knowledge at its pinnacle

Some people’s advice will only add vice to your life

World bank ranks karnataka first

The World Bank has developed a new Investment Climate Index to help identify the key challenges and bottlenecks to be overcome in attracting business investment. In a policy research working paper, World Bank analyst Guiseppe Iarossi ranks the investment climate in 16 Indian States, using data from a survey of 4,000 entrepreneurs in 2005. Karnataka tops the list, with Kerala a close second. Tamil Nadu comes in at ninth place, overtaken by Gujarat, Andhra Pradesh, Haryana, West Bengal, Maharashtra and Delhi.

Having identified 46 variables descriptive of the business environment in the 16 States, the researcher grouped them into three categories: inputs, infrastructure and institutions. Two dimensions were identified for each category: the objective indicators of cost and the subjective indicators of perception.

Noting that both Delhi and Tamil Nadu seemed to be ranked lower than expected, the paper concludes that Delhi was dragged down by poor power infrastructure and the worst performance in terms of corruption of all 16 States. Tamil Nadu, on the other hand, finds its rankings lowered by poor performance on access to finance, lack of skills and availability of technology, according to paper.

The Index attempts to rank the most important bottlenecks to a better business climate, so that governments can better prioritise policies to remedy them with appropriate interventions. Infrastructure is the biggest variable distinguishing between the best and worst States on the Investment Climate Index, with electricity being the single biggest constraint within that category. This is confirmed by both subjective and objective indicators, with the bottom six States in the rankings facing a large number of power outages and large losses due to such outages. The second most important constraint is poor transportation infrastructure, according to the paper. The World Bank used the 2005 data collected in its Investment Climate Survey to construct the new Index.

January 17, 2009 Posted by | business | , , , , | 1 Comment