A clean break from Doing Business rankings

An Independent Review Panel established to comprehensively review the World Bank’s annual Doing Business report released their final report on Monday, calling for the Bank to “make a clean break” with the practice of ranking countries in the report on the grounds that the results might be misleading and were sometimes not objective.

The Doing Business report, now in its 10th year, measures and analyses regulations that apply to small and medium-sized local businesses in 185 economies (see the 2012 rankings here). It is based on 10 indicators and updated annually. Considering its rankings are, according to review panel chair Trevor Manuel, “the leading tool to judge the business environment of developing countries”, and carry enormous weight with governments, media outlets, researchers and development organisations, the call for an end to the rankings system is a big deal.

The review panel found that the report relies on a narrow information base, uses flawed data-collection methodology, is not designed in such a way as to help countries improve their rankings and has insufficient oversight.  It recommended continuing the report, minus the rankings, and made a series of other recommendations for change. For example, a peer-review process will be introduced, the methodology fixed, transparency increased and oversight and management arrangements clarified.

The World Bank has yet to respond to the Panel’s findings.  Interestingly, Jim Yong Kim released a statement on 7 June about the review process, in which he said, “rankings are part of [the report’s] success”.

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Jonathan Pryke

Jonathan Pryke worked at the Development Policy Centre from 2011 as a Research Officer and Blog Editor, and left in mid-2015 to take up the position of Melanesia Fellow at the Lowy Institute. He has a Master of Public Policy/Master of Diplomacy from Crawford School of Public Policy and the College of Diplomacy, ANU.

Robin Davies

Robin Davies was appointed Head of the Indo-Pacific Centre for Health Security at the Australian Department of Foreign Affairs and Trade in September 2017. Previously, from 2013, he was the Associate Director of the Development Policy Centre and from mid-2014, concurrently an Honorary Professor at the Crawford School at ANU.

4 Comments

  • There clearly are methodology and applicability issues with the indicators, but it looks as though the Bank is being persuaded to throw out the baby with the bathwater. Particularly disturbing is the Panel’s argument that the employing workers indicator should be abandoned because labour market regulation may contribute to reducing inequality. Such regulations may or may not reduce inequality (that is a proposition that would need pretty careful testing) but that is beside the point. Many of the other interventions covered by the Doing Business indicators may in principle serve useful regulatory functions: but if they are badly designed and poorly administered, the costs they impose are matter of policy concern. And the Doing Business indicators have been useful in prompting governments to consider if they could achieve business regulatory goals at lower cost.

  • I believe that removing the rankings would basically destroy the usefulness of the DB. They have been an important tool for achieving progress in business environments.

  • It’s good to see this discussion on the DB reports. The methodology is far from perfect and clearly requires improvement. The issues around this have been discussed for quite some time, including the IEG’s evaluation published in 2008. I am not sure I agree with the recommendation to remove the index. While the rankings are crude, they are a powerful tool for getting countries to think about these issues. The media love it and it gets governments and business to at least begin to talk about the need for reform – unlike other more “sound” assessments undertaken by the World Bank and other agencies. My biggest problem with the DB rankings is how they have been misused and included as measures of success for development assistance programmes.

  • I agree this is a big deal, the rankings are quoted extensively by a range of actors so to critique them in such harsh terms is really significant – thanks for highlighting this

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