The Bretton Woods Credibility Crisis
The World Bank and the International Monetary Fund play a critical role in the global economy precisely because their independent research is universally trusted. But following a scandal involving the World Bank's flagship report, urgent action is needed to regain the public's confidence.
WASHINGTON, DC – Despite setbacks like the Great Recession and the COVID-19 pandemic, the world economy has had a massively successful run since World War II. That success was underpinned by the post-war global economic system and its central institutions: the International Monetary Fund, the World Bank, and the World Trade Organization (previously the General Agreement on Tariffs and Trade). In joining the Bretton Woods institutions, countries around the world agreed to subject their economic behavior to an international rule of law.
These institutions all have governing bodies with representatives from member states, as well as highly qualified technocratic staff to carry out their work. The periodic reports they produce have been essential sources of information and analyses. But one of these reports, the World Bank’s annual Doing Business index, has become the source of enormous controversy.
The point of Doing Business was to report on each member state’s regulatory environment, elements of which include legal procedures, wait times, start-up costs, the efficiency of the judicial system, and the accessibility and reliability of basic utilities like electricity. These and many other factors determined each country’s overall ranking. In the 2018 report, for example, New Zealand ranked highest, and Somalia the lowest.