2 Direct foreign investment and Doing Business scores
Even though Doing Business indicators focus on small to medium-size domestic firms, many policy makers have associated improvements in the indicators with greater foreign direct investment (FDI).
World Bank Doing Business data shows that in 2011 economies closer to the top score in regulatory practice received significantly more foreign direct investment than those with a middle-rank score.1 Economies with a middle-rank score received more foreign direct investment than those with the lowest scores.
How Doing Business measures economies
The Doing Business indicators used here are composite measures of the investment climate gained by measuring what is called the distance to frontier.
The frontier is a measurement of how far an economy is from the most efficient practice or highest score achieved by any economy since 2005 for each Doing Business indicator.
This case study in the table below uses the distance to frontier measure to capture how an economy ranks compared to others and also how far it is from the most efficient business regulatory practices identified by Doing Business.
In 2011, foreign direct investment was higher per person for economies that were closer to the frontier.