GENEVA, Sept. 24 (IPS) – The World Bank announced last week that it was “closing” its “Doing Business” report, which gives countries the opportunity to open and operate a company.
It quoted the results of an investigation as saying that the rankings had changed under pressure from the World Bank. This was not the first time for criticism. Their lack of transparency was highlighted in an internal assessment report from 2008 to 2008, when Paul Romer, the bank’s chief economist, resigned in 2018 over a decision on data manipulation.
Indeed, rankings ran a credibility issue for some time. My colleagues and I saw this first hand. And there were several reasons for this. First, the doing business became very political. It was originally created as a way to measure the improvement of the business environment of countries. It uses an index score based on a number of methods and for example to start a business or get a construction permit – there were ten indicators.
However, the bank used it to rank countries by identifying it as a top scorer and reformer. Governments soon saw a good ranking as an end in itself, regardless of how it affects their development. A slip of rank can be politically damaging.
Rankings clearly promise a rigorous assessment of each country’s business environment. Yet a small team in Washington D.C., which described the investigation as a toxic environment, evaluated ten indicators from 1,190 countries on a national volunteer panel that was asked to amend or approve previously filled questionnaires.
Not everyone was an expert on the subject and some did not even work in the country. The people we spoke to before signing off have just seen the question paper at a glance. Furthermore, English questions are challenged in countries where the language is not commonly spoken. The result is that the government has not always seen their hard work reflected in the rankings, which has led to lobbying campaigns, which are probably surprisingly overweight and not always on the right track.
Some governments have complained that their scores have changed for little reason, and in the case of Chile, according to the ruling party. The vague nature of the change, for example, contrasts with UNCTAD’s Global Enterprise Registration Index, which specifically calls for input from the public. The investigation confirmed the notion that the rankings were aided by funding the World Bank to advise on reforms without resorting to development agencies such as UNCTAD or UNDP. It noted that “most of the bank employees we spoke to raised the issue of the underlying conflict of interest that makes up advisory services.” The method also had its flaws. It does very little to distinguish between good practices, such as ensuring compliance with environmental regulations, and unnecessary red tape, such as another stamped and notarized copy of a document is required.
And while reforms in the business environment can be measured by saving the number of days and methods, it does not measure their impact. For example, at the beginning of Covid we helped Benin move away from the process of creating a business online, meaning that it could be done from a mobile phone instead of queuing at government offices in the tropical sun. This reduces the total time to two hours. But it did not end here.
As a result of the change, which made their lives easier for a short time or away from the capital, the number of companies created increased by 43 percent, half started by people under 30, half in rural areas and one-third owned by women. This effect, more than a general ranking, should be the real reason for the celebration. So, what happens next? The bank’s board said it would “work on a new approach to assessing business and investment climate.” What might it look like, how can it encourage real development, how can it be politicized, and is it still relevant? Doing business means promoting development by facilitating the work of the private sector. Therefore, it should be measured not only if the reforms simplify the processes on paper, but if they actually lead to the creation of more companies, and if so where and by whom? In other words, does it have a real development impact? It should also be measured if the methods are clearly understood. Because the lack of clarity on what paperwork to prepare, where to go, how much to pay, and what to expect often discourages business owners from registering, perpetuating the informal economy. The municipality of Hanoi in Vietnam shows how well it can be done. The team must have adequate staff to work without relying heavily on volunteers, and any desk analysis, including field inspections in government offices supported by a survey of private companies, should be double-checked. The independence of the party can be protected by a committee with the membership of other development agencies. That committee will oversee the details of each report. It will also hear appeals from governments who think the index does not accurately capture their situation. The data collected, the decision of outsiders and any other conjecture should be published online, as a member with sufficient statistical skills of the public can reasonably produce the same results.
For clarity, consideration of appeals by the government should also be disclosed. The index should be less political. This means no rankings. Reform is not a race, and quality Trump amounts. An improved business environment is a means to an end but not the end in itself. The final question, however, is whether such an index is needed at a time when many governments are changing their administrative methods online at the behest of Kovid and young entrepreneurs. Earlier this year, Bhutan made it possible for small website owners to register their websites through an official website and receive legal documents created automatically by email in a matter of seconds. As more governments adopt the same platform and technology, countries will soon be separated by hours or minutes instead of weeks and days. Procedures will be reduced to a single step. Under this scenario, it is not clear that there will be anything left to measure the Doing Business.
UN development economist Ian Richards helps the government improve their business environment and attract investment.
Follow @IPSNewsUNB Bureau
Follow the IPS New UN Bureau on Instagram
© Inter Press Service (2021) – All rights reservedOriginal Source: Inter Press Service