World Bank drops ‘Doing Business’ report
INSTITUTION DROPS POPULAR RANKING OF COUNTRIES AFTER PROBE
Under fire for allegations that it bowed to pressure from China and other governments, the World Bank has dropped a popular report that ranked countries by how welcoming they are to businesses.
The report is important to many companies and investors around the world: They use the World Bank’s Doing Business report to help decide where to invest money, open manufacturing plants or sell products.
Eager to attract investment, countries around the world, especially developing economies, have sought to improve their rankings in the World Bank’s report.
Sometimes, nations would pursue substantive policy changes — by, for example, making it easier for businesses to pay taxes, obtain loans or enforce contracts. Sometimes, they would take a more aggressive tack: Like pushy high schoolers cajoling a teacher for a higher grade, they would lobby the World Bank to provide a higher score on the Doing Business report. Countries that have scored a high ranking have often touted their success.
But the World Bank has long been accused of using sloppy methodology and of succumbing to political pressure in producing the rankings. This week, the bank dropped the report after investigators had reviewed internal complaints about ‘data irregularities’ in the 2018 and 2020 editions of Doing Business and possible ‘ethical matters’ involving World Bank staff members.
Data fudged
In an investigation conducted for the bank, the law firm WilmerHale concluded that staff members fudged the data to make China look better under pressure from Kristalina Georgieva, then the CEO of the World Bank and now head of the International Monetary Fund, and the office of Jim Yong Kim, then the World Bank’s president.
Eswar Prasad, a professor of trade policy at Cornell University, said the report was already losing favour: “In recent years, the increasing politicisation of the report’s presentation and analysis of data had already undercut its credibility and diminished its value to international investors.”