
Tommaso RoomsT he efficiency and quality of the business regulatory environment can vary substantially across differentlocations within a country. In the context of the European Union (EU), such local disparities mayhinder regional economic convergence, one of the long-standing pillars of the European integrationprocess. This Brief highlights how identifying and promoting good local practices in regulating the business environment can reduce spatial inequality and create economic opportunities. The analysis is based ondata collected using the World Bank’sDoing Businessmethodology between 2017 and 2022. By taking stock ofsuch data, the Brief also provides a benchmark for assessing the contributions of new and upcoming assessmentsof the EU subnational business environment that are currently being conducted though the World Bank’sBusinessReady(B-READY) methodology, which replaced and improved uponDoing Business.Public Disclosure Authorized Mindthe regional gap:Uneven businessconditions within EU member states long, at 134 days. This differencewithinGreece is larger thanthe largest difference between the 16 countries for the timefor property transfer (refer to figure 2). While national regulations govern a significant part of theoverall business regulatory environment, it is often the localregulations—andthe local enforcement of nationallaws—that shape the investment climate for firm entry, jobcreation, and economic growth. Data from a World Bankseriesof subnational assessments of the EU businessenvironment conducted between 2017 and 2022 (describedin box 1) reveal that differences in the business environmentare substantial not only among EU member states, but alsowithin them. This is true not only in larger EU countriessuch as Italy—where local governments play a role inestablishing regulations and where the gap between thePublic Disclosure Authorized Not all member states are characterized by the samemagnitudeof subnational differences.Denmark,theNetherlands,and Sweden have both a high level ofcentralization and robust national digital infrastructure. Thismeans that for several bureaucratic steps, entrepreneurs gothrough the same procedures, through the same portal,independently from where they are based, and applicationsare processed centrally. In Denmark, for example, more than1,500 e-government services are available through a singleportal, including formalities to open a new business, whichcan be completed directly by users. Similarly, Sweden has Thesewithin-countrydifferencesarenotjustwidespread—they can also exceed the differences observedacrosscountries.For example,in Greece,registering aproperty between two local companies in Patra takes 24 days,Public Disclosure Authorized The scale of subnational variation observed also dependson the bureaucratic process considered. On average, theregulatory gaps are widest in construction permitting, due tothe important role of local authorities in this area. The other *Affiliations:Regulatory Efficiency Unit. Global Indicators Group, Development Economics, World Bank. For correspondence: gcardenas@worldbank.orgAcknowledgements:The authors are grateful to Norman Loayza, Valentina Saltane, David Francis, Seung Hee Nam, Penelope Demetra Fidas, and Burak Turkgulu for theirvaluable comments and guidance during the publication process. Nancy Morrison provided editorial assistance. All errors remain our own.Objective and disclaimer:This series of Policy Indicators Briefs synthesizes existing research and data to shed light on a useful and interesting question for policydebate. The names of the authors are indicated above and should be cited accordingly. The findings, interpretations, and conclusions are entirely those of theauthors. They do not necessarily represent the views of the World Bank Group, its Executive Directors, or the governments they represent. All Briefs in the series Map 1 Figure 2 twoareas showing substantial variation are electricityconnection and supply (driven by the diversity of distributioncompanies’ connection processes and fees, the size of theircustomer base, and wait times for associated municipalpermits) and enforcing a contract (due to the role played by the top in registering property but could look to Timisoarato improve its performance in enforcing contracts. Similarly,Craiova and Iasi lead on dealing with construction permits The discussion that follows provides two examples of howpolicy makers could replicate and promote (as a nationalstandard)existing,successful local practices.The firstexample looks at the existing good practices in Austria(Doing Business in the European Union in 2021: Austria) on The relationship between city size and the efficiency of thebusiness environment is not straightforward: larger cities donot always perform better, nor do smaller ones consistentlylag. In some countries, smaller cities tend to have moreefficient regulatory environments on average across the fiveareas measured. One explanation i