Is Canada an easy place to do business in? The World Bank says not really

Beyond an overwhelming number of illustrative stories, many have pointed to the World Bank’s Ease of Doing Business index as proof. That index, which ranked over 150 countries on their business environments, showed Canada slipping from 4th in 2006 to 23rd by 2020, with its regulatory system identified as a major area of weakness. In 2021, however, the World Bank’s chief economist admitted the index was “potentially tainted by political motivations of World Bank staff.” Following a number of concerns raised around methodology, transparency, and data integrity, the index was cancelled. This left Canada without a comparable international benchmark to gauge how its business environment stacks up against other countries. Then, in 2024, the World Bank began releasing a successor initiative by a new name: Business Ready (B-READY), giving Canada another window into its performance. The objective is the same: assess the strength of business environments across countries as an indicator of future economic growth. But, as you might expect, with much greater emphasis on accountability and transparency. All underlying data and methodology are publicly available, and the consultation process has been greatly expanded, engaging around 5,000 local experts and surveying around 58,000 firms—something not done in the previous iteration. The results don’t bode well for Canada. Canada earns a C for its regulatory framework, scoring 71.8 out of 100—the pillar most comparable to the earlier Ease of Doing Business index. This places Canada 33rd out of roughly 100 countries published, closer to China (34th) than to the United States (5th). This suggests Canada’s relative performance is even worse than previously thought, based on the Ease of Doing Business index. More concerning, Canada’s final ranking is likely to fall. The initiative is only in the second stage of a three-phase rollout, and many peer countries—including Germany, France, and Japan—have yet to be reported on. Once data for the remaining countries (about 70 more) are released later this year, Canada’s relative rank may decline. And, given the competition for business investment globally, that comparison matters as much as, if not more than, the score itself. The other two pillars in B-Ready look at how well governments help businesses comply with regulations and how efficiently the system works. This includes things like how long it takes to get a construction permit, whether service standards are available online, and how easy it is to register for taxes. On these measures, Canada performs better, scoring 74.7 on public services to support compliance and 73.9 on operational efficiency, placing it 8th on both. Even so, relative strength in those areas can only go so far. The framework itself matters most. If the rules themselves are overly complicated or poorly designed, no amount of service delivery can fully offset that. A bad process that’s digitized is still a bad process. That raises concerns about the country’s economic future. After all, the World Bank’s initiative exists to inform policy reform that drives economic growth and reduces poverty. No single index can fully capture the complexity of a regulatory system, and B-READY—though much improved from its predecessor—will likely face its own critiques. But the results reinforce what businesses have consistently reported for years. If Canada wants to meet its investment ambitions and boost prosperity for Canadians, building a better regulatory system is non-negotiable. A version of this post was originally published by the Business Council of Alberta.