After 15 Years, World Bank’s Doing Business Report Still Missing the Mark
Source: Bretton Woods Project
December 7, 2017
In October, the World Bank published its 15th Doing Business Report (DBR), Reforming to Create Jobs, noting that 119 economies had carried out 264 business reforms in the past year to “create jobs, attract investment and become more competitive”. The Bank stated in a press release that the DBR provides “objective measures of business regulations and their enforcement across 190 economies”, whilst encouraging economies to “compete towards more efficient regulation” (see Observer Summer 2017). It continued that “3,188 business reforms have been carried out since it began monitoring”.
From its inception, civil society organisations (CSOs) have been critical of this influential publication for promoting one-size-fits-all solutions to development. CSOs argue that the Bank and IMF use the DBR to promote deregulation and neoliberal reforms, based on the unfounded claim that more ‘business friendly’ regulations play a key role in lowering income inequality, while not taking into account the social or economic benefits of regulation and costs of de-regulation.
Simeon Djankov, the creator of the Doing Business series, said in an October press release that, “Reforming in the areas measured by Doing Business can be particularly beneficial to employment creation when those reforms take place in the areas of starting a business and labor market regulation.” Considering that claim, Matti Kohonen from Christian Aid UK stressed that, “This micro-level view is often at odds with a macro-level perspective, where something that may be beneficial at an individual firm owner level (e.g., lesser labour regulation), may hurt macroeconomic objectives – such as greater labour productivity through upskilling of committed employees”. He added that, “Recent macroeconomic perspectives on women’s labour market participation, and tackling inequality may be at odds with the entire DBR.”
giving better scores to low-tax venues is in clear contradiction with the World Bank’s stated objective of giving governments the means to provide essential public services, especially to the poor, and reducing inequality
Peter Bakvis, ITUC
Civil society further criticised the DBR’s ranking of nations as based on narrow business interests over those of citizens and countries (see Observer Autumn 2013, Update 86, 85). For example, according to the International Trade Union Confederation (ITUC), eight out of the DBR 2017’s “top 10 improvers” had poor or worsening performance on workers’ rights. According to UK-based charity CAFOD’s 2013 research, the DBR failed to match the priorities needed for small private sector enterprises to grow. These include ensuring adequate funding for small enterprise support programmes and public services, as well as recognising informal workers’ organisations and collective bargaining processes. In November Peter Bakvis of ITUC commented on Inequality.org that, “giving better scores to low-tax venues is in clear contradiction with the World Bank’s stated objective of giving governments the means to provide essential public services, especially to the poor, and reducing inequality”. Despite a series of methodological changes in 2015 after extensive criticism of the report from the Bank’s own Independent Evaluation Group (IEG) in 2013 (see Observer Summer 2017, Update 86), these civil society critiques still stand.