60
Source The data is derived from International Financial
Statistics (IFS) published by IMF and national
sources. Available online:
http://ifs.apdi.net/imf/ifsBrowser.
aspx?Entry=0050492_PUB&sType=other&QueryT
ype=other&ShowSeries=True.
Interest rate spread
8
7
6
5
4
3
2
1
0
la y
re y
er um
Re pub rk
el y
Sp an
K ain
te rla d
Sl ec De ala o
U witz inla d
Caede s
d
or ea
Ireway
e ce
un da
nd
N Mrance
G lgi ia
H na n
Ja ds
A pub lic
ov h R nm nd
Sw tat d
Be tral c
Po gar
e
G Ital
Ic an
ni e n
Cz Ze xic
S F lan
an
us li
d n
ak e a
N or
p
F e
n
m
rla
S
he
et
ew
N
61
4.11 Cost to Create Collateral
Definition:
The indicator measures the creditor’s cost associated with creating
and registering collateral. The cost measure is presented as a per-
centage of income per capita.
Assessment Grade
Overall A
The cost to create collateral is a direct
measure of the ease of creating and registe-
ring collateral, which would make creditors
more motivated to assist entrepreneurs but
it is only a proxy measure of the supply
and accessibility of debt capital.
regulation (collateral and insolvency laws)
will have direct impact on the size of the
indicator.
The indicator is fact-based and is based on
research on collateral and insolvency laws,
and responses to a World Bank survey on
secured transactions laws.
Fully comparable. The data is based on
standardised case and based on research of
collateral and insolvency laws and respon-
ses to a survey on secured transactions
laws, developed with input and comments
from experts, including from the Center
for Economic Analysis of Law, the Inter-
national Bar Association Committee E8 on
Financial Law, and the European Bank for
Reconstruction and Development.
62
countries.
The indicator will be updated annually.
Source World Bank - Doing Business. Available online:
http://rru.worldbank.org/DoingBusiness/Explore-
Topics/GettingCredit/CompareAll.aspx.
Cost to Create Collateral
35
30
25
20
15
10
5
0
D wedary
Be tra ly
Mubl y
K ium
U S Z rlan ny
Re ur rk
St m
la d
la n
un in
re o
A I nd
H Spaal
ec NFra tes
N Ge na ia
Fi ubl y
rtu ea
Re rw e
N eth rm da
Ireapad
e
lg lia
ov en en
te itz la s
n ic
U d K erl nd
te gd d
G xicc
p ke
h o nc
Po lan
ni w ea d
ec
p a
J n
e i
ni in an
us ta
g
Ca str
d o
ak T ma
Po or
ew e a
S g
u
A
Cz
Sl
63
4.12 Country Credit Rating
Definition:
The indicator measures the country credit rating, which is based on
an assessment by the Institutional Investor Magazine Ranking.
The ranking goes from 1 (worst) to 100 (best).
Assessment Grade
Overall C
Country credit rating indicates the risks of
lending capital to specific countries, but it
is only a proxy measure of the supply and
accessibility of debt-capital to individual
entrepreneurs.
The country credit rating is the outcome
of individual investor’s assessments of
each country’s credibility. Policy initiati-
ves will only have an indirect impact on
other people’s assessment of each country’s
credibility.
The indicator is opinion-based as informa-
tion is provided by senior economist and
sovereign risk analysts at leading global
banks and money management and securi-
ties firms.
lity The indicator is available for 60 industria-
lised and emerging countries.
The indicator will be updated annually.
64
T
0
10
20
30
40
50
60
70
80
90
100
Murk
Sl e
Source
o H ex y
Czvak Pungico
ec R ol ary
h ep an
Re ub d
pu lic
K bl
G oreic
r
I ee a
Pocela ce
N
ew rtugnd
Ze Itaal
al ly
A Jaand
us pa
App/Index.htm
tra n
BeSp lia
l ai
Iregiumn
Al
G usand
er tr
C m ia
U an
ni Fana y
Country Credit Rating
te ra da
d n
N S Sta ce
et w te
book 2006, Switzerland, Sources
h ed s
U Derla en
ni e
te Fnmnds
d i a
Lu Ki nla rk
Institutional Investor, September 2005.
xe ng nd
md
Sw N boom
itz orwurg
er ay
la
nd
http://www.worldcompetitiveness.com/OnLine/
ment Development (IMD), Competitiveness Year-
The data is published by the Institute for Manage-
65
4.13 Legal Rights Index
Definition:
Legal Rights Index measures the degree to which collateral and
bankruptcy laws facilitate lending (exhibit 1).
The index ranges from 0 to 10, with higher scores indicating that
collateral and bankruptcy laws are better designed to expand access
to credit.
Exhibit 1
The index includes 7 aspects related to legal rights in collateral
law and 3 aspects in bankruptcy law. A score of 1 is assigned for
each of the following features of the laws:
• General rather than specific description of assets is per-
mitted in collateral agreements.
• General rather than specific description of debt is per-
mitted in collateral agreements.
• Any legal or natural person may grant or take security in
the property.
• A unified registry operates that includes charges over mo-
vable property
• Secured creditors have priority outside of bankruptcy.
• Secured creditors, rather than other parties such as gover-
nment or workers, are paid first out of the proceeds from
liquidating a bankrupt firm.
• Secured creditors are able to seize their collateral when a
debtor enters reorganization; there is no “automatic stay”
or “asset freeze” imposed by the court.
• Management does not stay during reorganization. An ad-
ministrator is responsible for managing the business during
reorganization.
• Parties may agree on enforcement procedures by contract.
• Creditors may both seize and sell collateral out of court
without restriction.
66
Assessment Grade
Overall A
The Legal Rights Index is an indirect
measure of entrepreneurs’ access to capital
through loans. Higher protection of bor-
rowers and lenders rights facilitates the
lending process.
regulations will have a direct impact on the
legal rights index.
tries.
b) Availability over Time B
Getting Credit. Available online: http://www.doi-
ngbusiness.org/ExploreTopics/GettingCredit/
Legal Rights Index
10
9
8
7
6
5
4
3
2
1
0
Caelan y
G la y
Fr xic y
Cz Po ust m
et S rk
Sl Ne Aurel ny
an o
Fi ubl n
Jaand
N or n
ak Z ra d
Re p l
G rla tes
ec rtu ria
U D n d
or ea
itz ed ay
ce
N ted ma a
Be reend
A giu e
Reeal lia
Herla n
I as
nl ic
pu and
un nd
ic
h S ga
Ic gar
PoItal
Murke
p ai
K pa
ni en ad
ov w st an
er nd
l c
bl
Sw Sw w
he ta
m
e
T
67
4.14 Venture Capital - Early Stage
Definition:
The indicator measures the total early stage venture capital invest-
ment per year as a share of GDP.
Assessment Grade
Overall B
The amount of early stage venture capital
is a direct measure of the supply of early
stage venture capital in each country.
Although the government can take initiati-
ves to build up new national venture funds
via direct investments, the amount of
early stage venture capital is primarily the
outcome of an efficient policy framework
for venture capital markets and thus not a
direct measure of the regulation per se.

come of regulation.
Comparable to some extent. The definition
of expansion stage versus other stages may
vary from country to country. The data for
the US is not directly comparable to the
data from the other countries as only part
of the US expansion capital investment is
included.
countries.
68
The indicator is available from 1998 to
2004. The data will not be updated every
year.
Source Data for European countries: Eurostat 2006, Data
for the US: NVCA, Data for Australia: AVCA.
Link for EU: http://epp.eurostat.cec.eu.int/

portal/page?_pageid=1996,39140985&_
dad=portal&_schema=PORTAL&screen=detailre
f&language=en&product=Yearlies_new_science_
technology&root=Yearlies_new_science_techno-
logy/I/I4/ir061
Venture Capital - Early Stage
0,12
0,1
0,08
0,06
0,04
0,02
0
ak P It ry
Re ol aly
A orwum
Berelany
e rk
Ze nlanm
N ASp an
he s n
C ala d
N lgi nd
S I an l
N ing ates
G rla tria
te ed rla d
Postra ay
ea
U Unwitzcel ce
Swma a
Gubli d
Jaece
Frtugaa
K den
I as
ga c
D an nd
K t d
re c
et u ai
en ad
er nd
r li
ni it e an
p an
un li
d S n
ew Fi do
or
p
Hpub
u
Re
h
ec
ov
Cz
Sl
69
4.15 Venture Capital - Expansion Stage
Definition:
The indicator measures the total expansion stage venture capital
investment per year as a share of GDP.
Assessment Grade
Overall B
The amount of expansion stage venture
capital is a direct measure of the supply
of expansion stage venture capital in each
country.
Although the government can take ini-
tiatives to build up new national venture
funds via direct investments, the amount
of expansion stage venture capital is pri-
marily the outcome of an efficient policy
framework for venture capital markets and
thus not a direct measure of the regulation
per se.

come of regulation.
Comparable to some extent. The definition
of early stage versus other stages may vary
from country to country.
countries.
The indicator is available from 1998 to
2003. The data will not be updated every
year.
70
Source Data for European countries: Eurostat 2006, Data
for the US: NVCA, Data for Canada: CVCA, Data
for Australia: AVCA.
Link for EU:

http://epp.eurostat.cec.eu.int/portal/page?_page-
id=1996,39140985&_dad=portal&_schema=PORT
AL&screen=detailref&language=en&product=Year
lies_new_science_technology&root=Yearlies_new_
science_technology/I/I4/ir062
Venture Capital - Expansion Stage
0,18
0,16
0,14
0,12
0,1
0,08
0,06
0,04
0,02
0
N Sta ry
A lg ly
D str um
Po lany
Po na rk
om
G erl an
N Z eland
K ed n
A lan d
U HFra gal
ws
Be Itaria
he la d
N Fin ay
te S Sprea
te ng ce
rtu da
us d
Sw pub ce
Cama a
gd n
o s
itz aplic
rla nd
Ire and
Re e c
or te
d w ai
K nd
i
et ea n
in e
h Gr bli
er an
d a
en al
ni u n
e
ew Ic la
t
u i
m
ec pu
J
Cz Re
ak
ov
ni
U
Sl
71
4.16 Capitalisation of Secondary Stock Market
Definition:
The indicator measures the capitalisation of the secondary stock
market (the value of the issued shares on the market) in percentage
of GDP.
Assessment Grade
Overall B
supply and accessibility of expansion capi-
tal.
An efficient secondary stock market is a fa-

cilitator of expansion capital and indirectly
a source to more capital in earlier invest-
ment phases.
The size of the secondary capital market is
primarily the outcome of market-based ini-
tiatives and an efficient policy framework
for stock markets. It is not a direct measure
of the regulation per se.

come of regulation.
Fully comparable.
countries.
72
The indicator is available for the average of
year 1999 -2002.
The data will not be updated every year,
but may be updated in the future if fun-
ding is found.
Source The data is published by OECD, Venture Ca-
pital: Trends and Policy Recommendations, p.
25. Available online: http://www.oecd.org/datao-
ecd/4/11/28881195.pdf.
Capitalisation of Secondary Stock Market
0,2
0,18
0,16
0,14
0,12
0,1
0,08
0,06
0,04
0,02
0
a
D pan
en
ly
itz nd
ay
a
K and
Be ark
G ce
y
F m
Fr d
ea
N m
A s
Sw s
te nad
ai
tri
an
nd
e
Ita
iu
ed
w
an
o
Sw inla
or
at
la
Sp
us
m
Ja
gd
l
m
rla
lg
or
te Ire
U Ca
St
er
K
en
er
in
he
d
et
ni
d
N
ni
U
73
4.17 Market Capitalisaton of Newly-Listed
Companies Relative to GDP
Definition:
The indicator measures the market capitalization of newly listed
domestic shares relative to GDP. The market capitalization of newly
listed domestic shares is the total number of new shares issued mul-
tiplied by their value on the first day of quotation.
Assessment Grade
Overall A
supply and accessibility of new capital
The market capitalization of newly listed
companies is primarily the outcome of
market-based initiatives and an efficient
policy framework for stock markets.
Policy initiatives will therefore only have
an indirect impact on the market capitali-
zation of newly listed companies.
The indicator is fact-based and originates
from the World Federation of Exchange.
Fully comparable because the same metho-
dology is used in all countries.
lity The indicator is available for 22 OECD
countries.
74
Source World Federation of Exchange, annual report 2005
(data for Denmark: Copenhagen stock exchange,
statistics 2005).
Available online:
http://www.worldexchanges.org/publications/WFE
%202005%20Annual%20Report.pdf
Market capitalization of newly listed companies relative to GDP
0,16
0,14
0,12
0,1
0,08
0,06
0,04
0,02
0
un rg
Ire gary
e y
Sp ey
G any
al k
om
d
ni K ain
Sw A pan
er nd
ew n es
A rla a
d ea
in ay
Po ada
d r d
Fi ece
n a
Tu den
Ja nd
us nd
Sw Ital
Ze ar
e i
an
Ca rali
te o n
H bou
itz ustr
N De tat
rk
te or
K w
G la
ni N la
a
m
gd
m
re
nl
t
x em
Lu
75
4.18 Capitalisation of Primary Stock Market
Definition
The indicator measures the capitalisation of the primary stock mar-
ket (the value of the issued shares on the market) in percentage of
GDP. The indicator is measured as the average of the years 1997-
2001.
Assessment Grade
Overall A
supply and accessibility of expansion capi-
tal.
An efficient primary stock market is a

facilitator of access to expansion capital
and indirectly a source to more capital in
earlier investment phases.
The size of the primary capital market is
primarily the outcome of market-based ini-
tiatives and an efficient policy framework
for stock markets. It is not a direct measure
of the regulation per se.

come of regulation.
from the World Bank and Standard and
Poor’s Emerging Market Database.
Fully comparable.
tries.
76
The indicator is available for the year 2004
and will be updated annually.
Source WORLD FEDERATION OF EXCHANGES (DO-
MESTIC MARKET CAPITALIZATION), OECD
economic outlook (GDP), Statistics Denmark
(exchange rates)
http://www.world-exchanges.org/publications/WF
E%202004%20Annual%20Report%20and%20Sta
tistics.pdf
Capitalisation of Primary Stock Market
2,5
1,5
0,5
0
te the nla a
te o in
er an
y
Sw ou n
G an y
Zeelany
lg ay
K la d
Po ust nd
a d
G rtu ria
U N F analia
N eec d
y
m e
ni K pa k
d
D Fra m
nd
A Sta ea
itz Japrg
Re xi c
Hpub o
m l
xe weom
Lu S gd ds
Beorw e
c
C ra s
ni e i d
er ga
Po gar
m de
IreItal
ew Ic rke
d r n
en nc
an
S ar
h e li
Tulan
us te
c
un li
iu
d r
A la
in n
la
ec Mpub
b
r
Cz Re
ak
U
ov
Sl
77
4.19 Turnover in Primary Stock Market
Definition:
The indicator measures the total shares traded on the stock mar-
ket exchange in percentage of GDP. The indicator is the average of
years 1997- 2001.
Assessment Grade
Overall A
The total number of shares traded on the
stock market is an indication of the well
functioning and efficiency of the capital
market.
The total number of shares is a direct mea-

sure of the accessibility of expansion capi-
tal via the stock market.
The total number of shares traded on the
stock market is primarily the outcome of
market-based initiatives and an efficient
policy framework for stock markets. It is
not a direct measure of the regulation per
se.

come of regulation.
from the World Bank and Standard and
Poor’s Emerging Market Database.
Fully comparable.
tries.
78
The indicator is available for the year 2004
and will be updated annually.
Source World Bank and Standard and Poor’s Emerging
Market Database. Available online: http://www.
worldbank.org/research/projects/finstructure/struc-
ture_database.xls.
Stockmarket Turnover Ratio
2
1,8
1,6
1,4
1,2
1
0,8
0,6
0,4
0,2
0
I ex rg
Po ranary
d K pa ly
G pu key
Al m
itz straark
Itany
om
Becelaico
Fg n
he ta d
K o in
na d
SwAunmgal
ov Nolantes
h Ze eca
Pogiu d
ReTur ay
gd a
D rtu ce
H Japda
CzNe Gusand
Re al e
Ser lia
N ted nlaen
ak rwds
Ca lanic
Ireubl d
U weland
m ic
ec w retri
in re
un a
et S n
l n
p an
Mbou
er bl
a
ni Fi d
S
em
r
e
x
Lu
te
ni
U
Sl
79
4.20 Buyouts
Definition:
A transaction in which a business, business unit or company is
acquired from the current shareholders. The indicator is measured
as a percentage of GDP and is calculated as an average of the period
1999-2002.
Assessment Grade
Overall B
The number of buyouts is a direct mea-
sure of businesses’ choice to exit the stock
market.
impact on the number of buyouts.
The indicator is fact-based, originating
from OECD statistics.
Not fully comparable - Method of collec-
ting data varies among countries.
Note for Australia, Japan, Korea and New
Zealand the average is taken for the period
1998-2002.
lity Data is available for 26 OECD countries.
Data is available as an average of the pe-
riod 1999-2002. Future updates are uncer-
tain.
Source OECD, Science, technology and industry.
Venture capital: trends and policy recommendati-
ons, p.7.
Available online:
http://www.oecd.org/dataoecd/4/11/28881195.pdf
80
A
0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
Cz us
ec G tria
h re
Re ec
pu e
b
Po lic
H and l
un
Po gar
rtu y
Ire gal
D lan
en d
m
Sw Nor ark
itz wa
er y
la
n
Sp d
G a
er in
m
Buyouts
an
y
Be tal I
lg y
Fi ium
nl
a
N Fr nd
et an
he c
U rla e
ni
I
te c nds
d el
K an
in d
g
Sw dom
ed
en
81
4.21 Revenue from Bequest Tax
Definition:
The indicator measures the revenue from bequest tax as percent of
GDP-3 year moving average.
Assessment Grade
Overall A
The revenue from bequest tax is a direct
measure of wealth tax’s negative impact on
financial possibilities.
reducing the bequest tax-rates will have a
direct impact on the revenue from bequest
tax.
Fully comparable.
lity The indicator is available for the OECD
countries.
The indicator is available for years 1965-
2003. The data will be updated every year.
Source SourceOECD, Revenue Statistics. Available online:
http://thesius.sourceoecd.org/vl=7366043/cl=22/
nw=1/rpsv/~4018/v55n1/s13/p1.
82
M
A ex
0
0,05
0,1
0,15
0,2
0,25
0,3
0,35
0,4
0,45
0,5
us ic
A tra o
D us lia
en tr
G maia
re rk
N e
values for this indicator

ew Itace
Z Jap ly
Poeala an
U
ni Trtugnd
te ur al
d k
Cz St ey
ec Canates
h Po ad
Re l a
a
Hpub nd
un li
ga c
N Kor ry
o
Swrw ea
a
Ic ede y
e l n
Sl L G Ireland
ov ux er an
a e m d
Revenue from Bequest Tax
U k R mboany
ni ep u
te
d ub rg
SwKi Splic
itzngdain
N Ferlaom
et in n
he la d
rl n
F an d
Be rands
lg ce
iu
m
Note: Lower values are assued to be more conducive for entrepreneurship performance than higher
83
4.22 Revenue from Net Wealth Tax
Definition:
The indicator measures the revenue from net wealth tax in a 3-year
moving average as a percentage of GDP.
Assessment Grade
Overall A
The revenue from net wealth tax is a direct
measure of wealth tax’s negative impact on
financial possibilities.
reducing the wealth tax-rates will have a
direct impact on the revenue from wealth
tax.
Fully comparable.
countries.
Source SourceOECD, Revenue Statistics. Available online:
http://thesius.sourceoecd.org/vl=7366043/cl=22/
nw=1/rpsv/~4018/v55n1/s13/p1.
84
M
0
0,5
1
1,5
2
2,5
Cz Au ex
ec str ico
h Au ali
Re s a
D pu tria
e b
H nm lic
un ar
Ire ga k
la ry
N n

ew Jap d
K
Ze oran
Sl a e
ov P la a
ak Po oland
U R rtu nd
ni ep g
te u al
U d K Tublic
ni in rk
te g ey
d do
St m
a
N Ge Ittes
et rm al
he a y
Berlan ny
l d
G giu s
Fireecm
nl e
Revenue from Net Wealth Tax
Spand
F a
Swran in
c
Caede e
I na n
Sw Ncelada
Lu itz orwnd
xe erl ay
m an
bo d
ur
g
85
4.23 Taxation of Dividends - Top Marginal Tax Rate
Definition:
The indicator measures the top marginal tax rate of dividend in-
come.
Assessment Grade
Overall B
The top marginal tax rate of dividend
income is a proxy measure of the tax-rates
negative impact on financial possibilities.
The indicator does not take into considera-
tion tax rebates, etc.
reducing the top marginal tax rate will
have a direct impact on the indicator.
Fully comparable.
The indicator is available for 2000, but
data will not be updated annually.
Source http://www.world-exchanges.org/publications/WF
E%202004%20Annual%20Report%20and%20Sta
tistics.pdf
WORLD FEDERATION OF EXCHANGES (DO-
MESTIC MARKET CAPITALIZATION), OECD
economic outlook (GDP), Statistics Denmark
(exchange rates)
86
Sl
ov
ak G
0
10
20
30
40
50
60
Re re
Cz pu ec
ec BIcebli e
U h R elglanc
ni e iu d
te pu m
d b
S l
Potatic
A la es

N ustnd
o
F rwria
Swinlaay
U N
ni e M ed nd
te th ex en
d er ic
K la o
i n
Hngd ds
L un om
N uxe K gar
ew m or y
Z bo ea
Poealaurg
Sw rtu nd
itzTur gal
er ke
l y
D Ireland
en an
m d
G I ark
er ta
m ly
Taxation of Dividends – Top Marginal Tax Rate
C Spany
A an ain
us a
tr da
Jaalia
Fr pa
an n
ce
87
4.24 Taxation of Dividends
- Top Marginal Tax Rate for the Self-employed
Definition:
The indicator measures the top marginal tax rates of dividend in-
come for the self-employed.
Assessment Grade
Overall B
The top marginal tax rate of dividend in-
come for the self-employed is a proxy mea-
sure of the tax rate’s negative impact on
financial possibilities. The indicator does
not take into consideration tax rebates, etc.
reducing the top marginal tax rate will
Fully comparable.
OECD countries.
The indicator is available for the year
2000, but will not be updated annually.
Source The data are published by OECD, Taxation, SMEs
and Entrepreneurship, 2002, p.16. Available on-
nsf/43bb6130e5e86e5fc12569fa005d004c/
2137ebc4eaa738a5c1256c10004e37ec/$FILE/
JT00130282.PDF.
88
Cz
ec
NhR
ew e
p
0
10
20
30
40
50
60
70
Z ub
Healalic
u n
Mnga d
U ex ry
ni
te PPol ico
d or an
K tu d

in g
g a
Kdo l
Ireorem
Sw la a
it I nd
U zerl taly
ni
te Spand
d
A St ain
us at
Catrales
Ic nadia
e
T lana
Aurked
us y
G Ja tria
er pa
N ma n
o
Swrwny
Lu ed ay
xe Fra en
m n
N F bo ce
et in u
he la rg
B rla nd
D elgnds
en iu
mm
Taxation of Dividends – Top Marginal Tax Rate for the Self-employed
ar
k
89
4.25 Taxation of Stock Options
Definition:
The indicator measures the effective tax rate of stock options for a
hypothetical taxpayer with certain assumptions regarding income,
family situation and portfolio development (Exhibit 1).
Exhibit 1
The effective tax rates are calculated for a married person with
two children, earning 50 000 € a year and with a grant element
of face value equal to 33 % of his salary. The special rates refer
to promotional schemes. The calculation is based on the as-
sumption that the employee exercises the options three years af-
ter they have been granted and keeps the shares for another two
years afterwards. The calculation supposes further an average
increase in the stock price of 10 % and an interest rate of 5 %.
The estimated annual gross income of options is EUR 50 000.
Furthermore, the employee is granted stock options representing
a (at grant) stock worth of EUR 16 500.
Assessment Grade
Overall B
The indicator measuring is a direct mea-
sure of the negative impact of taxes on new
firms’ financial possibilities.
reducing the taxation of stock options will
The indicator is a fact-based estimate based
on Taxation of Stock Options in the EU
and the US , a study prepared by Price Wa-
terhouse Coopers for the European Com-
mission, Enterprise Directorate-General,
2002; the estimates are still preliminary.
90
Fully comparable.
lity The indicator is available for most of he
EU member states and US.
data will not be updated.
Source The data is published in Benchmarking Enterprise
Policy, 2002, EU Commission. Available online:
http://europa.eu.int/comm/enterprise/enterprise_
policy/better_environment/doc/enterprise_policy_
scoreboard_2002_en.pdf.
Taxation of Stock Options

90
80
70
60
50
40
30
20
10
0
U Fr rg
he ly
xe ium
G ny
k
Be om
Fi in
Sw nd
nd
Ire al
er s
Po tria
d ce
A ce
D den
Sp s
G tate
ar
nd
u
et Ita
g
a
ni an
a
e
a
la
bo
rtu
m
gd
us
m
re
nl
Lu lg
rla
e
S
en
m
in
K
te
d
N
te
ni
U
91
4.26 Taxation of Capital Gains on Shares
- Short Term
Definition:
The indicator measures the level of the tax rate when shares are is-
sued and sold in the short term.
The indicator consists of two lower level indicators: one tax rate for
companies and one tax rate for individuals (both short term taxa-
tion).
Assessment Grade
Overall B
The tax rate of capital gains on shares is
a direct measure for the tax rates negative
impact on financial possibilities.
Policy focused indicator. Policy initiati-
ves reducing the taxation of capital gains
on shares will have a direct impact on the
indicator.
Fact-based indicator, originating from
OECD statistics.
Comparable to some extent. The taxa-
tion may vary across different asset types.
Holding periods for short term assets differ
across countries as do other conditions.
OECD countries.
data will not be updated.
92
and Entrepreneurship, 2002, p. 23. Available
online: http://www.olis.oecd.org/olis/2002doc.
nsf/43bb6130e5e86e5fc12569fa005d004c/
JT00130282.PDF.
Taxation of Capital Gains on Share - Short Term
60
50
40
30
20
10
0
an g
xe rel ary
un ly
ey
G gium
gd k
A Spom
Ze lan o
or an
ec C ed nd
A ralin
b d
el l
K m s
rk a
H Itand
N eth ex ea
Cz Swnla y
N Jap e
U itedpub da
Poerla nd
N M orce
us a
U h R an en
Sw Pala ds
te De Stalic
itz oland
Ic tugad
Fr our
d n te
in ar
Tu tri
c
ew er ic
t i
m an
Fi wa
r n
us a
Ke
n e a
a
Lu I g
re
l
Be
ni
93
4.27 Taxation of Capital Gains on Shares
- Long Term
Definition:
The indicator measures the level of the tax rate when shares are is-
sued and sold in the long term.
The indicator consists of two lower level indicators: one tax rate for
companies and one tax rate for individuals (both long term taxa-
tion).
Assessment Grade
Overall B
The tax rate of capital gains on shares is a
direct measure for the tax rates’ negative
impact on financial possibilities.
ves reducing the taxation of capital gains
on shares will have a direct impact on the
indicator.
OECD statistics.
Comparable to some extent. The taxa-
tion may vary across different asset types.
Holding periods for short term assets differ
across countries as do other conditions.
The indicator is available for 2000.
The data will not be updated annually.
94
and Entrepreneurship, 2002, p. 23. Available
online: http://www.olis.oecd.org/olis/2002doc.
nsf/43bb6130e5e86e5fc12569fa005d004c/
JT00130282.PDF.
Taxation of capital gains on shares - long term
35
30
25
20
15
10
5
0
N th exurg
te el ry
H Sp ly
D pubum
G ak
Lu reeny
Itam
Ze lan o
U ungain
or an
Caede d
A St nd
te I la l
Frrali s
Re gi a
gd d
N Mbo a
Swnlany
N pe
da
i rt nd
xe Ko ce
an a
na n
P lan s
G nm lic
Sw Po ola d
K ela d
ni tzer uga
t e
m r
h el tri
m re
c
ew e ic
a d
in n
Fi wa
d c n
ni Ir a
o
er a
us at
d a
ec B us
J a
r
A
e
Cz
95
4.28 Possibility for a Fresh Start
Definition:
The indicator measures an entrepreneur’s possibility to resume run-
ning a business after experiencing financial difficulties. A fresh start
can be attained through a restructuring of the existing business to
avoid bankruptcy or by restructuring debt.(Exhibit 1)
Exhibit 1
The indicator consists of the following questions:
• Reorganization out-of-court:
o Q1 Early warning systems supported by the public sector
o Q2 Countries having private supported early warning
systems
o Q3 Possibility for out-of-court settlements
• Reorganization in court:
o Q4 Possibility for in-court reorganization
o Q4A Countries having fast track procedures for reorgani-
zing Small and Medium Sized Enterprises (SMEs)
o Q7 Countries having courts or sections within courts
specialized in restructuring insolvent companies
• Liquidation and discharge:
o Q13 What priority is given to the national public autho-
rities’ claims on the debtor
o Q14 Can an enterprise that is about to be liquidated con-
vert from liquidation to reorganization proceedings?
o Q17 and 17B: For how long does the honest business
bankruptee usually have to pay back installments (check
Ireland)
o Q18 Are all debts belonging to an honest business bank-
ruptee discharged in the cases where a discharge is granted
o Q21 Honest business bankruptees who has also served
as directors of a bankrupt company can be deprived of the
right to start a new business
96
The indicator is quantified as follows:
• Q1: yes = 1 point, no = 0 point
• Q3: yes = 1 point, yes, but is rarely used = 0.5 point, no =
0 point
• Q4A: yes = 1 point, no = 0 point
• Q13: 1. Priority = 0 points, 2. or 3. Priority = 0.33 points,
4.-2. Last Priority = 0.66 points, Last Priority = 1 points.
(If a government have different priorities the average of
these alternatives are used to determine the number of
points the country receives).
• Q17 and 17B: instantaneously discharge or maximal 1 year
= 1 point, 1-3 year = 0.66 point, 4-5 year = 0.33 point,
more than 5 years = 0 point.
• Q18: yes = 1 point, In most cases = 0.66, rarely = 0.33, no
= 0 point
The indicator is constructed on a scale from 0-11.
When a question is not answered an average score from the other

questions is given to a country.
97
Assessment Grade
Overall A
The indicator is a direct measure of an
entrepreneur’s restart possibilities.
regulations will have a direct impact on an
entrepreneur’s possibility to restart after
experiencing financial difficulties.
The OECD survey “Policy Questionnaire
on Bankruptcy” is fact-based.
Fully comparable - the same questions were
asked in every country
lity The indicator is available for 25 OECD
countries.
The indicator is available for 2005. It is
unclear if the indicator will be updated
in the future because it will require a new
survey.
Source The indicator is constructed on the basis of the
OECD survey “Policy Questionnaire on Bankrupt-
cy” which maps out regulation of rehabilitation,
liquidation, restructuring of debt and discharge in
OECD countries.
98
Sw
0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
0,9
ed
J e
Po apan
r
N tug n
or al
Sw T wa
itz urk y
e e
H rlan y
un d
M gar
G ex y
er ic
m o
Po any
N C lan
et an d
he a
d
D rlan a
en d
m s
G ar
re k
K ec
Be oree
l a
Fi gium
n
A lan
N u d
Possibilities for a Fresh Start
ew stri
a
Ze Ital
al y
a
S nd
Fr pain
U A an
ni ustr ce
te I al
d re ia
K la
in nd
gd
om
99
4.29 Entrepreneurship Education at Primary and
Secondary Levels
Definition:
The indicator measures the perception of entrepreneurial experts of
the quantity and quality of entrepreneurship education in primary
and secondary levels of the educational system.
The indicator is based on three questions that the experts are asked
to answer. The ranking of the questions go from 1 (strongly disag-
ree) to 5 (strongly agree). The indicator is a simple average of the
questions (Exhibit 1).
Exhibit 1:
• Teaching in primary and secondary education encourages
creativity, self-sufficiency, and personal initiative.
• Teaching in primary and secondary education provides ade-
quate instruction in market economic principles.
• Teaching in primary and secondary education provides ade-
quate attention to entrepreneurship and new firm creation.
Assessment Grade
Overall C
The quantity and quality of entrepre-
neurship education in higher levels of the
educational system is a direct measure of
the quality and quantity of entrepreneurial
motivated pupils in primary and secondary
levels of the educational system.
100
The quantity and quality of entrepreneurs-
hip education is an important outcome of
an effective educational system and thus
not a direct measure of regulation per se.
Furthermore, the indicator is opinion-
based. Policy measures can only have an
indirect impact on the opinions of entre-
preneurial experts.
The indicator is opinion-based. The in-
formation Is provided by entrepreneurial
experts’ answers to a list of questions in an
expert survey, which is part of the GEM/
GERA project.
lity The indicator is available for all GEM
countries (the list varies from year to year;
approximately, 30 countries on average).
The indicator is available for 1997-2004.
In this time span, some divergence exists in
the exact stating of the questions. The data
may be updated in the future.
Source The indicator is published by GEM/GERA in
specific reports. Not available on the net. GEM/
GERA website: http://www.gemconsortium.org.
101
102
Fr
0
0,5
1
1,5
2
2,5
3
an
Ja ce
Sw Po pan
itz rtug
er al
Sw lan
d
Be ede
lg n
G ium
re
e
Sp ce
H ai
un n
ga
r
Ita y
Ic ly
el
U Ire and
ni
te P lan
d o d
K la
in n
A gd d
us om
N De tral
ew n ia
m
Ze ar
al k
N Fi and
et nl
he an
rl d
N and
or s
Ca way
U Ge nad
Entrepreneurship Education at Primary and Secondary Levels
ni rm a
te a
d n
St y
at
es
4.30 Entrepreneurship Education at Higher Levels
Definition:
The indicator measures entrepreneurial experts’ perception of the
quantity and quality of entrepreneurship education at higher levels
of the educational system.
The indicator is based on three questions that the experts are asked
questions (exhibit 1).
Exhibit 1:
• Colleges and universities have enough courses and pro-
grams on entrepreneurship.
• The level of business and management education is truly
world-class.
• The business and post-graduate educations prepare the stu-
dents adequately to start their own business.
Assessment Grade
Overall C
The quantity and quality of entrepre-
neurship education in higher levels of the
educational system is a direct measure of
the quality and quantity of entrepreneurial
motivated students in higher levels of the
educational system.
103
The quantity and quality of entrepreneurs-
hip education is an important outcome of
an effective educational system and, thus,
preneurial experts.
formation is provided by entrepreneurial
GERA project.
Some divergence exists in the exact stating
of the questions through the years. The
indicator may be updated.
104
0
0,5
1
1,5
2
2,5
3
3,5
4
D Jap
en an
m
G ark
re
N Por ece
et tu
U he g
ni rl al
te Swand
d e s
K de
in n
g
Ca dom
N nad
o a
A
N u rwa
ew st y
Ze rali
al a
a
Sp nd
ai
n
Be Ita
lg ly
Fi ium
nl
Po and
l
Ire and
l
Ic and
el
Fr and
H a
Sw u nce
Entrepreneurship Education at Higher Education
itz nga
er ry
U Ge lan
ni rm d
te a
d n
St y
at
es
105
4.31 Quallity of Management Schools
Definition:
The indicator measures business executives’ perception of the qua-
lity of management/ business schools.
The indicator is based on the Executive Opinion Survey, which is

part of the Global Competitiveness Report. Business executives are
asked to state their opinion on the quality of business schools. The
ranking goes from 1(limited or poor quality) – 7 (the best in the
world).
Assessment Grade
Overall C
High quality of management or business
schools is a direct measure of the quality
and quantity of management and business
schools students.
The quality of management or business
schools is an important outcome of an
effective educational system and, thus,
indirect impact on the opinions of business
executives.
formation is provided by leading business
executives and entrepreneurs based on the
Executive Opinion Survey, which is part of
the Global Competitiveness Report 2003-
2004.
106
Source World Economic Forum, The Global Competitive-
ness Report 2003-2004. table 10.16
Quality of Management Schools
7
6
5
4
3
2
1
0
Re re urg
Re tu ry
Ja ly
Itaey
K us m
N I nlany
tra rk
it an om
K pan
ec P un ico
h l d
d Algiuin
Derla and
N Sw bli l
es
N ala nd
Sw Cngdtria
Cz H exrea
Fimaay
St ce
ni F la a
rk d
Poubli e
ni BeSpalia
Ze elaen
A enmnds
ew I ed c
G orwnd
te ra nd
Tulanc
pu ga
et re n
U zer ad
p ec
h or ga
us a
at
d n
ak Gbo
Mo
er
ov m
i
Sl uxe
L
te
U
107
4.32 Government Programmes
Definition:
The indicator measures entrepreneurial experts’ perception of
government programmes created at all levels of government (natio-
nal, regional, municipal level) in order to assist new and growing
firms.
The indicator is based on five questions that the experts are asked
questions (exhibit 1).
Exhibit 1:
• The range of government assistance for new and growing
firms can be obtained through contact with a single agency.
• Government sponsored incubators provide effective sup-
port for new and growing firms.
• There is an adequate number of government programs for
new or growing businesses.
• The people working for government agencies are competent
and effective in supporting new and growing firms.
• Persons who need help can find the necessary support.
Assessment Grade
Overall C
The quantity and quality of governmental
support programs is a direct measure of
the quality and supply of tightly stitched
regional networks of skilled, experienced
and specialised advisors.
108
The quantity and quality of governmental
programs is an important outcome of an
effective public and market-based entre-
preneurship-assistance system and, thus,
preneurial experts.
The data is opinion-based. The informa-
tion is provided by entrepreneurial experts’
answers to a list of questions in an expert
survey which is part of the GEM/GERA
project.
approximately 30 countries on average).
Source
The indicator is published by GEM/GERA in
109
110
L
Sl uxe
ov m
0
1
2
3
4
5
6
7
ak Gbo
Re re urg
p ec
Poubli e
Tulanc
rk d
Itaey
Ja ly
K pan
Mo
Cz H exrea
ec P un ico
h or ga
Re tu ry
pu ga
N Sw bli l
ew I ed c
c
Ze elaen
N ala nd
G orwnd
er
Fimaay
N I nlany
et re n
h l d
Derla and
A enmnds
us a
Quality of Management Schools
tra rk
U
ni BeSpalia
te
d Algiuin
K us m
i
Sw Cngdtria
it an om
U zer ad
ni F la a
te ra nd
d n
St ce
at
es
4.33 Total Tax Revenue as Percentage of GDP
Definition
The indicator measures the ratio of total tax revenues to gross do-
mestic product at market prices.
Assessment Grade
Overall A
The level of total tax revenue is expected
to have a direct influence on entrepre-
neurs’ incentive to start and run a business,
because it reflects the total tax burden they
face.
ves changing the tax structure will have a
direct impact on the indicator.
OECD statistics.
Not fully comparable because many coun-
tries with high tax-to-GDP ratios provide
family benefits as cash payments rather
than as tax reductions, increasing the appa-
rent tax burden as measured by the tax-to-
GDP ratio.
countries.
data will be updated annually.
111
Source OECD Revenue Statistics publication 1965-2004
– 2005 edition.
http://puck.sourceoecd.org/vl=1705958/cl=30/
nw=1/rpsv/cgi-bin/fulltextew.pl?prpsv=/ij/oecdthe-
mes/99980169/v2005n6/s1/p1l.idx
Total Tax Revenue as a Percentage of GDP
60
50
40
30
20
10
0
el rg
xe rla ary
F str y
Catraley
Swma m
ni Ze pa y
ed rk
Re tu m
U Ko ico
Sl witd S pan
te al in
Be rwnd
pu and
N Hpubgal
ak I rla es
A Ita d
Firan ia
S te Ja ea
D lg ay
N nla ce
G Pol ada
ew mand
ec P ng ce
n ia
en
Icbou s
Luetheunglic
Cz Ki reend
Re rel nd
A Tur lic
u l
S n
m nd
an
en iu
h or do
ov ze tat
us k
r
r a
d Ga
ex
o
M
e
ni
N
U
112
4.34 Highest Marginal Income Tax
plus Social Contributions
Definition:
The indicator measures the highest rate of taxation in percentage
of the gross wage. The indicator is based on a standard case: single
(without children) with high income.
Assessment Grade
Overall A
The level of personal income taxes are
expected to have a direct influence on the
benefit side of the cost/benefit equation as
entrepreneurs will reap a larger share of the
benefit with lower tax rates.
reducing the rate will have a direct impact
on the indicator.
OECD statistics.
Fully comparable.
countries.
The indicator is available for 2002.
The data will be updated every year.
Source
http://miranda.sourceoecd.org/vl=258119/cl=28/
nw=1/rpsv/cgi-bin/fulltextew.pl?prpsv=/ij/oecdthe-
mes/99980169/v2006n1/s1/p1l.idx
OECD, Taxing Wages: 2003/2004 - 2004 Edition,
p.50, Table II.6
113
114
Sl K
0
10
20
30
40
50
60
70
ov M ore
ak ex a
i
Cz Re Japco
ec pu an
h Ca bli
Re n c
p ad
Tuubl a
Sw rkic
it Sp ey
U zerl ain
N nite Au and
e d s

U w Z St tria
ni a
te eal tes
d Ic an
K el d
in an
g
Fr do d
an m
G Pol ce
er an
m
I ad
Porelany
rtu nd
Lu N Itgal
xe orwaly
A mbo ay
us u
Gtral rg
Fireecia
N H nla e
et un n
he g d
r a
Highest Marginal Income Tax Plus Social Contribution
Swlan ry
B edds
D elg en
en iu
mm
ar
k
4.35 Average Income Tax Plus Social
Contributions
Definition:
The indicator measures the average rate of taxation in percentage
of the gross wage. The indicator is based on a standard case: single
(without children) with high income.
Assessment Grade
Overall A
The level of personal income taxes are
expected to have a direct influence on the
benefit side of the cost/benefit equation as
entrepreneurs will reap a larger share of the
benefit in case lower tax rates.
reducing the rate will have a direct impact
on the indicator.
OECD statistics.
Fully comparable.
countries.
The indicator is is available for 2002.
The data will be updated every year.
Source
http://miranda.sourceoecd.org/vl=3781702/cl=15/
nw=1/rpsv/ij/oecdstats/16081102/v65n1/s1/p1
OECD, Taxing wages 2004-2005, Table II.13 . In-
come tax plus employee contributions, by family-
type and wage level (as % of gross wage earnings),
2004, p.58.
115
116
Sl K
0
10
20
30
40
50
60
ov M or
ak ex ea
R Ja ico
N epu pan
ew b
Sw Z Splic
a
Cz itzeala in
ec erl nd
h Ca an
R n d
U Pepu ada
n b
U itedortu lic

ni
te Stagal
d Ire t
K la es
in n
Ggd d
A re om
us ec
t
Turalie
Fr rkea
Ic ancy
el e
a
Lu P It nd
xe ol aly
m a
N bo nd
N Aorwurg
et u ay
he st
r r
Filan ia
Swnlads
Average Income Tax Plus Social Contribution
H ed nd
G ung en
e a
Berma ry
D lg ny
en iu
mm
ar
k
4.36 SME Tax Rates
Definition:
The indicator measures the corporate SME tax rate.
Assessment Grade
Overall A
The corporate SME tax rate is a direct
measure of the incentives to create compa-
nies as entrepreneurs will reap a larger
share of the benefit in the case of lower tax
rates. The indicator measures the tax level
for SMEs and not for new companies.
Policy focused indicator. Political initiati-
ves will have a direct influence on the tax
rate for SMEs.
Fully comparable.
countries.
The indicator is available for 2000 and
2004. It is unclear if the indicator will be
updated in the future.
Source http://www.oecd.org/dataoecd/26/55/33717506.xls
OECD tax database, table II.2 & II.1
117
118
Ire
0
5
10
15
20
25
30
35
40
45
Klan
Fr ored
H an a
u c
Sl Icnga e
o C ela ry
U vak an nd
ni
te R Pol ada
U d Kepu and
n i b
Luitedngdlic
SwxemStaom

itz bo tes
Cz B erlaurg
ec elg nd
h Au iu
Re s m
t
N Fpub ria
et in li
he la c
Porlannd
N rtugds
o
S rw al
SME Tax Rates
D we ay
en de
m n
A Ja ark
us pa
tr n
Spalia
Tu ai
n
N Merkey
ew G xi
Ze reeco
al ce
a
G I nd
er ta
m ly
an
y
119
4.37 Taxation of Corporate Income Revenue
Definition:
The indicator measures the revenue from corporate income tax as
percentage of GDP on a three year moving average.
Assessment Grade
Overall A
The amount of corporate tax revenue is a
direct measure of one of the incentives to
create high growth companies as entrepre-
neurs will reap a larger share of the benefit
in the case of lower tax rates.
regulation concerning corporate tax rates
will have a direct influence of the size of
the indicator.
Fully comparable.
countries.
Source The data is published by the OECD: Tax Reve-
nue as Percent of GDP-3 year Moving Average, Vol.
2004. Available online: http://juno.sourceoecd.org/
vl=641507/cl=40/nw=1/rpsv/~4018/v55n1/s13/p1.
120
G
0
1
2
3
4
5
6
7
8
er
m
Ic an
U
ni P elan y
te ol d
d an
S
A tated
H us s
Sl S ungtria
ov w Tu ar
ak itz rk y

Re erla ey
U pu nd
ni Sw bli
te
d Fredec
K an n
in c
gd e
o
N De Itam
et nm l
he y
rla ark
Spnds
a
Po Jap in
r a
Catug n
a
G nad l
re a
e
BeKorce
lg ea
i
Taxation of Corporate Income Revenue
Cz
ec FIrel um
a
N h R inl nd
ew ep an
Z ub d
Lu Auealalic
xe str nd
m ali
bo a
ur
g
121
4.38 Actual Cost to Close a Business
Definition:
The indicator measures the actual cost to close a business. The cost
is measured in percent of estate, based on a standard business clo-
sure (Exhibit 1).
Exhibit 1
• is a limited liability company;
• operates in the country’s most populous city;
• is 100 percent domestically-owned, of which 51 percent is
owned by its founder, who is also the chairman of the su-
pervisory board (aside from the founder, there is no other
shareholder who has above 1 percent of shares);
• has downtown real estate as its major asset, on which it
runs a hotel;
• has a professional general manager;
• has average annual revenue of 1,000 times income per ca-
pita over the last three years;
• has 201 employees, and 50 suppliers, each supplier is owed
money for the last delivery;
• borrowed from a domestic bank five years ago (the loan
has 10 years to full repayment) and bought real estate (the
hotel building), using it as a security for the bank loan;
• has observed the payment schedule and all other conditions
of the loan up to now; and
• has a mortgage with the current value of the mortgage
principal being exactly equal to the market value of the
hotel.
It also assumes the following with regard to business closure
122
• In January 2004, the business experiences liquidity pro-
blems. The company’s loss in 2003 brought its net worth
to a negative figure. There is no cash to pay the bank either
through interest or principal in full, due on January 2,
2004. Therefore, the business defaults on its loan. Manage-
ment believes that losses will be incurred in 2004 and 2005
as well.
• The bank holds a floating charge against the hotel in coun-
tries where floating charges are possible. If the law does not
permit a floating charge, some contracts may nevertheless
use some other provision to that effect. This provision
would be specified in the lending contract.
• The business has too many creditors to renegotiate out of
court. Its options are: a procedure aimed at rehabilitation
or any procedure that will reorganise the business to permit
continue operation; a procedure aimed at liquidation; or
selling the hotel, either as a going concern or piecemeal,
either enforced through a court (or a government authority
like a debt collection agency) or through out of court pro-
cedure (receivership).
Assessment Grade
Overall B
The indicator measures the potential costs
of closing a business based on a standard
case with a company with 201 employees.
The indicator can thus only be a proxy
measure for the potential costs for an en-
trepreneurial company as such companies
seldom have more that 200 employees.
Policy implication focused indicator. A
direct measure for policy instrument.
Changing formal regulation will have a
direct influence of the costs of closing a
company.
123
2. Accuracy a) Data Collection Method B
Action-based indicator coming from the
World Bank. The cost figures are averages
of the estimates in a multiple-choice que-
stion. Respondents are required to choose
among the following options: 0-2 percent,
3-5 percent, 6-10 percent, 11-15 per-
cent, 16-20 percent, 21-25 percent, 26-50
percent, and more than 50 percent of the
estate value of the bankrupt business.
The data are derived from survey responses
by local law firms, all members of the In-
ternational Bar Association. Answers were
provided by a senior partner at each firm,
in co-operation with one or two junior as-
sociates.
tries.
Source
http://www.doingbusiness.org/ExploreTopics/Clo-
singBusiness/
World Bank
124
N
et
he
r
0
5
10
15
20
25
N lan
or ds
F i wa
Benla y
l n
Cagiu d
na m
N Ja da
ew K pa
Sw Ze oren
U i a a

ni tze lan
te I rla d
d ce n
K la d
i
U ngd nd
ni Tu o
te r m
d ke
A Sta y
G ustr tes
e
D rm alia
en an
m y
Fr ark
G anc
r e
Ir eec
Po ela e
r n
Cz Swtug d
ec e al
h S den
Actual Cost to Close a Business
Re pa
H pub in
un li
Sl g c
ov Au ary
ak M str
Re ex ia
pu ico
bl
ic
PoItal
la y
nd
125
4.39 Actual Time to Close a Business
Definition:
The indicator measures the time it takes to close a business. Time
is recorded in calendar years. The indicator is based on a standard
business closure (Exhibit 1).
Exhibit 1
• is a limited liability company;
• operates in the country’s most populous city;
• is 100 percent domestically owned, of which 51 percent is
owned by its founder, who is also the chairman of the su-
pervisory board (aside from the founder, there is no other
shareholder who has above 1 percent of shares);
• has downtown real estate as its major asset, on which it
runs a hotel;
• has a professional general manager;
• has average annual revenue of 1,000 times income per ca-
pita over the last three years;
• has 201 employees, and 50 suppliers, each supplier is owed
money for the last delivery;
• borrowed from a domestic bank five years ago (the loan
hotel building), using it as a security for the bank loan;
• has observed the payment schedule and all other conditions
of the loan up to now; and
• has a mortgage with the current value of the mortgage
principal being exactly equal to the market value of the
hotel.
126
It also assumes the following with regard to business closure
• In January 2004, the business experiences liquidity pro-
blems. The company’s loss in 2003 brought its net worth
to a negative figure. There is no cash to pay the bank either
through interest or principal in full, due on January 2,
2004. Therefore, the business defaults on its loan. Manage-
ment believes that losses will be incurred in 2004 and 2005
as well.
• The bank holds a floating charge against the hotel in coun-
tries where floating charges are possible. If the law does not
permit a floating charge, some contracts may nevertheless
use some other provision to that effect. This provision
would be specified in the lending contract.
• The business has too many creditors to renegotiate out of
court. Its options are: a procedure aimed at rehabilitation
or any procedure that will reorganise the business to permit
continue operation; a procedure aimed at liquidation; or
selling the hotel, either as a going concern or piecemeal,
either enforced through a court (or a government authority
like a debt collection agency) or through out of court pro-
cedure (receivership).
Assessment Grade
Overall B
The indicator measures the time of closing
a business based on a standard case with a
company with 201 employees. The indica-
tor can thus only be a proxy measure for
the potential costs for an entrepreneurial
company as entrepreneurial companies sel-
dom have more that 200 employees.
Policy implication focused indicator. A
direct measure for policy instrument.
Changing formal regulation will have a di-
rect influence of the time it takes to close a
company.
127
2. Accuracy a) Data Collection Method B
Action-based indicator, stemming from the
World Bank.
The cost of the bankruptcy proceedings is
calculated based on answers by practicing
insolvency lawyers. If several respondents
report different estimates, the median re-
ported value is used.
The data are derived from survey responses
by local law firms, all members of the In-
ternational Bar Association. Answers were
provided by a senior partner at each firm,
in co-operation with one or two junior as-
sociates.
tries.
Source
World Bank
singBusiness/
128
Ire
l
0
1
2
3
4
5
6
7
8
9
10
J an
Ca apad
Be na n
d
Filgiu a
n
N la m
U A orwnd
ni us a
te t y
d Srali
K p a

in ai
Icgdo n
A ela m
G us nd
er tr
m ia
an
PoItaly
N y
et Kland
he or
r e
Mlan a
e d
Fr xics
a o
N HGrence
ew u ec
Ze nga e
S al ry
U P weand
Actual Time to Close a Business
ni o d
Swted rtugen
Sl S a
ov itze tate l
D
ak e rla s
Cz Re nmand
ec pu rk
h Tubli
Re r c
pu key
bl
ic
129
4.40 Bankruptcy Recovery Rate
Definition:
The recovery rate measures the efficiency of foreclosure or bank-
ruptcy procedures. It estimates how many cents on the dollar
claimants - creditors, tax authorities and employees - recover from
an insolvent firm.
Exhibit 1
The following assumptions underlie the data:
• Assumption underlying the recovery rate:
The calculation takes into account whether the business is
kept as a going concern during the proceedings, as well as
court, attorney and other related costs and the discounted
value due to the time spent closing down. If the business
keeps operating, no value is lost on the initial claim, set at
100 cents on the dollar. If it does not, the initial 100 cents
on the dollar are reduced to 70 cents on the dollar. Then
the official costs of the insolvency procedure are deducted
(1 cent for each percentage of the initial value). Finally, the
value lost due to the time that the money remains tied up
in insolvency procedures is taken into account, including
the loss of value due to depreciation of the hotel furniture.
Consistent with international accounting practice, the
depreciation rate for office furniture is taken to be 20%.
The value of the furniture is assumed to be a quarter of the
total value of assets. The recovery rate is the present va-
lue of the remaining proceeds, based on end-2004 lending
rates from the International Monetary Fund’s International
Financial Statistics, supplemented with data from central
banks.
• Assumptions underlying the Business. The business:
o Is a limited liability company.
o Operates in the country’s most populous city.
130
o Is 100% domestically owned, with the founder, who is
also the chairman of the supervisory board, owning 51%
(besides the founder, no other shareholder holds more than
1% of shares).
o Has downtown real estate, where it runs a hotel, as its
major asset.
o Has a professional general manager.
o Has had average annual revenue of 1,000 times income
per capita over the past 3 years.
o Has 201 employees and 50 suppliers, each of whom is
owed money for the last delivery.
o Borrowed from a domestic bank 5 years ago (the loan
hotel building), using it as security for the bank loan.
o Has observed the payment schedule and all other conditi-
ons of the loan up to now.
o Has a mortgage, with the value of the mortgage principal
being exactly equal to the market value of the hotel.
Assessment Grade
Overall A
The indicator is a direct measure of in-
vestors’ potential loss if a business closes.
The recovery rate directly influences inve-
stors’ incentives to invest in new business
operations.
Policy focused indicator. Changing bank-
ruptcy legislation will have a direct impact
on the recovery rate.
131
tries.
Source
The World Bank. Doing Business, Explore topic:
Closing Business
Available online:
singBusiness/
Bankruptcy - Recovery Rate
100
90
80
70
60
50
40
30
20
10
0
b y
itz re aly
ak H ub ey
Ireandm
m y
N Po ark
he gi m
Aala o
I tr n
N na d
n
Canland
te e al
A Spates
U S rt ria
K o d
N Bngd ea
Ja ay
D m e
wa
Ze exind
er ece
te celalia
St n
Fi lans
Re unglic
Po ustnd
G raand
Sw G Itlic
pu ar
en an
er nc
or d
pa
d K an
d de
ni w ug
rl u
et el o
us a
ov ep rk
i r
ew M la
l
Sl h R Tu
F
ec
ni
Cz
132
4.41 Number of Procedures for Starting a Business
Definition:
The Number of procedures indicator records all generic procedures
that are officially required for an entrepreneur to start an industrial
or commercial business. These include obtaining all necessary licen-
ses and permits, and completing any required notifications, verifi-
cations or inscriptions with relevant authorities for a new company
(Exhibit 1).
Exhibit 1
The indicator assumes the following with regard to procedures:
• A procedure is any interaction between the company fou-
nder and external parties (government agencies, lawyers,
auditors, notaries, etc.). Interactions between company
founders or company officers and employees are not consi-
dered separate procedures.
• The founders complete all procedures themselves, without
middlemen, facilitators, accountants, lawyers, etc., unless
law mandates the use of third parties.
• Procedures that are not required by law for starting a busi-
ness are ignored. For example, obtaining exclusive rights
over the company name is not counted in a country where
businesses may use a number as identification.
• Shortcuts are counted only if they fulfil three criteria: they
are legal and available to the general public, and are used
because avoiding them causes substantial delays.
• Only procedures required of all businesses are covered.
Industry-specific procedures are excluded. For example,
procedures to comply with environmental regulations are
included only when they apply to all businesses.
• Procedures that the company undergoes to connect to
electricity, water, gas, and waste-disposal services are not
included, unless they entail inspections required prior to
starting operations.
133
The indicator assumes that the new business:
• is a limited liability company. If there is more than one
type of limited liability company in the country, the most
popular limited liability form among domestic firms is
chosen. Information on the most popular form is obtained
from incorporation lawyers or the statistical office,
• operates in the country’s most populous city,
• is 100 percent domestically owned and has five owners,
none of whom is a legal entity,
• has a start-up capital of 10 times income per capita at the
end of 2003, paid in cash,
• performs general industrial and/or commercial activities,
such as producing or selling products or services to the
public. It does not perform activities related to foreign
trade and does not handle products subject to a special tax
regime, for example liquor or tobacco. The business does
not use heavily polluting production processes,
• leases the commercial plant and offices and is not a pro-
prietor of real estate,
• does not qualify for investment incentives or any special
benefits,
• has up to 50 employees one month after the commence-
ment of operations, all of them nationals,
• has a turnover at least 100 times income per capita, and
• has a company deed 10 pages long
Assessment Grade
Overall A
administrative burdens resulting from the
process of becoming an entrepreneur.
134
regulation will have a direct impact on
the number of procedures for starting a
company. Policies easing the administrative
burdens include initiatives relaxing the
legal requirements needed to start and run
a company including the legal regulations
related to hiring employees, meeting env-
ironmental standards, exporting, making
annual accounts and other types of com-
pulsory duties.
The indicator is fact-based. In every coun-
try the same methodology is used.
Fully comparable.
tries.
Source
World Bank
http://www.doingbusiness.org/ExploreTopics/Star-
tingBusiness/
135
136
A
N us
0
2
4
6
8
10
12
14
16
ew C tral
Zeana ia
d
Fialan a
n
S la d
D we nd
e d
Benmaen
lg rk
U NIrelium
ni o an
te rw d

d a
S
I ta y
U S Hcel tes
ni w u an
te itz ng d
d e a
K rla ry
i
N Fngd nd
et r om
he an
rl c
Tuande
M rk s
e e
Sl Ax y
G us ico
ov er tr
ak ma ia
Cz Re It ny
ec pu aly
h Sbli
Re p c
p ai
Starting a Business Number of Procedures
Poubl n
la ic
Po Japnd
rt an
Kuga
G ore l
re a
ec
e
4.42 Number of Days for Starting a Business
Definition:
This indicator measures the average time spent during each enter-
prise start-up procedure. Time is recorded in calendar days based on
standard assumptions about time; the company and procedure (see
description of number of procedures for starting a business indica-
tor for at description of assumptions, etc.).
Assessment Grade
Overall A
regulation will have a direct impact on the
amount of time needed to fulfill each pro-
cedure in the business start-up stage.
tries.
Source World Bank
tingBusiness/
137
138
A
us
tr
0
10
20
30
40
50
60
70
C
U D analia
ni en a
te m da
d a
S r
Ic tat k
e e
F la s
N Trannd
N eth u ce
ew e rk
r
Ze lan ey
al ds

a
N Itna d
U o l
ni Fi rwa y
te S nla y
d w
SwKi ed nd
itzngd en
er om
l
Sl K and
ov I or
ak Gerela ea
Re rm nd
p an
Aubl y
us ic
Ja tria
P p
Beola an
Starting a Business Number of Days
Cz lg nd
ec HGreium
h un ec
Re g e
pu ary
b
Po Sp lic
r a
M tugin
ex al
ic
o
4.43 Costs Required to Start a Business
Definition:
The indicator measures the official cost of each procedure in per-
centage of GNI per capita based on formal legislation and standard
assumptions about business and procedure (see description of Num-
ber of procedures for starting a business indicator for at description
of assumptions, etc.).
The indicator measures only the politically influenced costs of star-

ting a business.
Assessment Grade
Overall A
regulation will have a direct impact on the
costs to fulfill each procedure for starting a
company.
tries.
Source World Bank
tingBusiness/
139
140
N D
e
U w Zenm
0
5
10
15
20
25
30
n
U itedeal ark
ni a
te S Stand
d w t
K ed es
in e
Cagdo n
m
Frnad
F a a
A inlnce
us a
N tra nd

Sl o li
ov Ic rwaa
ak Ge ela y
Re rm nd
p an
Iruebli y
Cz Sw A la c
ec it us nd
h ze tr
Re rla ia
pu nd
b
N B Japlic
et el a
he gi n
u
Porlan m
rtu ds
Kg
M oreal
ex a
i
I co
Starting a Business Cost (% of GNI per capita)
Sptaly
P a
H ola in
u n
Gnga d
r r
Tueec y
rk e
ey
141
4.44 Regulatory and Administrative Opacity In-
dex
Definition:
The regulatory and administrative opacity index consists of two com-
ponents: information on licenses and permits system, and commu-
nication and simplification of rules and procedures in at least some
markets in 24 manufacturing and service sectors.
Information on Licenses and permits systems reflects the use of ‘one-

stop shops’ and ‘silence is consent’ rules for getting information on
and issuing licenses and permits. This component is based on fact-
based questions (Exhibit 1).
Exhibit 1 Low-level Indicator: Licenses and Permits Sy-
stem
Licenses and Permits System Question Coding of

Weights answers
(c k) Yes No
The ’silence is consent’ rule (i.e. that
licenses are issued automatically if the
competent licensing office has not acted 1/3 0 6
by the end of the statutory response pe-
riod) is used.
There are single contact points (one-

stop-shops) for getting information on 1/3 0 6
notifications and licenses.
There are single contact points (one-stop

shops) for issuing or accepting on notifi- 1/3 0 6
cations and licenses.
142
Communication and simplification of rules and procedures reflects
a government’s communication strategy and efforts to reduce and
simplify the administrative burden of interacting with government.
Exhibit 2. Low-level Indicators: Communication and
Simplification of Rules and Procedures
Question Coding of answers

Respondents are asked if:
Weights
(c k) Yes No
Communication 1/2
There are systematic pro-
cedures for making regu-
2/12 0 6
lations known and acces-
sible to affected parties.
There is a general policy

requiring plain language 1/3 0 6
drafting of regulation.
There are enquiry points

where affected or intere-
sted foreign parties can
3/12 0 6
get information on the
operation and enforce-
ment of regulations.
Affected parties have the Yes or

In some
right to appeal against ad- in all No
4/12 cases
verse enforcement decisi- cases 6
3
ons in individual cases. 0
143
Government policy impo-
Go-
ses specific requirements
vern- For some
in relation to transpa- No
2/12 ment sectors
rency/freedom of infor- 6
Wide 3
mation throughout public
0
administration.
Simplification ½*W i / MaxW 98

National government (all
ministries and agencies)
keeps a complete count 1/3 0 6
of the number of permits
and licenses required.
There is an explicit pro-

gramme to reduce the
administrative burdens 1/3 0 6
imasked by government
on enterprises and/or
citizens.
There is a programme
underway to review and
reduce the number of
1/3 0 6
licenses and permits
required by the national
government.
Licenses and permits system and communication is allocated a weight

of 0,55 in the regulatory and administrative opacity, which is in-
dexed against 0,45 for the indicator of simplification of rules and
procedures (OECD, ECO/WPK(2005)6, p. 8).
Assessment Grade
Overall A
144
The lack of opacity in the administrative
legislation concerning starting and ma-
naging a business is a direct measure of
the administrative burdens resulting from
starting of a business.
Policy focused indicator. A direct measure
for a policy instrument. Changing formal
regulation concerning licenses and permits
system, and communication and simpli-
fication of rules and procedures will have
direct influence of the size of the indicator.
Fact-based indicator. It does not focus on
informal regulatory practices or enforce-
ment practices.
The indicator is available for years 1998
and 2003.
The data will not be updated annually;
however some of the data may be updated
at a later stage.
Source
The data is published in the OECD re-
port, ECO/WKP(1999)18. Available on-
nsf/c16431e1b3f24c0ac12569fa005d1d99/
5ef586bbe13dd52ac125684a003a8da0/
$FILE/00075836.PDF.
145
146
A
0
0,5
1
1,5
2
2,5
3
3,5
4
H ust
un ri
ga a
M Itary
ex ly
Sl S ic
ov Ca pa o
ak G na in
Lu Re reeda
xe pu ce
m bl
Swbouic

A e rg
us de
Fi tral n
nl ia
Jaand
U K pa
ni No oren
te P rw a
d or a
K tu y
U ing ga
ni F do l
te ra m
d n
St ce
D Polates
en an
I ma d
Berela rk
CzNe Ge lgi nd
ec w Z rm um
Regulatory and Administrative Opacity
h e an
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ey
4.45 Registering Property
Definition
procedures legally required to register property, 2) Time spent in
completing the procedures and 3) Registering property costs (Exhi-
bit 1).

tor.
Exhibit 1
The data contains the full sequence of procedures necessary when
a business purchases land and a building to transfer the property
title from the seller to the buyer so that the buyer can use the pro-
perty for expanding its business, as collateral in taking new loans
or, if necessary, to sell to another business. Every required proce-
dure is included, whether it is the responsibility of the seller or
the buyer or must be completed by a third party on their behalf.
• The following assumptions and definitions underlie the
data:
o Is located in a periurban area of the country’s most popu-
lous city.
o Is 100% domestically and privately owned.
o Has 50 employees, all of whom are nationals.
o Performs general commercial activities.
• Assumptions about the property:

o Has a value of 50 times income per capita.
o Is fully owned by another domestic limited liability
company.
o Has no mortgages attached and has been under the same
ownership for the past 10 years.
o Is adequately measured and filed in the cadastre, registe-
red in the land registry and free of title disputes.
147
o Is located in a periurban commercial zone, and no rezo-
ning is required.
o Consists of land and a building. The land area is 6,000
square feet (557.4 square meters). A 2-story warehouse of
10,000 square feet (929 square meters) is located on the
land. The warehouse is 10 years old, is in good condition
and complies with all safety standards, building codes and
other legal requirements. The property of land and buil-
ding will be transferred in its entirety.
o Will not be subject to renovations or additional building
following the purchase.
o Has no trees, natural water sources, natural reserves or
historical monuments of any kind.
o Will not be used for special purposes, and no special
permits, such as for residential use, industrial plants, waste
storage or certain types of agricultural activities, are re-
quired.
o Has no occupants (legal or illegal), and no other party
holds a legal interest in it
• Definition of procedures:
A procedure is defined as any interaction of the buyer or
the seller, their agents (if an agent is legally or in practice
required) or the property with external parties, including
government agencies, inspectors, notaries and lawyers. Int-
eractions between company officers and employees are not
considered. All procedures that are legally or in practice
required for registering property are recorded, even if they
may be avoided in exceptional cases. It is assumed that the
buyer follows the fastest legal option available and used by
the general public. Although the business may use lawyers
or other professionals where necessary in the registration
process, it is assumed that it does not employ an outside
facilitator in the registration process unless legally or in
practice required to do so.
148
• Definition of time:
Time is recorded in calendar days. The measure captures
the median duration that property lawyers or registry of-
ficials indicate is necessary to complete a procedure. It is
assumed that the minimum time required for each proce-
dure is 1 day. Although procedures may take place simul-
taneously, they cannot start on the same day. It is assumed
that the buyer does not waste time and commits to com-
pleting each remaining procedure without delay. If a pro-
cedure can be accelerated for an additional cost, the fastest
legal procedure available and used by the general public is
chosen. If procedures can be undertaken simultaneously, it
is assumed that they are. It is assumed that the parties in-
volved are aware of all regulations and their sequence from
the beginning. Time spent on gathering information is not
considered.
• Definition of Cost:
Cost is recorded as a percentage of the property value,
assumed to be equivalent to 50 times income per capita.
Only official costs required by law are recorded, including
fees, transfer taxes, stamp duties and any other payment to
the property registry, notaries, public agencies or lawyers.
Other taxes, such as capital gains tax or value added tax,
are excluded from the cost measure. If cost estimates differ
among sources, the median reported value is used.
Assessment Grade
Overall A
The indicator, Registering Property, is a
direct measure of administrative burdens
which can arise during a business opera-
tion.
Policy focused indicator. Changing for-
mal regulations will have a direct impact
on administrative burdens arising from an
entrepreneur registering property.
149
tries.
Source
The World Bank. Doing Business, Explore
topic: Registering Property
Available online:
http://www.doingbusiness.org/ExploreTo-
pics/RegisteringProperty/
Registering Property
80
70
60
50
40
30
20
10
0
G lan y
tr ly
Re o y
m
m rk
Jaany
he la m
Calan d
Sppan
A I ain
Porelaico
H rtu nd
Po gar l
te it el es
K rl d
G nmtria
U k R weway
Mubl a
lg ce
DAusada
F ee d
Be rance
ec Tu alia
te u en
n ds
I ex ic
a S r d
N Fngd nd
U S Stblic
un ga
h Krke
p re
r n
d ze an
ov Noalan
us ta
iu
et in o
er a
ni w Ic at
ni ep d
i a
r
Ze
e
d
ew
N
Cz
Sl
150
4.46 Procedures, Time and Costs to Build a Ware-
house
Definition:
The indicator is an average of three measurements:1) Average time
spent during each procedure, 2) Official cost of each procedure and
3) Number of procedures to build a warehouse (Exhibit 1).

tor.
Exhibit 1
The following assumptions and definitions underlie the data:
• Assumptions about the construction company:
o Is 100% domestically owned and has 5 owners, none of
whom is a legal entity.
o Carries out construction projects, such as building a
warehouse.
o Has up to 20 builders and other employees, all of them
nationals with the technical expertise and professional
experience necessary to develop architectural and technical
plans for building a warehouse.
• Assumptions about the warehouse project. The Warehouse:
o Has 2 stories and approximately 14,000 square feet
(1,300.6 square meters). Each floor is 9 feet, 10 inches (3
meters) high.
o Is located in a periurban area of the country’s most popu-
lous city.
o Is located on a land plot of 10,000 square feet (929
square meters), which is 100% owned by BuildCo and is
accurately registered in the cadastre and land registry.
o Is a new construction (there was no previous construc-
tion on the land).
o Has a complete architectural and technical plan.
151
o Will be connected to electricity, water, sewerage and one
land phone line. The connection to each utility network
will be 32 feet, 10 inches (10 meters) long.
o Will require a 10-ampere power connection and 140 kilo-
watts of electricity.
o Will be used for storing books.
• Definition of procedures:
A procedure is any interaction of the company’s employees
or managers with external parties, including government
agencies, public inspectors, notaries, the land registry and
cadastre and technical experts apart from architects and
engineers. Interactions between company employees, such
as development of the warehouse plans and inspections
conducted by employees, are not counted as procedures.
Procedures that the company undergoes to connect to elec-
tricity, water, sewerage and phone services are included. All
procedures that are legally or in practice required for buil-
ding a warehouse are counted, even if they may be avoided
in exceptional cases.
Time is recorded in calendar days. The measure captures
the median duration that local experts indicate is necessary
to complete a procedure. It is assumed that the minimum
time required for each procedure is 1 day. If a procedure
can be accelerated legally for an additional cost, the fastest
procedure is chosen. It is assumed that BuildCo does not
waste time and commits to completing each remaining
procedure without delay. The time that BuildCo spends on
gathering information is ignored. It is assumed that Build-
Co is aware of all building requirements and their sequence
from the beginning.
152
• Definition of cost:
Cost is recorded as a percentage of the country’s income
per capita. Only official costs are recorded. The building
code, specific regulations and fee schedules and informati-
on from local experts are used as sources for costs. If seve-
ral local partners provide different estimates, the median
reported value is used. All the fees associated with complet-
ing the procedures to legally build a warehouse, including
utility hook-up, are included.
Assessment Grade
Overall A
Procedures, time and cost spent when
building a warehouse is a direct measure
of administrative burdens which can arise
during a business operation.
regulations will have a direct impact on ad-
ministrative burdens arising when building
a warehouse.
tries.
153
Dealing with licenses.
The three inidicators used to construct the indica-
tor are available online:
http://www.doingbusiness.org/ExploreTopics/Dea-
lingWithLicenses/
Procedures, Time and Costs to Build a Warehouse
100
90
80
70
60
50
40
30
20
10
0
rk y
Re tu ly
ey
ak Gust m
U N Ja ark
U S Fraany
BeKorom
te rw an
Irtral d
he x n
rla ico
G n d
Poubl l
F e es
K rla d
Re re ria
SwSta ay
ov Algiu a
te itz el ce
m a
Tu gard
pu ece
Caelania
A inlden
ec P Inds
H la ic
md
gd d
N MSplic
p ga
e
us an
er ad
et e ai
d e an
un n
en an
in n
h or ta
t
ni w Ic n
ni o p
b
D eal
d
Z
ew
N
Cz
Sl
154
4.47 Enforcing Contracts
Definition:
The indicator is an average of three measurements: 1) Enforcing
contracts number of procedures, 2) Enforcing contracts – time and
3) Enforcing contracts cost (% of debts) (Exhibit 1).
tor.
Exhibit 1
The following assumptions are made about the case:
• The value of the claim equals 200 percent of the country’s
income per capita.
• The plaintiff has fully complied with the contract (that is,
the plaintiff is 100% right).
• The case represents a lawful transaction between businesses
located in the country’s most populous city.
• The plaintiff files a lawsuit to enforce the contract.
• A court in the most populous city decides the dispute.
• The defendant attempts to delay service of process but it is
finally accomplished.
• The defendant opposes the complaint (default judgment
is not an option) on the grounds that the delivered goods
were not of adequate quality.
• The plaintiff introduces documentary evidence and calls
one witness. The defendant calls one witness. Neither party
presents objections.
• The judgment is in favor of the plaintiff and the defendant
does not appeal the judgment.
• The plaintiff takes all required steps for prompt enforce-
ment of the judgment. The debt is successfully collected
through sale of the defendant’s movable assets (such as a
vehicle) at a public auction.
155
• Definition of Procedures:
A procedure is defined as any interaction mandated by law
or court regulation between the parties, or between them
and the judge (or administrator) or court officer. This
includes steps to file the case, steps for trial and judgment
and steps necessary to enforce the judgment.
Time is recorded in calendar days, counted from the mo-
ment the plaintiff files the lawsuit in court until payment.
This includes both the days when actions take place and
the waiting periods between actions. The respondents
make separate estimates of the average duration of diffe-
rent stages of dispute resolution: the completion of service
of process (time to file the case), the issuance of judgment
(time for the trial) and the moment of payment (time for
enforcement).
• Definition of cost:
Cost is recorded as a percentage of the claim, assumed to
be equivalent to 200% of income per capita. Only official
costs required by law are recorded, including court costs
and average attorney fees where the use of attorneys is
mandatory or common.
Assessment Grade
Overall A
Enforcement of contracts is a direct mea-
sure of administrative burdens which can
arise during a business operation.
regulations will have a direct impact on
administrative burdens arising when enfor-
cing a contract.
156
tries.
Source
Enforcing Contracts
Available online:
http://www.doingbusiness.org/ExploreTopics/En-
forcingContracts/
Enforcing Contracts
80
70
60
50
40
30
20
10
0
Cz N A ree ry
ex ly
G ga y
g m
wk
Re ra ny
H urkom
U it str an
K g d
la n
o
ak Fma d
Po pai l
Sw na es
Re la ia
SwAu Japay
te B nla a
Popub ce
e da
M Ita d
ec eth us ce
te rl ia
K den
pu nds
ov er lanic
Nnmand
Ca tat d
rtulic
S ga
un e
or r
ni Fi ore
d el n
ic
n
d an
in iu
h er tr
ni ze al
G re l
n
b
e a
Td
D eal
I
Z
ew
N
Sl
157
4.48 Time it takes to Prepare, File and Pay the
Corporate Income Tax, the VAT and Social Secu-
rity Contributions
Definition:
Time it takes to prepare, file and pay (or withhold) the corporate
income tax, the value added tax and social security contributions
(in hours per year).
Exhibit 1
The following assumptions and definitions underlie the data:
• Assumptions about the business. The business:
o Is a limited liability, taxable company. If there is more
than one type of limited liability company in the country,
the limited liability form most popular among domestic
firms is chosen. Incorporation lawyers or the statistical of-
fice report the most popular form.
o Started operations on January 1, 2004. At that time the
company purchased all the assets shown in its balance sheet
and hired all its workers.
o Is 100% domestically owned and has 5 owners, all of
whom are natural persons.
o Has a start-up capital of 102 times income per capita at
the end of 2004.
o Performs general industrial or commercial activities. Spe-
cifically, it produces ceramic flowerpots and sells them at
retail. It does not participate in foreign trade (no import or
export) and does not handle products subject to a special
tax regime, for example, liquor or tobacco.
o Owns 2 plots of land, 1 building, machinery, office
equipment, computers and 1 truck and leases another
truck.
o Does not qualify for investment incentives or any special
benefits apart from those related to the age or size of the
company.
158
o Has 60 employees - 4 managers, 8 assistants and 48
workers. All are nationals, and 1 of the managers is also an
owner.
o Has a turnover of 1,050 times income per capita.
o Makes a loss in the first year of operation.
o Has the same gross margin (pre-tax) across all economies.
o Distributes 50% of its profits as dividends to the owners
at the end of the second year.
o Sells one of its plots of land at a profit during the second
year.
o Is subject to a series of detailed assumptions on expenses
and transactions to further standardize the case.
Time is recorded in hours per year. The indicator measures
the time to prepare, file and pay (or withhold) three major
types of taxes: the corporate income tax, value added or
sales tax and labor taxes, including payroll taxes and social
security contributions. Preparation time includes the time
to collect all information necessary to compute the tax
payable. If separate accounting books must be kept for tax
purposes—or separate calculations must be made for tax
purposes—the time associated with these processes is inclu-
ded. Filing time includes the time to complete all necessary
tax forms and make all necessary calculations. Payment
time is the hours needed to make the payment online or
at the tax office. When taxes are paid in person, the time
includes delays while waiting.
Assessment Grade
Overall A
The time spent preparing, filing and pay-
ing taxes is a direct measure of administra-
tive burdens which arise during a business
operation.
regulations will have a direct impact on
administrative burdens when paying taxes.
159
tries.
Source
Paying Taxes
Available online:
http://www.doingbusiness.org/ExploreTopics/Pay-
ingTaxes/
Time it Takes to Prepare, File and Pay the Corporate Income Tax, the
Value Added Tax and Social Security Contributions
1000
900
800
700
600
500
400
300
200
100
0
Sl ted ap y
ec th ex ly
us y
Po ium
Catral y
lg rk
Ze rlan n
ak PoSta n
h erl ico
G orwnd
bl l
Re tu es
re d
K tria
A rm ay
U ung ea
N ela e
D ed a
G land
Tu ece
Sw nada
Be ma n
pu ds
ic
d
a d
Cz Ne M Ita c
pu ga
ni J ar
A rke
us an
Ir anc
ew ze ai
a
i
Ic lan
en e
Frlan
i
t
bl
H or
Re an
N wit Sp
r
e
S
ov
160
4.49 Difficulty of Hiring
Definition:
The index measures whether laws or other regulations have impli-
cations for the difficulties of hiring a standard worker in a standard
company (Exhibit 1).
Based on fact-based (yes/no) questions but remodelled into a 0-100

index.
Exhibit 1
The index measures:
• whether term contracts can only be used for temporary
tasks. (A country is assigned a score of 1 if term contracts can
only be used for temporary tasks and a score of 0 if term con-
tracts can be used for any task);
• the maximum duration of term contracts (A score of 1 is as-
signed if the duration of term contracts is 3 years or less; 0.5 if
the duration is between 3 and 5 years; and 0 if term contracts
can last more than 5 years);
• the ratio of the mandated minimum wage (or apprentice
wage, if available) to the average value-added per working
population. (A score of 1 is assigned if the ratio of minimum
wage to average value added per worker ratio is higher than
0.75; 0.67 for ratios between 0.50 and 0.75; 0.33 for ratios
between 0.25 and 0.50; and a score of 0 if the ratio is below
0.25).
The score is based on regulatory implications on a standard work-

er and company. Regulative implications may vary among workers
and companies. The indicator is based on several assumptions
about worker and company:
The worker
• is a non-executive, full-time male employee who has wor-
ked in the same company for 20 years;
• earns a salary plus benefits equal to the country’s average
wage during the entire period of his employment;
161
• has a non working wife and two children and the family
resides in the country’s most populous city;
• is a lawful citizen who belongs to the same race and reli-
gion as the majority of the country’s population;
• is not a member of the labor union, unless membership is
mandatory.
The business:
• is a limited liability company that operates in the country’s
most populous city;
• is a 100 percent domestically owned that operates in the
manufacturing sector;witness. Neither party presents objec-
tions.
• has 201 employees, and abides by every law and regula-
tion, but does not grant workers more benefits than legally
mandated.
Assessment Grade
Overall A
The indicator is a direct measure of some
of the potential administrative burdens
resulting from one becoming a high growth
entrepreneur, namely the burdens con-
nected to hiring employees.
162
Changing formal labor market regulation
will have a direct impact of the size of the
indicator.
Note that in some countries some of the

regulations are based on agreements bet-
ween the parties on the labour market,
who have no tradition for political interfe-
rence.
The indicator has been remodelled into

index 0 – 100, which makes the indicator
an indirect measure (it is a priori unclear
what is needed to change a country from
70 to 35).
The indicator is fact-based. It measures
formal regulation for an standard company
and worker. In every country the same
methodology is used.
The score is based on regulatory implica-

tions on a standard worker and company.
Regulative implications may vary among
workers and companies. The indicator will
not catch specific difficulties of hiring dif-
ferences related to different sectors or in
special cases.
Comparable to some extent. To be fully
comparable the assumptions about worker
and company has to encompass the majori-
ty of workers and companies in the coun-
tries compared. The typical size of compa-
nies varies substantially between compared
countries.
163
tries.
Data available for 2004 and will be up-
dated annually.
Source http://www.doingbusiness.org/ExploreTopics/Hi-
ringFiringWorkers/Default.aspx?direction=asc&so
rt=1
World Bank
Difficulty of Hiring
90
80
70
60
50
40
30
20
10
0
Sl ite eal ary
Fr pai y
Itaey
N HCanium
lg ark
rk y
pu om
et re an
el o
Tu and
G ancn
Cz S rlannd
Mubl al
D us tes
Benm ria
N ornd
F rw a
G inlaay
re e
U w Z ungada
Rengd nd
e
te rl ia
Re tu n
ec P we ds
Icexicic
ak Ki ola d
A ta d
N I Japlic
S l
o e
er n
ec
h or de
ov d P an
d an
p g
ni ze al
he la
Ka
e t
m
U wit ustr
S
S A
e
n
Note: Lower values are assumed to be more conducive for entrepreneurship performance than higher
164
4.50 Difficulty of Firing
Definition:
The index measures whether laws or other regulations have impli-
cations for the difficulties of firing a standard worker in a standard
company (Exhibit 1).
Based on fact based (yes/no) questions but remodelled to 0-100 index.
Exhibit 1
Exhibit 1
The index measures:
(i) whether redundancy is not grounds for dismissal;
(ii) whether the employer needs to notify the labor union or
the labor ministry for firing one redundant worker;
(iii) whether the employer needs to notify the labor union or
the labor ministry for group dismissals;
(iv) whether the employer needs approval from the labor union
or the labor ministry for firing one redundant worker;
(v) whether the employer needs approval from the labor union
or the labor ministry for group dismissals;
(vi) whether the law mandates training or replacement prior to
dismissal;
(vii) whether priority rules apply for dismissals; and
(viii) whether priority rules apply for re-employment
If the answer to any question is yes, a score of 1 is assigned;

otherwise a score of 0 is given. Questions (i) and (iv) have double-
weight in the construction of the final index.
The score is based on regulatory implications on a standard work-

er and company.
165
Assessment Grade
Overall A
of the potential administrative burdens re-
sulting from being an entrepreneur, namely
the burdens connected to firing employees.
Changing formal labor market regulation
will have a direct impact of the size of the
indicator.
Note that in some countries some of the

regulations are based on agreements bet-
ween the parties on the labour market,
with no tradition for political interference.
The Indicator has been remodeled into

index 0-100, which makes the indicator an
indirect measure (it is a priori unclear what
is needed to change a country from 70 to
35).
The indicator is fact-based. Measures for-
mal regulation for an ideal-type company
and worker. The same methodology is used
in every country.
The score is based on regulatory implica-

tions on a standard worker and company.
Regulative implications may vary among
workers and companies. The indicator will
not catch hiring differences in specific sec-
tors or in special cases.
166
Comparable to some extent. In order to
be fully comparable, the assumptions
about the worker and company have to
encompass the majority of workers and
companies in the countries compared. The
typical size of companies varies substanti-
ally between compared countries.
tries.
Source
http://www.doingbusiness.org/ExploreTopics/Hi-
rt=1
World Bank
Difficulty of Firing
70
60
50
40
30
20
10
0
Irenad y
K taly
he pa y
U S Z nmum
te itz la k
Swreec y
Re ta m
A cel an
G Fra nd
Porlan in
o
I d
ex al
Hpub es
nl ia
Be tra nd
Re orw ea
pu ay
G ane
la a
Fi str d
e
N D lg lia
N urk n
M tug s
un lic
CzUn Ki erland
ec itedngd nd
A lanc
r
et S e
ni w ea ar
er nc
ic
n
r d
T ede
Po bli
Ca ga
h S o
t
ak N or
I ap
a
us a
ew e i
m
u
J
ov
Sl
167
4.51 The Rigidity of Hours
Definition:
The indicator measures the rigidity of working overtime.
The indicator is an index with five components: (i) whether night

work is restricted; (ii) whether weekend work is allowed; (iii) whether
the work week consists of five and a half days or more; (iv) whether
the workday can extend to 12 hours or more (including overtime);
and (v) whether the annual paid vacation days are 21 days or less. If
the answer is no on any of these questions, the country is assigned a
score of 1, otherwise a score of 0 is assigned. The questions are based
on standard assumptions on worker and company (See the indicator
above “Difficulty of Hiring” for a description of the assumptions).
Assessment Grade
Overall A
of the potential administrative burdens
resulting from becoming an entrepreneur,
namely the rigidity connected to having
employees working more that standard.
Changing formal regulation will have a
direct impact on the size of the indica-
tor. Note that in some countries some of
the regulations are based on agreements
between the parties on the labour market
with no tradition for political interference
Indicator has been remodelled into index 0
– 100, which makes the indicator an in-
direct measure (it is a priori unclear what
is needed to change a country from 70 to
35).
168
The indicator is fact-based. Measures for-
mal regulation for an ideal-type company
and worker. In every country the same
methodology is used. The score is based
on regulatory implications on a standard
worker and company. Regulative implica-
tions may vary among workers and compa-
nies. The indicator will not catch difficulty
of hiring differences in specific sectors or
in special cases.
Comparable to some extent. To be fully
comparable the assumptions about worker
and company have to encompass the majo-
rity of workers and companies in the coun-
tries compared. The typical size of compa-
nies varies substantially between compared
countries.
tries.
Source http://www.doingbusiness.org/ExploreTopics/Hi-
rt=1
Rigidity of Hours
90
80
70
60
50
40
30
20
10
0
rtu ary
us ly
ey
m
la rk
H reeny
Bestraom
ak itz rw n
N MKornd
Poando
rk n
Sl S N Ja nd
Tupai l
K u es
G Fra tria
A Ita d
Re erl ay
he xi a
G ae
U ec itedeal da
Ic eded
Po ng ce
D lg lia
el n
Sw la s
Aingdblic
te R ta d
Fiubl d
nl ic
S ga
et e e
er nc
ov w o pa
rl c
an
n
ni h S an
p an
en iu
Irema
d ep t
CzUn Z ana
m
u
ew C
u
N
169
4.52 Number of Administrative Procedures when
Recruiting First Employee
Definition:
The indicator measures all obligatory contacts that employers have to
make with administrative offices in the recruitment process of the first
employee.
Procedures relevant to specific groups of enterprises are omitted.
Assessment Grade
Overall A
The indicator is a direct measure for the
administrative burdens resulting from hi-
ring of the first employee.
Policy focused indicator. Changing the
legislation for hiring the first employee
indicator.
Fact-based indicator. The same methodo-
logy is used In every country.
Fully comparable although procedures re-
levant to specific groups of enterprises are
omitted.
EU countries, but not for the non-EU
OECD countries.
170
Source
European Commission (2002): “Hiring Employees:
Administrative Burdens on SMEs in Europe”, foot-
note 23. Available online:
Number of Administrative Procedures when Recruiting First Employee

8
7
6
5
4
3
2
1
0
S p rg
Sw ort y
he m
y
Lu ra rk
Fi om
er d
N elg n
ni N nd
er l
G ria
Ire nd
K way
m e
Ic ce
A en
s
en d
itz uga
P l
an
xe nc
G lan
B ai
nd
D lan
u
Ita
et iu
a
e
la
a
ed
bo
m
gd
us
re
m
el
rla
te or
n
Sw
F
in
d
U
171
4.53 Number of Administrative Procedures when
Recruiting Additionsl Employees
Definition:
The indicator measures all obligatory contacts that employers have to
make with administrative offices in the recruitment process.
Procedures relevant to specific groups of enterprises are omitted.
Assessment Grade
Overall A
The indicator is a direct measure for the
administrative burdens resulting from hi-
ring of additional employees.
Policy focused indicator. Changing the
legislation for hiring additional employees
indicator.
Fact-based indicator. The same methodo-
logy is used In every country.
Fully comparable although procedures re-
levant to specific groups of enterprises are
omitted.
EU countries, but not for the non-EU
OECD countries..
172
Source
European Commission (2002): “Hiring Employees:
Administrative Burdens on SMEs in Europe”, foot-
note 23. Available online:
Number of Administrative Procedures when Recruiting Additional

Employees
4,5
4
3,5
3
2,5
2
1,5
1
0,5
0
Sp g
m y
m
G ark
Ic ny
Be dom
er d
N Fra n
Po and
Sw gal
en a
Sw or d
ni itz ay
he ce
Ire ce
Fi en
s
K nd
ur
xe Ital
D stri
G an
ai
nd
N an
iu
et n
e
w
ed
d la
bo
rtu
m
re
m
nl
l
el
lg
rla
u
g
te er
in
A
Lu
U
173
4.54 Cultural and Social Norms
Definition:
The indicator measures entrepreneurial experts’ perception of the cul-
tural and social norms related to entrepreneurship.
The indicator is based on five questions that the experts are asked to
answer. The ranking of the questions go from 1 (strongly disagree) to
5 (strongly agree). The indicator is a simple average of the questions
(Exhibit 1).
Exhibit 1
• The national culture is highly supportive of individual suc-
cess achieved through own personal efforts.
• The national culture emphasizes self-sufficiency, autonomy,
and personal initiative.
• The national culture encourages entrepreneurial risk-ta-
king.
• The national culture encourages creativity and innovative-
ness.
• The national culture emphasizes the responsibility that the
individual (rather than the collective) has in managing his
or her own life.
Assessment Grade
Overall C
The cultural and social norms related to
entrepreneurship are a direct measure of
the degree in which national culture and
norms support entrepreneurship and, con-
sequently, the starting up of new business.
174
Political initiatives will have an indirect
influence of the national culture and the
national norms towards entrepreneurship.
preneurial experts.
formation is provided by entrepreneurial
GERA project.
Fully comparable. The same question was
asked in every country.
countries.
indicator may be updated in the future.
Source
The indicator is published by GEM/GERA in spe-
cific reports. Not available on the net. http://www.
gemconsortium.org.
175
176
Sw
0
0,5
1
1,5
2
2,5
3
3,5
4
4,5
Po ede
rtu n
Fr ga
an l
U c
ni B Jap e
te e a
d lg n
K iu
in m
D gdo
en m
H ma
un rk
N Fi gar
et nl y
he an
rla d
S w P nd
itz olans
er d
N lan
or d
w
Sp ay
G ain
re
ec
A Ita e
us l
Cultural and Social Norms
tr y
Ca alia
N I nad
ew re a
Ze lan
a d
Ic land
U Ge elan
ni rm d
te a
d n
St y
at
es
4.55 Entrepreneurial Motivation
Definition:
The indicator measures entrepreneurial experts’ perception of entre-
preneurial motivation.
The indicator is based on four questions that the experts are asked to
answer. The ranking of the questions go from 1 (strongly disagree) to
5 (strongly agree). The indicator is a simple average of the questions
(Exhibit 1).
Exhibit 1
Experts were asked if:
• the creation of new ventures is considered an appropriate
way to become rich.
• people consider becoming an entrepreneur as a desirable
career choice.
• successful entrepreneurs have a high level of status and
respect.
• is a lawful citizen who belongs to the same race and reli-
gion as the majority of the country’s population;
• you will often see stories in the public media about succes-
sful entrepreneurs, etc.
Assessment Grade
Overall C
degree in which the national culture and
norms supports entrepreneurship and con-
sequently the starting up of new business.
177
Political initiatives will have an indirect
influence of the national motivation to
become entrepreneur. Furthermore, the
indicator is opinion-based. Policy measures
can only have an indirect impact on the
opinions of entrepreneurial experts.
formation Is provided by entrepreneurial
GERA project.
countries.
indicator may be updated in the future.
specific reports. Not available on the net. http://
www.gemconsortium.org.
Entrepreneurial Motivation
4,5
4
3,5
3
2,5
2
1,5
1
0,5
0
A rw y
Ire ly
un m
nl k
St y
N G dom
l n
U Sw Por and
ew a in
ni rm d
d r l
es
Ita d
us ay
Ic nce
al a
nd
rla e
en ia
Ja en
P o nds
Fr and
in nd
te tze ga
N gar
Fi ar
d n
Be pa
Ze nad
U Ge lan
he ec
an
H giu
N C pa
D tral
at
te a
ed
la
K la
ni i tu
m
et re
a
el
S
g
Sw
178
4.56 Self-employment Preferences
Definition:
The indicator measures individual’s preferences towards being self-
employed or being an employee.
Assessment Grade
Overall C
The cultural and social norms for entrepre-
neurship is a direct measure of the degree
in which the national culture and norms
supports entrepreneurship and consequent-
ly the starting up of new business.
Policy measures may have an indirect im-
pact on the national preference to become
entrepreneur. Furthermore, the indicator is
opinion-based.
The indicator is opinion-based.
lity The indicator is available for 25 countries
of the EU and for the USA, Norway, Ice-
land and Lichtenstein.
be updated annually
Source The data is published by European Commission
“Flash Euro Barometer: Entrepreneurship“, June
2004, page 7. Available online :
http://europa.eu.int/comm/public_opinion/flash/
fl160_en.pdf.
179
180
Cz
Sl ech Fin
0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
ov R la
ak ep nd
R u
N ep blic
et u
he bl
rl ic
Be and
l s
N gium
or
Sw wa
e y
A den
D ust
U e r
ni G nm ia
te er ar
d m k
K a
in ny
g
Fr dom
a
Lu Hu nce
xe ng
m ary
b
Po ourg
l
G and
re
Self-Employment Preferences
ec
Ita e
Sp ly
Ic ain
U I elan
ni re d
te la
d nd
S
Po tat
rtu es
ga
l
4.57 ”The Wish to own one’s own Business”
Definition:
The indicator measures people’s preferences to own their own busi-
ness. Respondents who expressed a preference for self-employment
were also asked whether they would prefer to own their own business
or work for themselves, without necessarily owning a company.
Assessment Grade
Overall C
neurship are a direct measure of the degree
support entrepreneurship and consequently
the starting up of new business.
entrepreneur. Furthermore, the indicator is
opinion-based.
lity The indicator is available for the 25 coun-
tries of the EU and for the USA, Norway,
Iceland and Lichtenstein.
“Flash Euro Barometer: Entrepreneurship“ June
fl160_en.pdf.
181
182
H
un 0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
0,9
ga
r
Ita y
Ire ly
l
U Fr and
ni G an
te er ce
d m
K an
in y
gd
o
Sp m
Lu Ic ain
xe ela
m nd
b
A our
us g
t
Cz Ne Po ria
t
ec e nh la
h rla d
Re n
p ds
U Be ubl
ni l ic
te giu
Sl d m
ov S Sta
ak w tes
Re ede
p n
D ub
en lic
“The Wish to own one’s own Business”
Po mar
rt k
G uga
r l
N eec
or e
Fi way
nl
an
d
4.58 Desirability of Becoming Self-employed
Definition:
The indicator measures people’s desire to become self-employed within
the next 5 years. This question was asked only to non-self-employed
individuals.
Assessment Grade
Overall C
entrepreneur.
will be updated annually.
fl160_en.pdf.
183
184
Sl
ov
ak Fi
0
0,1
0,2
0,3
0,4
0,5
0,6
Re nla
pu nd
A blic
u
Be str
Cz lg ia
ec S iu
h we m
Re d
p e
G ub n
U er lic
ni N m
te o an
d r y
K w
in ay
D g
N en dom
et m
Lu her ar
xe lan k
m ds
H bou
un rg
g
Fr ary
an
Ire ce
la
n
Ita d
G ly
r
U I eec
ni ce e
Desirability of Becoming Self-employed
te la
d nd
S
Po tat
rtu es
Po ga
la l
Sp nd
ai
n
4.59 Risk for Business Failure
Definition:
The indicator measures people’s perception of being willing to start a
business if a risk exists that it might fail.
Assessment Grade
Overall C
entrepreneur.
will be updated annually.
2004, page 52. Available online : http://europa.
eu.int/comm/public_opinion/flash/fl160_en.pdf.
185
186
U
ni Ire
0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
0,9
te la
d nd
S
N tate
or s
Fi way
nl
U

Fr and
ni a
te G nce
d re
K
N in ece
et gd
he o
rla m
n
Sp ds
Ic ain
e
Sw lan
d
D ede
en n
m
ar
B
Lu e ly
Ita k
xe lgi
Sl m um
ov bo
ak Po urg
Risk for Business Failure
Re lan
Cz pu d
ec A bli
h us c
Re tr
p i
G ub a
er lic
m
Po an
rtu y
H g
un al
ga
ry
187

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The National Agency for

International Consortium for Dynamic

FORA ensures a fact-based platform for effective business policy

FORA enables decision makers to make fact-based decisions that take

Effective decisions and solid policy making require clear, compre-

This paper deals with indicators related to entrepreneurship. The

All of the discussed indicators are collected in a database, which is

The paper has three purposes. First, it aims at providing a compre-

A Dichotomy for Entrepreneurship Indicators 10

Part 1 The Quality Framework 14

Part 2 Quality Assessment of Each Indicator - an Overview 20

Part 3 Quality Assessment of Each Performance Indicator

Part 4 Quality Assessment of Each Framework Condition Indicator

Available indicators relating to entrepreneurship measure every-

Performance indicators – includes all indicators related to the out-

Business environment indicators – includes all indicators relating to

Attribute indicators – includes personal and firm specific characteristic

Context indicators – includes indicators related to the overall macro-

Another large set of indicators relate to people’s perception of and their

The following manual will focus on performance and business environ-

Quality is defined as “fitness for use” in terms of user needs (OECD,

It is important to note that each indicator must be evaluated in its

The quality framework draws on experience from the OECD, Euro-

An example is the indicator labeled Barriers to Competition. Here

Relevance has one more dimension. If an indicator is applied as a me-

For example, for Barriers to Competition changing formal regulation

Major sources of error in data collection include coverage, sampling,

The appraisal of accuracy is based on the method used in collecting

The accuracy of data collection methods can be evaluated as very

These scores can be clarified as follows:

• Very good: the indicator originates from national statistical

4. Overall Quality Assessment

Clarification of the three indicator score categories:

1.1 Gatekeeper Requirements

• The Indicator must originate from a reliable source, i.e. from a

• The method for collecting data must be standardised to som ex-

• The indicator must be interpretable a priori as to whether a high

This manual focuses on two categories of entrepreneurship indica-

The performance indicators is lacking in quality (Table 2.1). None

The business environment indicators can be divided into five main

3. Access to Foreign Markets

10. Wealth and& Bequest Taxes

10. Restart Possibilities

11. Entrepreneurship Education

12. Traditional Business Education

13. Public Entrepreneurship Infra-

14. Total Tax Revenue

15. Personal Income Tax

16. Business Tax

17. Bankruptcy Legislation

18. Administrative Burdens - Start-

19. Administrative Burdens - Pro-

20. Labour Market Regulation

21. Entrepreneurial Culture

3.1 Entry Rates

b) Assessment of the Type of Policy Indicator B

a) Data Collection Method

Source Eurostat, INDUSTRY, TRADE AND SERVICES.

b) Assessment of the Type of Policy Indicator B

a) Data Collection Method

b) Availability over Time A

b) Availability over Time A

Growth in New Companies - Turnover