Under fire for allegations that it bowed to pressure from China and other governments, the World Bank has dropped a popular report that ranked countries by how welcoming they are to businesses.
The report is important to many companies and investors around the world: They use the World Bank’s “Doing Business” report to help decide where to invest money, open manufacturing plants, or sell products.
Eager to attract investment, countries around the world, especially developing economies, have sought to improve their rankings in the World Bank’s report.
Sometimes, nations would pursue substantive policy changes — by, for example, making it easier for businesses to pay taxes, obtain loans or enforce contracts.
Sometimes, they would take a more aggressive tack: Like pushy high schoolers cajoling a teacher for a higher grade, they would lobby the World Bank to provide a higher score on the “Doing Business” report Countries that have scored a high ranking have often touted their success.
In 2017, for example, Prime Minister Narendra Modi took to Twitter to celebrate India’s big improvement in 2017. In Rwanda, the country’s development board employs a “Doing Business economist.”
But the World Bank has long been accused of using a sloppy methodology and of succumbing to political pressure in producing the “Doing Business” rankings. This week, the bank dropped the report after investigators had reviewed internal complaints about “data irregularities” in the 2018 and 2020 editions of “Doing Business” and possible “ethical matters” involving World Bank staff members.
In an investigation conducted for the bank, the law firm WilmerHale concluded that staff members fudged the data to make China look better under pressure from Kristalina Georgieva, then the CEO of the World Bank and now head of the International Monetary Fund, and the office of Jim Yong Kim, then the World Bank’s president.
Founded in 1944, the 189-country World Bank makes grants and loans, often to finance big public works projects, and offers economic advice, mostly to developing nations. The bank, based in Washington, has also pledged to reduce poverty around the world.
Questions surrounding the report date back to at least 2018, when Paul Romer, then the chief economist of the World Bank, who would go on to win a Nobel Prize in economics for his earlier work, resigned after complaining about how “Doing Business treated” Chile.
As a result of methodological tinkering, the South American country had plunged in the rankings while socialist Michelle Bachelet occupied the presidency, rebounded under conservative Sebastian Pinera, then slumped again when Bachelet returned to power. The ups and downs occurred despite little actual change in policy, according to a summary of events by the Center for Global Development think tank, which called then for the bank to “ditch” the report.