Stop Doing Business
The World Bank should no longer publish its Doing Business index, owing to its flawed design and vulnerability to manipulation. The Bank also owes the developing world an apology for all the harm this misleading and problematic tool has already caused.
NEW DELHI – The World Bank’s Doing Business index has been both conceptually and operationally suspect since its inception in 2003, but mainstream economists have only recently started to criticize it. Although the Bank’s own recent acknowledgement of some of the problems is welcome, the index has already caused huge damage to developing countries, and it should be scrapped.
The Bank has already been forced to suspend publication of the index, owing to “irregularities” in its data. The latest brouhaha concerns straightforward number fudging. Apparently, data from four countries – Azerbaijan, China, Saudi Arabia, and the United Arab Emirates – were inappropriately altered, at least for 2017 and 2019 (thus affecting the 2018 and 2020 Doing Business reports). Other irregularities may have occurred, too. The Bank has begun a “systematic review” of the last five years of data, launched an independent audit of the process, and pledged to correct the most-affected countries’ data.
But this is a minor issue compared to all the other concerns with the index. Paul Romer, then the Bank’s chief economist, highlighted some of these in a stinging 2018 criticism of the tool. According to Romer, most of the changes in country rankings over the previous four years had resulted from repeated methodological changes that gave more weight to national governments’ political orientation.