Composite Indicators Conditioned by Discontinuous Spaces: Capturing the Spatial Heterogeneity of the Costs of Doing Business Across Advanced and Emerging Economies

2026/07/28 by Petr Ekel, Matheus Pereira Libório
Economics, Econometrics and Finance · Social Sciences · #Cultural Industries and Urban Development #Economic and Technological Innovation #Regional Economics and Spatial Analysis

paper · doi:10.1080/00330124.2026.2703471

crossref issued 2026/07/28 · crossref published 2026/07/28 · crossref published-online 2026/07/28 · openalex publication_date 2026/07/28 · crossref created 2026/07/28 · crossref deposited 2026/07/28 · crossref indexed 2026/07/28 · openalex created_date 2026/07/29 · openalex updated_date 2026/07/30

Abstract

Attempts to represent the costs of doing business through composite indicators commonly assume that the importance of each cost component is homogeneous across countries, overlooking spatial heterogeneity. Existing approaches predominantly represent spatial heterogeneity through geographical relationships, making them less suitable for geographically discontinuous settings such as cross-country analyses. This study investigates a third perspective, in which spatial heterogeneity is operationalized through location-specific weighting structures. To this end, we identify, apply, and compare the benefit-of-the-doubt (BoD) and ordered weighted averaging (OWA) methods in constructing the cost of doing business index conditioned by discontinuous spaces (CDBI-CDS). The results show that the ability to operationalize spatial heterogeneity depends on the extent to which weighting methods generate distinct location-specific weighting structures rather than on optimization itself. The study also introduces a simple measure of heterogeneous weighting based on the proportion of unique weight structures and identifies the winning and losing subindicators that characterize each country’s business environment. These findings contribute to the literature on composite indicators by extending the representation of spatial heterogeneity to geographically discontinuous spatial units and providing a methodological framework for comparing heterogeneous weighting methods.

Citations

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