How to score each indicator
In the three categories of planning, policies and regulations, and pricing and subsidies, indicators are scored between 0 and 100 and aggregated with equal weights. Indicators present a scalar way of capturing quality of policies. Typically, sub-indicators are formulated in a binary form to ensure objectivity, but aggregating all sub-indicators enables the comprehensive presentation of a country’s achievement on that indicator.
For procedural efficiency, the questions adopt the “distance to frontier” (DTF) approach, where the frontier presents the best performance by any country observed on each indicator. The distance to frontier is a relative measure normalized to range between 0 and 100, with 100 representing the frontier. A higher score indicates a more efficient business environment.
How to aggregate scores of individual indicators
All the indicators are weighted equally. While it can be argued that some indicators are more important than others, a justification in a consistent manner was not applicable in all cases. Further, the Doing Business project that inspires RISE has carried out analysis of several ways of weighting indicators that have proved inconclusive, and have not proceeded with weighting.
How to indicate traffic lights
A “traffic light” indicates the score for indicators, categories, and pillars.
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A green light is reported for countries with a score of 75 or more, which are considered close to good practice on a certain indicator or a pillar. |
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A yellow light shows countries that are in between green and red. |
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A red light indicates that a country scores 25 or less and has a lot to improve to achieve good practice on what RISE measures. |
When a country receives a green light on a pillar, it doesn’t necessarily mean that the country lacks attributes to improve on—rather, it signals its current readiness for investment. For the investor, this provides important evidence about the commitment and credibility of government policymaking to create an attractive enabling environment. The private sector will of course carry out further due diligence before investing.