The End of World Bank’s “Doing Business Report”: A Landmark Victory for People & Planet
Source: Inter Press Service
The writer is Research Associate at the Oakland Institute in San Francisco, USA.
SAN FRANCISCO, USA, Sep 29 2021 (IPS) – The September 16, 2021 announcement from the World Bank that it had discontinued publication of the Doing Business Report (DBR) marked a major victory for people and planet.
Since 2002, the DBR has scored and ranked countries on the “ease of doing business,” i.e. on regulatory changes and reforms that make them more attractive to private investors. These “reforms” have included lowering corporate taxes, slashing environmental safeguards, social and labor standards, cutting administrative procedures, and removing restrictions to trade and business.
Cancellation of the DBR comes after data irregularities were found in the 2018 and 2020 reports. Audits revealed serious ethical concerns of data manipulation – shattering trust in the rankings. An explosive external review delivered to the Bank’s Board of Executive Directors exposed how senior Bank officials applied pressure to manipulate data in order to improve rankings for select countries.
Notably, the independent report exposed how then-Bank CEO (and current IMF Managing Director) Kristalina Georgieva applied “pressure” to “make specific changes to China’s data points in an effort to increase its ranking for the 2018 DBR,” at a time the country was expected to increase its financial contribution to the Bank’s capital. Then-World Bank President Dr. Jim Yong Kim was also indirectly implicated in the effort to increase China’s ranking.
Simeon Jankov, one of the founders of the DBR and a senior Bank official was also incriminated in altering Saudi Arabia’s data to boost the country’s ranking, in an effort to reward the country for the “important role it played in the Bank community.”
Saudi Arabia had previously implemented a series of Reimbursable Advisory Services (RAS) projects – paid advisory services provided by the Bank, some of which focus on improving economic indicators scored on the DBR. Elevating Saudi Arabia to first place in the Top Improvers list was done to “demonstrate the effectiveness of the Bank’s efforts and validate the amount of money Saudi Arabia had spent on RAS projects relating to the Doing Business Report.”
While shocking, these revelations are not the first charges of data manipulation brought against the Bank’s flagship publication. In 2018, the World Bank’s then-Chief Economist, Paul Romer exposed how DBR scores for Chile were skewed and politically manipulated to disfavor Michelle Bachelet’s progressive government.
While Romer admitted “business conditions did not get worse in Chile” under Bachelet, the country’s DBR rank fell from 25th to 57th while she was in power. The Bank denied Romer’s allegations and he subsequently resigned.
The blatant evidence of manipulation of the rankings is a slap in the face of the poorest countries that deregulated their economies to gain favor with the Bank. Consumed by climbing the rankings, policy makers around the world prioritized reforms that would improve their score instead of pursuing policies that would benefit people or the environment.
Even before the extent of the data manipulation came to light and destroyed any credibility of the DBR, the rankings were built on a flawed premise that rewarded countries for reducing their labor standards, destroying the environment, and providing easy access for corporate pillaging and land grabs.
For instance, the DBR ranked Sierra Leone, as one of “the top 15 economies that improved their business regulatory environment the most” after the country implemented policy changes that fast-tracked land leases, attracting foreign investors eager to develop large-scale oil palm and sugar cane plantations that deprived local communities of the land essential to their livelihoods.
Similarly, the DBR ranked Liberia as a “top ten global reformer” in 2010 after it prioritized lowering tax rates for corporations, provided guarantees to investors “against unfair expropriation,” and “ensur[ed] the ability of investors to repatriate capital and profits,” among other pro-corporate reforms. These policy changes resulted in giant palm oil and rubber producers acquiring more than 1.5 million acres of land – once again at the expense of community livelihoods.