Finance minister: The World Bank's "Doing Business" report ranks countries in terms of ease of doing business in them...

kristinsmith04 on October 20, 2019

Why is it D?

Why does it matter that the minister's understanding of midsized business is smaller than the business report's hypothetical business?

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Irina on October 20, 2019


The minister tells us that tax compliance for small and even medium size business has been simplified in his country, and concludes that the country's ranking will improve based on this fact. But the report ranks countries based on how easy it easy for a hypothetical business to comply with tax regulations, and since we have no information on the size of the hypothetical business - perhaps, the report is only interested in how easy it is for a hypothetical large business or an average size business - we could not conclude that the country's ranking will improve unless we can establish that the hypothetical business in the report is no larger than the medium size business in the country. If the medium-size business is smaller as the question asks, then the new regulations will have no impact on the country's ranking.

kristinsmith04 on October 20, 2019

I think I have a gap in general knowledge here - why does it matter that the hypothetical business is larger that the midsize businesses in the finance minister's country, but it DOES NOT matter if the hypothetical business is smaller than the midsize business in the finance minister's country?

Irina on October 21, 2019


Because the new tax compliance regulations only apply to small and medium size businesses, so if a hypothetical business is a business that could not benefit from the new regulations, i.e. any business other than small and medium size, then the country's ranking will not improve.

kristinsmith04 on October 21, 2019

Thank you!