The World Bank is working on a new approach to measuring the business and investment climate in economies after its previous flagship report known as “Doing Business” was canceled last year following an outside audit that concluded data were manipulated.
The development lender is seeking input for the new project, with the working title “Business Enabling Environment,” to take into account the views of experts and potential users in government, the private sector and civil society, the World Bank said on its website. The project will be led by the same development economics global indicators group that produced “Doing Business.”
Some changes proposed include evaluating the business environment from the standpoint of private-sector development overall rather than just individual firms; including the provision of public services in an economy and not just the regulatory burden; and the inclusion of data based on practical implementation of regulations rather than just laws on the books.
“The data collection and reporting process will be governed by the highest possible standards,” the World Bank said in a note on the project released yesterday.
The Washington-based institution is targeting a bank-wide review of the project for late March, with a goal of release the first full report in late fall 2023.
The World Bank abandoned the “Doing Business” report last September. The move came after a review by an outside law firm accused current International Monetary Fund Managing Director Kristalina Georgieva of pressuring World Bank staff to boost China’s position in the 2018 edition of the report when she was the organization’s No. 2 official.
Georgieva consistently denied the allegations, and the IMF board decided to keep her as the fund’s head after its own review, saying that the evidence didn’t “conclusively demonstrate” that she played an improper role. The scandal rocked the IMF and World Bank last year, and the fund last week appointed an independent outside panel led by former Bundesbank President Jens Weidmann to strengthen institutional safeguards.
The “Doing Business” report played a notable role in emerging markets, with governments often showcasing moves up in ranking in appeals for foreign investment. But the integrity of the ratings had been the source of heated debate in recent years, with Paul Romer quitting as the World Bank’s chief economist in 2018 after questioning changes to Chile’s order in the report.
While the proposal says that the new project will avoid the hype around rankings that plagued its predecessor, it says that whether the indicators will be grouped to produce aggregate scores is yet to be determined. That could leave it open to the debate that plagued its predecessor, said Justin Sandefur, a senior fellow at the Center for Global Development and a participant in a panel that reviewed “Doing Business” last year.
“It’s not super categorical or committal about not going with an index or aggregate scores,” he said. “It sounds like the jury is still out there.”
Source: Bloomberg
