The wrongdoings of the Doing Business Rankings and the Corporate Take-Over of Agriculture
March 14, 2018
Source: Bretton Woods Project
Under the campaign ‘Our Land Our Business’, NGOs, trade unions, farmers’ organisations, consumer and environmental groups – all together over 280 organisations from over 80 countries – have joined hands to demand that the World Bank stop one of its most insidious activities: the ‘business ranking’ of countries. The Bank’s Doing Business Report (DBR) has scored countries according to how well their governments are “improving the business climate” over the past 15 years. But this model suffers from fundamental flaws (see also Observer Summer 2017).
In January 2018, the Bank’s Chief Economist Paul Romer publicly denounced the flawed methodology of and political manipulation by the World Bank’s DBR, which Romer noted may have been used to disfavour Chile’s ranking under its outgoing socialist president, Michelle Bachelet. Romer’s resignation followed a few days later.
In 2013, the World Bank’s own Independent Evaluation Group (IEG) recommended that the country rankings be eliminated from the DBR (see ObserverAutumn 2013). The group’s report also criticised the DBR for ignoring ‘the social or economy wide benefits that regulations yield, such as safety, environmental protection, worker protection, or transparency.’ By forcing countries to compete against each other, the rankings encourage a race to the bottom of deregulation between countries. The IEG also recommended eliminating the tax indicator, which penalises countries that require private companies to pay taxes or make contributions to pensions and other social protection schemes (see Observer Winter 2017). Bank management ignored these recommendations and has maintained a scoring system that rewards governments that not only cut taxes but also eliminate social, labour and environmental regulations in favour of corporations and foreign investment.
EBA: The expansion of a failed model
Based on the DBR’s model, the Enabling the Business of Agriculture (EBA) report was launched after leaders of the G8 asked the World Bank in 2012 to create a “Doing Business in Agriculture Index”, to guide policy makers in the developing world in designing “business-friendly” agricultural policies and regulations. It was started with financing from the US, UK, Danish, and Dutch governments as well as the Bill and Melinda Gates Foundation.