What does a higher Distance to Frontier (DTF) score indicate?
Show answer & explanation
Correct answer: B
Explanation
Answer: (B) Better ease of doing business
Explanation —
The Distance to Frontier (DTF) score is a metric that measures how close a country's business regulatory framework is to global best practices or the 'frontier.' This score is measured on a scale of 0 to 100, where 0 represents the worst performance and 100 represents the best performance (the frontier).
Therefore, a higher DTF score implies that the country is very close to global best practices for doing business, which directly translates to greater ease of doing business. This score was published by the World Bank as part of its 'Ease of Doing Business' report. If a country's DTF score improves, it indicates that regulatory processes such as starting a business, obtaining construction permits, and securing electricity connections have improved within that country.
Additional Points —
Score Calculation: This index is compiled based on more than 10 parameters (such as paying taxes, enforcing contracts, etc.).
India's Position: India had significantly improved its DTF score over recent years (particularly during the period 2014–2020).
Potential Exam Questions & Answers —
Question: Which institution used to publish the 'Ease of Doing Business' report?
Answer: The World Bank.
Question: What does the term 'frontier' signify within the context of the DTF score?
Answer: The global best standard, or the best performance achieved to date in a specific category.