Do the World Bank’s Doing Business Rankings really measure up?

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This week I am in Washington DC attending the Annual Meetings of the World Bank and IMF with Tina Weller, our Lead Economic Analyst.  Part of our agenda in being here is to raise questions about the Doing Business Rankings which is a flagship publication of the World Bank measuring all countries against a set of investment climate indicators and ranking them accordingly.

The avowed purpose of this report is to cut red tape and unnecessary bureaucracy.  By the Bank’s own admission, the Rankings have become highly influential in setting the regulatory reform agendas of many low-income countries.  In 2008, 85 % of policy-makers surveyed said that the Doing Business rankings had motivated reforms in their countries.

So, they are a pretty important force in establishing and setting investment climates around the world. At the same time they are highly controversial, not least amongst many of the world’s pre-eminent economic powers as well as civil society and Trade Unions.

 

The main criticisms from the latter grouping include that they advocate for a low or no tax environment, low employment protection, that they are gender blind and ignore the interests of micro-entrepreneurs. 

The former grouping tend to dislike the ‘Doing Business’ approach if they feature low down on the rankings.  Indeed, big questions are raised about the evidence base of the rankings when many of the world’s economic powerhouses are considered not business friendly.

But the Doing Business rankings need to consider what is business friendly in the widest sense of the word, for business in all its diversity, especially the poorest women and men who already have so many odds stacked against them.

The question is can these forces of civil society and government combine to create a head of steam for review, reform or to even replace the Doing Business rankings so that they support poor people to contribute to and participate in economic life.?

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