For a development liberal, it's hard to know which way to jump in the controversy over the World Bank's Cost of Doing Business Report.
Since 2003 CoDB has made itself a key publication for both development economists and journalists -- by no means a common feat. The Bank even uses it to decide on lending to low-income states.
Now its survival seems under threat. At best it is expected to emerge in emasculated form, from being one of the few World Bank analyses to rate countries for their performance in an ordered list of 185 nation-states.
See update for 2016 with the results of the review.
After Jim Yong Kim took over as World Bank President in July 2012 he appointed a review panel to evaluate the report, which published its th edition this year.
Since then, it is reported, several middle-income countries have stepped up pressure against the Report.
Several journalistic organizations put the blame on China. Russia Today, hardly the most independent of reporting outfits, stated in a report on 7 May: "Displeased with their low ranking, China wants to eliminate the World Bank's 'Doing Business' global report, saying the institution shouldn't be ranking its members."
According to the World Bank 2013 list) (using figures from July 2012), China is at 91 against Singapore's 1, Russia's 112 and Central African Republic's 185.
The world's second largest economy was faulted for the difficulty in paying taxes and long waits for construction permits.
"Wrong, misleading"
RT also notes that China's World Bank Deputy Executive Director Bin Han complained late last year that the report "used wrong methodologies, failed to reflect facts, misled readers and added little value to China's improvement of the business environment."
The much-respected Financial Times took the same line with a story that "China seeks to water down key World Bank report".
But Mark Weisbrot in The Guardian on 31 May pointed out: "China is just one of many countries, and a latecomer at that, which have opposed the index within the Bank. Opposition has come from Brazil, Argentina, India and other developing countries."
Since economists praise it for its usefulness, what is all the fuss about?
Maybe CoDB is not as useful as the U.S. economists say. As Weisbrot notes, its principles were developed with the support the U.S. government and its aid agencies, and reflects their free-market principles ahead of anything else.
Thus, in 2013 it dropped labour regulations from its list of principles. Not so good in a time when a murderous Bangladeshi factory fire was grabbing headlines around the world. Ajay Chhibber, director of the UNDP's regional bureau for Asia and the Pacific, wrote an FT article, later picked up by other news organizations, entitled "WB's 'doing business index' flaws exposed" and pointing exactly to such failings (Daily Star 20 May 2013).
Nor is environmental regulation explicitly mentioned, he adds. "A revamp of the influential Ease of Doing Business Index is vital for helping foster more responsible means of globalization."
Ignores corruption, transport
As the Report itself admits, it does not take into account issues such as corruption or transport facilities -- which many (see the comments on the economists' web page) consider much more important than the paperwork involved in making exports competitive.
I once tried to 'sell' the CoDB to a development professional in his work to get better official help for businesses in developing countries. The World Bank boasts that it has assisted 80 countries to improve regulations using its CoDB principles.
But my friend's reply was that the analysis, though involving a boasted 7000 lawyers, is so superficial he just could not use it.
Which is pretty much what the aid workers told the economists in the debate following announcement of the petition.
I'm in favour of any reasonable proposal to improve reporting on countries' economic, social and welfare performance. But I'm not sure the CoBD deserves to survive in its present form.
Surely the World Bank could do better and draw up more useful indicators in deploying its resources?
It hardly inspires confidence that the review panel chief is a neo-liberal and the World Bank has excluded NGO and civil society critics from its reviewers.
Sources
The World Bank Cost of Doing Business Report (produced with the International Finance Corporation).
