LDN - Business

World Bank set to launch more robust, transparent business climate rankings

[May 01, 2023] By Andrea Shalal

WASHINGTON (Reuters) - The World Bank will announce on Monday a new methodology for assessing the business climate in up to 180 countries after embarrassing revelations of data irregularities and favoritism toward China forced it to cancel the "Doing Business" rankings two years ago.

The bank said a pilot edition of the new replacement annual series called "Business Ready" would be published in the spring of 2024, covering an initial group of 54 economies in Asia, Latin America, Europe, the Middle East and Sub-Saharan Africa.

Subsequent reports adding more countries will follow in the next two years as the bank refines its methodology and ramps up the new flagship project, which aims to help countries attract investment and boost jobs and productivity to accelerate development.

The bank scrapped Doing Business in September 2021, citing internal audits and an independent probe that found senior World Bank leaders had pressured staff to alter data to favor China, and cited data irregularities that also boosted rankings of other countries, including Saudi Arabia, the United Arab Emirates and Azerbaijan.

"Business Ready improves upon and replaces the World Bank Group’s earlier Doing Business project. It reflects a more balanced and transparent approach toward evaluating a country’s business and investment climate," the bank said in a statement.

World Bank Chief Economist Indermit Gill said the new approach enabled "a fuller and sharper measure of the investment climate of countries — something that is badly needed in a global economy in the midst of a generalized slowdown.”

"Business Ready" was shaped by recommendations from World Bank experts, governments, the private sector, and civil society groups, and includes for the first time worker rights, as defined by the International Labor Organization, while acknowledging that regulation can also have positive aspects.

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A participant stands near a logo of World Bank at the International Monetary Fund - World Bank Annual Meeting 2018 in Nusa Dua, Bali, Indonesia, October 12, 2018. REUTERS/Johannes P. Christo

"The main thing that went wrong was the data integrity of Doing Business was compromised," Norman Loayza, director of the World Bank's Indicators Group, which leads the project, told Reuters. "The main point for us is that we need to ensure data integrity and we have a very comprehensive approach to do that."

Loayza said the bank would publish all data collected for the project - raw data, scores and calculations to obtain the scores - from private sector contributors, as well as surveys of entrepreneurs, company owners and managers to ensure full data transparency, unlike the predecessor report.

The bank will also make available the tools needed by outsiders to replicate the results of the data assessments.

But World Bank officials were still debating whether to revive the business climate rankings that were at the heart of the "Doing Business" controversy or produce an overall index, Loayza said, with a decision expected prior to the first report.

He said the rankings were criticized for encouraging political pressure to try to lift country scores, but also helped spur nearly 4,000 regulatory reforms in developing and developed economies over the past two decades.

Loayza said the new project focuses on 10 topics covering the lifecycle of a firm, including business entry, utility services, labor, dispute resolution, market competition, taxation and insolvency - another move aimed at addressing criticism of the earlier product.

"We take into account not only the perspective of the private entrepreneur, but also the perspective of workers, consumers and other market participants," he said. "So for instance, we will look for worker safety, environmental sustainability and market competition."

(Reporting by Andrea Shalal; Editing by Shri Navaratnam)

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