The murky business of World Bank’s ‘Doing Business Report’​

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September 24th, 2021

The World Bank discontinued its Doing Business Report after data irregularities were reported in an ethics review of Doing Business 2018 and 2020. Find out how what the Doing Business Project was, how it worked, and what went wrong!

 

By Jaideep Singh Mann


 

On 16th Sept 2021, the World Bank released a statement declaring discontinuation of its Doing Business Report (DBR), an annual flagship report that the international financial institution has been publishing since 2002.

 

This comes after “data irregularities” were reported internally in an ethics review of Doing Business 2018 and 2020, in June this year. It prompted the organisation to hold the reports in August while an internal investigation was being carried out. The findings of the investigation revealed that top World Bank leaders, including then-Chief Executive Kristalina Georgieva, applied “undue pressure” on staff to boost China’s ranking in the bank’s “Doing Business 2018” report.

 

It’s a big deal and worthy of an explanation as to what the Doing Business Project (DBP) was, how it worked, and what went wrong!

 

The Bank investigated nations’ legal and regulatory environments to determine how conducive that State was for “doing business.” The data was meant to help explain the business environment, but the indicators also offered a way to rank the nations. The goal was to “motivate” reforms through country benchmarking, but also inform the nations as to what reforms were necessary and suggest future designs. Initially, the WB took the position that yes – when it comes to business “one size *can* fit all.”

 

The indicators measure time and costs on everything related to conducting business, eg. to enforce a contract. The 2020 DBR captures 294 regulatory reforms implemented 2018-2019. The indicators look at levels of corruption, how to start a business, barriers to a market, etc.

 

Underlying the project was the vision that the enhancement of administrative and judicial processes and institutions would lead to economic growth. Read here about a “frenzy of reform” that the DB indicators invoked in developing countries.

 

The DBP was a “lightning rod” for criticisms. Scholars, governments, and NGOs complained the indicators are biased in favour of neoliberal approaches – understood, roughly, as a narrow recipe for development driven by free markets & liberalisation trade & finance.

 

Amanda Perry-Kessaris has written extensively on these indicators, noting how the agenda fuels “development [a]s both a manifestation and a means, of economics imperialism.” The Bank itself initially saw this work as a “knowledge product”. Yet, Perry-Kessaris raised concerns as to how the competition of rankings “continuously pit nations against each other, and against their historical selves.”

 

The indicators also linked to aid programs, with how reforms taken linked up to receiving greater amounts of multilateral and Bank aid. In August 2020, the Bank reported a big problem. Data irregularities were found. An independent audit was called. Internal Bank staff were accused of manipulating data!

 

World Bank

 

In Dec 2020, Wall Street Journal reported on the outcome of the audit from the 2017/2019 DBR in December 2020. Data from four countries were affected: China, Azerbaijan, Saudi Arabia, and the United Arab Emirates. The data had shown improvements in China and Saudi Arabia’s global rankings. After correcting for inaccuracies, China’s standing in the World Bank’s 2017 Doing Business report would have dropped from No. 78 to 85.

 

The World Bank’s investigation, which was conducted by US law firm WilmerHale, found that the staff of then-President Jim Yong Kim held meetings to find ways to improve China’s ranking in 2018. Georgieva then got involved to develop a way to make China look better without affecting the rankings of other countries. The investigation’s findings state that both “direct and indirect” pressure was applied on staff by Kim to “change the methodology in an effort to boost China’s score”.

 

Long before the irregularities were officially found people in the know-how have been divided on whether this data is helpful or harmful to governments. Some argued the benchmarking and specific case studies should help a government understand how to foster the best regulatory environment possible. Others argued the indicators were tools of power.

 

Next steps? According to the Bank, they will be working on a new approach for assessing the business and investment climate. This will be an incredibly difficult effort, with multiple, multi-level legal norms, institutions, & practices interacting in a moving global network.

 

The views expressed in this article are those of the author alone and not the WorldRef.


 

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