Business costs and economic performance: measurements, impacts and propositions

This research investigates the relationship between business costs and economic performance through an innovative multidimensional measure of the costs of the business environment: the business costs index (BC-I). The results show that GDP per capita and BC-I correlate strongly and negatively. Reducing the BC-I by 0.01 increases GDP per capita by 4.7%. The research also identifies which costs most impact the country's business environment, which countries have the lowest and highest costs for doing business, and which groups of countries can be used as a benchmark to reduce costs. The research also offers an innovative approach to obtaining heterogeneous groups of countries with homogeneous characteristics. The novelty of this approach lies in defining the ideal number of groups based on the cohesion and resolution of the clusters since the elbow, average silhouette, and gap statistics tests offer contradictory solutions and do not guarantee the quality of the clusters.