Where to launch your next digital startup?

What is the best environment for your future business?

It’s been longtime that we consider ranking as a barometer of countries stability and attractiveness and we’d been used to consider these ranking in our decision making process when we study a new market or forecast the market trends.

The Legatum Prosperity Index for which is based on a variety of factors including wealth, economic growth, education, health, personal well being, and quality of life. Turkey is 94th in the overall Prosperity Index rankings. Since 2010, Turkey has moved down the rankings table by 21 places. Turkey performs most strongly in Living Conditions and Market Access & Infrastructure.

The Doing Business index provides objective measures of business regulations for local firms. Turkey is ranked 33rd among 190 economies in the World Bank’s Ease of Doing Business 2020 report. Turkey was 69th in the 2017 version of the report.

The Index of Economic Freedom measures economic freedom of 186 countries based on trade freedom, business freedom, investment freedom, and property rights. Turkey’s economic freedom score is 64.4, making its economy the 71st freest in the 2020 Index. The Turkish economy has been moderately free for more than a decade. The resilience of Turkey’s economy is due to solid public finances, well-capitalized banks, and a dynamic and diversified private sector. Besides to these ranking reports, other index exist such as human development index, the S&P Global Infrastructure Index... etc.

While we are focusing into policy responsiveness in the real world market, we say few words or none about ease or difficulty of doing business in the digital world. The digital ecosystems does not depend only on policy and governance and infrastructure but it expand since the users have their footprint on it. After COVID19, the digital sphere took the attention of all the actors and stakeholders in the economic ecosystem from retailer to the top head of countries. In 2019, The Ease of Doing Digital Business (EDDB) was released.

The Ease of Doing Digital Business (EDDB)

The new index focus on how easy it is for the digital platforms to enter, operate, succeed, or exit in markets around the world, and what are the primary facilitators and barriers. The report combined foundational measures essential to the functioning of any digital business  with measures of the “levers of ease”.

To create a composite picture of “digital businesses,” the report considered four types of digital platforms—e-commerce platforms such as Alibaba, Amazon and eBay, digital media platforms such as YouTube and Hulu, sharing economy platforms Uber and Airbnb, and online freelance platforms such as Upwork and Toptal—as the leading indicators of digital business opportunities.

For each digital platform, the index considered three main “levers of ease”: Supply, Institutions, and Market Sophistication.

Supply measures infrastructural barriers and boosters that include access, transaction and fulfillment infrastructure indicators unique to each platform. For example, for the sharing economy, the plurality of transportation and availability of idle assets are measured.

Institutions measures regulatory barriers and boosters that include platform-specific policies, trust, and institutional effectiveness. For example, for online freelance, taxation of foreign income and use of digital payments is measured. For the sharing economy, the rigidity of home and ride-sharing regulations are measured.

Market Sophistication measures idiosyncratic aspects unique to the market and the nature of digital platform, including platform-specific measures that inform the broader context of the market. For example, educational attainment and unemployment levels are an important contextual measure for online freelance. For the sharing economy, urbanization and travel/tourism levels are relevant.

The main takeaways and conclusions from our EDDB report are summarized below.

• First, unsurprisingly, digital regulations and public policy choices are key determinants of the Ease of Doing Digital Business. These can range from user privacy rules and internet freedoms to those governing sharing economy and e-commerce companies or those protecting the rights of freelance workers.
• Second, infrastructural elements that are at the intersection of the digital with the physical world, from internet and mobile access to payments and fulfilment, are all key to performance on EDDB, just as they are key to traditional businesses.
• Third, since digital businesses are built on platforms that match users on either side of a transaction, the factors governing all users’ capabilities are key to EDDB. Skills, user sophistication, and the willingness to engage with digital platforms are all material.
• Fourth, as Exhibit 1 illustrates, greater ease for one kind of a digital platform in a country does not automatically translate into ease for every other kind of digital platform. Policymakers need a granular awareness of the factors that buoy and beset specific digital platforms. Focused actions directed towards identifying and eliminating platform-specific barriers along with eliminating barriers at the foundational level are key to digital business competitiveness.
• Lastly, and perhaps most importantly, data accessibility and mobility of data across-borders is central to the sustained growth of and innovation among digital businesses. Several countries15 have restrictions on data flows or onerous data localization laws in place. Such laws have the effect of imposing a regressive tax on digital businesses: they raise the costs of entry and of doing digital business especially for startups16 and SMEs, encourage rent-seeking17 behavior among established domestic actors, and reduce competition.18 Policymakers keen to foster robust and competitive digital economies would do well to measure and monitor their Gross Data Product—or, as we call it, The New “GDP”19—eliminate barriers to accessibility of data, and work towards shared norms for cross-border data flows.

And Turkey?

Turkey took forty place overall, out of the 42 countries covered. The country was ranked in the bottom 40 percent in e-commerce platform.  All remaining categories saw Turkey placed in the bottom 20 percent. Turkey ranked 38 in (ease of doing) e-commerce, 41 in (ease of doing) digital media, 41 in (ease of doing) sharing economy and 41 in (ease of doing) online freelance.

The report shows that Turkey can be ranked 36 if it succeed to be from the top 40 percent in term of Data accessibility.

Article made on "Digital Doing Business" by Mohamed Alif Kahlani - Co-founder of Digital Istanbul and Consultant in entrepreneurship. Email: [email protected]

Source: EASE OF DOING DIGITAL BUSINESS 2019: Which Countries Help Expedite Entry, Growth, and Exit of Technology-Based Businesses?