How easy is it to do business in New Brunswick?

By Rawia Mokhtar

Upcoming research will measure the barriers and regulatory burden faced by entrepreneurs in New Brunswick compared to locations around the world 

Government regulations matter for the for the growth of the private sector. Academic research has established that lower barriers to starting a business are associated with a smaller informal sector (the part of an economy that is neither taxed nor monitored by government). Lower costs of entry encourage entrepreneurship, enhance firm productivity, and reduce corruption.  

For these reasons, the JDI Roundtable on Manufacturing Competitiveness of the University of New Brunswick and the Center for the Study of Living Standards (CSLS), an Ottawa-based not-for-profit economic research organization, are conducting a study to measure the level of burden of business regulations in New Brunswick using the methodology of the World Bank’s Ease of Doing Business (EDB) annual study. The World Bank conducts detailed analysis of costs, requirements and procedures a specific type of private firm is subject to in 190 countries to create a ranking of countries in terms of the ease of doing business. In the EDB index, 'higher rankings' (a lower numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights. To date, Canada’s EDB index represents the province of Ontario, so our work will allow New Brunswick’s business regulations to be evaluated in comparison to Canada’s largest province. 

Our research objective is to be able to gather data through surveys completed by 30 expert contributors (lawyers, accountants, etc.) in New Brunswick who deal with business regulations in their day-to-day work. Respondents will fill out written questionnaires and provide references to the relevant laws, regulations, and fees based on standardized case scenarios with specific assumptions, such as location in the largest business cities of Saint John or Moncton. For each dimension being assessed, at least three experts will be requested to contribute to its questionnaire so that the information collected can be cross checked. Information will also be validated with the relevant government departments. 

Following the World Bank’s methodology, the NB province ranking on the EDB index is based on the simple average of the scores for 10 sub-indices: 

• Starting a business – Procedures, time, cost, and minimum capital to open a new business 
• Dealing with construction permits – Procedures, time, and cost to build a warehouse 
• Getting electricity – procedures, time, and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse 
• Registering property – Procedures, time, and cost to register commercial real estate 
• Getting credit – Strength of legal rights index, depth of credit information index 
• Protecting investors – Indices on the extent of disclosure, extent of director liability, and ease of shareholder suits 
• Paying taxes – Number of taxes paid, hours per year spent preparing tax returns, and total tax payable as share of gross profit 
• Trading across borders – Number of documents, cost, and time necessary to export and import 
• Enforcing contracts – Procedures, time, and cost to enforce a debt contract 
• Resolving insolvency – The time, cost, and recovery rate (%) under bankruptcy proceeding 

The rankings are determined by sorting the aggregate scores on the 10 topics, each consisting of several indicators, and giving equal weight to each topic. 

While fewer and simpler regulations often imply higher rankings, this is not always the case. Protecting the rights of creditors and investors, as well as establishing or upgrading property and credit registries, may mean that more regulation is needed. We expect the results of this study to help the efforts of improving regulations which can lead to stronger economic growth with more investors are attracted to do business in the province.    

For more information, please contact:  

Rawia Mokhtar rawia.mokhtar@unb.ca or Andrew Sharpe at andrew.sharpe@csls.ca.   

The JDI Roundtable on Manufacturing Competitiveness in New Brunswick is an independent research program made possible through the generosity of J.D. Irving, Ltd. The funding supports arms-length research conducted at UNB.

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