Business as usual: World Bank rejects Doing Business reforms

20 June 2014

The World Bank has announced minor changes to its heavily criticised Doing Business Report (DBR), an annual report of business regulations in 189 economies. Following forceful recommendations for a change of approach in June 2013 by an independent panel reviewing DBR (see Update 86), in late April the Bank revealed “exciting new methodology updates” to the rankings. The process is being led by Bank vice president and chief economist Kaushik Basu. The Bank announced that a second city will be included for 11 sample economies from 2015, as well as a revised ranking calculation. According to the Bank, this will “give credit to governments that are reforming but not yet seeing changes in rankings.” Several changes to the indicators were also proposed, with new data being gathered and four new indicators added – getting electricity, property registration, enforcing contracts and resolving insolvency.  The details of when these changes will be introduced was left vague with a loose commitment to reflect “some … in Doing Business 2015”, whilst “others will be reflected starting in Doing Business 2016”.

However, the revised rankings are a long way from the panel’s recommendations, which included scrapping the aggregate rankings and introducing peer review. In June, Brussels-based NGO network Eurodad produced an analysis of the methodological changes, showing that only one of the panel’s seven main recommendations – to regularly review the rankings – had been implemented, which “raises questions about why the World Bank engaged in the review in the first place … If the DBR is going to become a credible source of information that is useful for governments and helpful towards achieving the World Bank’s goal of poverty eradication, the methodological proposals must go beyond the current proposals”. Jeroen Kwakkenbos of Eurodad said the Bank’s response to the Panel seemed to be “thanks but no thanks.”

A January paper,  by John Hall, of the  Brookings Insitutions’ African Growth Initiative busts the “myth” that “if only stroke-of-the-pen reforms such as reducing the time and cost of opening a business were pursued with vigour, Africa’s economies would be transformed”. Hall asserted that “More careful research highlights problems with power and trade logistics as accounting for much of the difference in competitiveness between Africa and the rest of the developing world. Moreover the new industrialisers in Southeast Asia and Central America score as badly on the Doing Business surveys as many African economies.” In an April article for international news channel Al Jazeera’s website, Jason Hickel, lecturer at the London School of Economics denounced DBR’s “pro-corporate ideology”, pointing to the rankings’ lack of peer review and condemned its attempt “to get countries to impose neoliberalism on themselves.”

DBR “to get countries to impose neoliberalism on themselves.” Jason Hickel, London School of Economics

Activists from countries penalised by the rankings’ have highlighted their weakness. In May, Maurenn Penjueli, coordinator of the Pacific Network on Globalisation, said “the World Bank’s Doing Business rankings is a key means to our governments’ formal policies of freeing up land and so what we are seeing now is that it is opened up for [a] resource grab.”

Critics also fear that land grabs will result from the Bank’s Doing Business rankings for agriculture, called Benchmarking the business of agriculture, which it is pressing ahead with (see Bulletin May 14). Samoan academic, Iati Iati of the University of Otago, New Zealand said the Bank and governments “need to …. be a bit more responsive to ordinary people’s interests … as opposed to pushing their own agenda … that is really only benefiting a small group in some of these counties.”