| Code | IQ.CPA.BREG.XQ |
| Indicator Name | CPIA business regulatory environment rating (1=low to 6=high) |
| Short definition | The CPIA measures the extent to which a country’s policy and institutional framework supports sustainable growth and poverty reduction, and consequently the effective use of development assistance. The outcome of the exercise yields both an overall score and scores for sixteen criteria that compose the CPIA. These criteria include: A. Economic Management (1. Monetary and Exchange Rate Policies; 2. Fiscal Policy; 3. Debt Policy and Management), B. Structural Policies (4. Trade; 5. Financial Sector; 6. Business Regulatory Environment), C. Policies for Social Inclusion/Equity (7. Gender equality; 8. Equity of public resource use; 9. Building human resources; 10. Social protection and labor; 11. Policies and institutions for environmental sustainability), D. Public Sector Management and Institutions (12. Property rights and rule-based governance; 13. Quality of budgetary and financial management; 14. Efficiency of revenue mobilization; 15. Quality of public administration; 16. Transparency, accountability, and corruption in the public sector).
This Business Regulatory Environment criterion assesses the extent to which the legal, regulatory, and policy environment helps or hinders private business in investing, creating jobs, and becoming more productive. The
emphasis is on direct regulations of business activity and regulation of goods and factor markets. Three sub-components are measured: (a) regulations affecting entry, exit, and competition; (b) regulations of ongoing business operations; and (c) regulations of factor markets (labor and land). |
| Long definition | The CPIA measures the extent to which a country’s policy and institutional framework supports sustainable growth and poverty reduction, and consequently the effective use of development assistance. The outcome of the exercise yields both an overall score and scores for sixteen criteria that compose the CPIA. These criteria include: A. Economic Management (1. Monetary and Exchange Rate Policies; 2. Fiscal Policy; 3. Debt Policy and Management), B. Structural Policies (4. Trade; 5. Financial Sector; 6. Business Regulatory Environment), C. Policies for Social Inclusion/Equity (7. Gender equality; 8. Equity of public resource use; 9. Building human resources; 10. Social protection and labor; 11. Policies and institutions for environmental sustainability), D. Public Sector Management and Institutions (12. Property rights and rule-based governance; 13. Quality of budgetary and financial management; 14. Efficiency of revenue mobilization; 15. Quality of public administration; 16. Transparency, accountability, and corruption in the public sector).
This Business Regulatory Environment criterion assesses the extent to which the legal, regulatory, and policy environment helps or hinders private business in investing, creating jobs, and becoming more productive. The
emphasis is on direct regulations of business activity and regulation of goods and factor markets. Three sub-components are measured: (a) regulations affecting entry, exit, and competition; (b) regulations of ongoing business operations; and (c) regulations of factor markets (labor and land). |
| Source | CPIA database, World Bank Group (WBG), uri: https://datacatalog.worldbank.org/int/search/dataset/0038988 |
| Topic | Public Sector: Policy & institutions |
| Dataset | WDI |
| Unit of measure | Score [SCORE] |
| Periodicity | Annual |
| Reference period | 2005-2024 |
| Aggregation method | Unweighted average |
| Statistical concept and methodology | Methodology: Each of the four clusters has a 25 percent weight in the overall rating. Within each cluster, all criteria receive equal weight, although components within a criterion may be weighted differently. The overall score is obtained by calculating the average score for each cluster, and then by averaging the scores of the four clusters. The CPIA can then be interpreted as representing an overall country score that considers each of the four clusters to be equally relevant even if some of the clusters contain more criteria than others.
For each of the criteria, the Bank has prepared guidance to help staff assess the country’s performance, by providing a definition of each criterion and a detailed description of each rating level. Bank staff assesses the country’s actual performance on each of the criteria and assign a rating. These scores are averaged—first to yield the cluster score, and then to determine a composite country rating as the average of the four clusters. The ratings reflect a variety of indicators, observations, and judgments based on country knowledge originated in the Bank or elsewhere, and on relevant publicly available indicators.
Statistical concept(s): The CPIA consists of 16 criteria grouped in four equally weighted clusters: Economic Management, Structural Policies, Policies for Social Inclusion and Equity, and Public Sector Management and Institutions. For each of the 16 criteria, countries are rated on a scale of 1 to 6. A rating of 1 corresponds to a very weak performance, and a rating of 6 to a very strong performance. Intermediate scores of 1.5, 2.5, 3.5, 4.5, and 5.5 may also be given.
The scores depend on the level of performance each year assessed against the criteria, rather than on changes in performance compared to the previous year. The ratings depend on actual policies and performance, rather than on promises or intentions. In some cases, measures such as the passage of specific legislation can represent an important action that deserves consideration. However, the way such actions should be factored into the ratings is carefully assessed, because in the end, it is the implementation of legislation that determines the extent of its impact. |
| Development relevance | The CPIA measures the extent to which a country’s policy and institutional framework supports sustainable growth and poverty reduction, and consequently the effective use of development assistance. The outcome of the exercise yields both an overall score and scores for all of the sixteen criteria that compose the CPIA. Experience has taught the development community that good policies and institutions lead, over time, to favorable growth and poverty reduction outcomes, notwithstanding possible yearly fluctuations arising from internal and external factors. The CPIA ratings help determine the relative sizes of the Bank’s concessional lending (lending by the World Bank Group’s International Development Association (IDA) on terms with significant grace periods, long repayments periods, and very low-interest rates) and grants to low-income countries. IDA resources are allocated in per capita terms based on a country’s IDA country performance rating (CPR) and, to a limited extent, per capita gross national income (GNI). Use of the CPR ensures that good performers receive, in per capita terms, a higher IDA allocation — allocations are performance based. A country’s overall score is the main element of the CPR. To fully underscore this role, the overall CPIA country score is referred to as the IDA Resource Allocation Index (IRAI). |
| Limitations and exceptions | The CPIA exercise is intended to capture the quality of a country's policies and institutional arrangements, focusing on key elements that are within the country's control, rather than on outcomes (such as economic growth rates) that are influenced by events beyond the country's control. More specifically, the CPIA measures the extent to which a country's policy and institutional framework supports sustainable growth and poverty reduction and, consequently, the effective use of development assistance. |
| License URL | https://datacatalog.worldbank.org/public-licenses#cc-by |
| License Type | CC BY-4.0 |
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