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Shedding Light on the Doing Business Index: a Machine Learning Approach

Author

Listed:
  • Maričić Milica

    (University of Belgrade, Faculty of Organizational Sciences, Department of Operational Research and Statistics, Belgrade, Serbia)

  • Bulajić Milica

    (University of Belgrade, Faculty of Organizational Sciences, Department of Operational Research and Statistics, Belgrade, Serbia)

  • Radojičić Zoran

    (University of Belgrade, Faculty of Organizational Sciences, Department of Operational Research and Statistics, Belgrade, Serbia)

  • Jeremić Veljko

    (University of Belgrade, Faculty of Organizational Sciences, Department of Operational Research and Statistics, Belgrade, Serbia)

Abstract

Background: The World Bank (WB) acknowledged the importance of business regulatory environment and therefore created a metric which ranks 190 countries based on their level of business regulation for domestic firms measured by the Doing Business Index (DBI).Objectives: The question which attracted our attention is whether all the observed entities should be given the same weighting scheme.Methods/Approach: The approach we propose as an answer is two-fold. First, we cluster the countries covered by the DBI. In the next step, we apply the statistical multivariate Composite I-distance Indicator (CIDI) methodology to determine new, data-driven weights for each of the retained clusters.Results: The obtained results show that there is a difference between the weighting schemes proposed by the CIDI methodology.Conclusions: One can argue that one weighting scheme does not fit all the observed countries, meaning that additional analyses on the DBI are suggested to explore its stability and its weighting scheme.

Suggested Citation

  • Maričić Milica & Bulajić Milica & Radojičić Zoran & Jeremić Veljko, 2019. "Shedding Light on the Doing Business Index: a Machine Learning Approach," Business Systems Research, Sciendo, vol. 10(2), pages 73-84, September.
    • Handle: RePEc:bit:bsrysr:v:10:y:2019:i:2:p:73-84:n:6
    DOI: 10.2478/bsrj-2019-019
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    More about this item

    Keywords

    CIDI methodology; Doing Business Index; international business; machine learning algorithms;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration

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