World Bank launches more Robust, Transparent Business Climate Rankings
The World Bank announced Monday a new methodology for assessing business climates in 180 countries. This follows embarrassing revelations about data irregularities and China’s favoritism. Two years ago the World Bank had to cancel their flagship rankings due to these scandals.
In September 2021 the bank canceled its “Doing Business Rankings” citing an internal audit and an independent investigation that revealed senior World Bank leaders had pressed staff to manipulate data in favor of China. The bank cited data irregularities which also helped boost rankings for other countries such as Saudi Arabia, United Arab Emirates, and Azerbaijan.
The bank announced that a pilot edition of a new annual replacement series entitled “Business Ready” would be published in spring 2024. It will first cover 54 economies from Asia, Latin America, and Europe, as well as the Middle East, Sub-Saharan Africa, and the Middle East.
In the next two years, the project will expand as the bank improves its methodology. It aims to boost productivity and jobs in order to speed up development by helping countries to attract investment.
The bank released a statement that said “Business Ready… reflects a balanced and transparent approach to evaluating a nation’s business climate and investment climate.”
Indermit Gil, the World Bank’s Chief Economist, said that the new approach allowed for “a more complete and precise measure of the investment climate in countries,” which was something he felt was desperately needed in an economy facing a generalized recession.
“Business Ready” is a result of recommendations made by World Bank experts and governments. It also includes, for the first, worker rights as defined by the International Labor Organization.
Norman Loayza of the World Bank Indicators Group (which leads the project) told Reuters that the main problem was the compromise of data integrity. “Our main concern is to maintain data integrity. We have a comprehensive plan to achieve that.”
Transparency of Data
Loayza stated that the bank will publish all data collected – raw data and scores, and the calculations used in obtaining the scores – from private sector contributors as well as surveys of entrepreneurs, business owners, and managers.
The bank will also provide the tools required by others to reproduce the results of data assessments.
Loayza stated that World Bank officials are still debating if they should revive the rankings of business climate, which were at the center of the controversy surrounding “Doing Business”, or create an overall index. A decision is expected before the first report.
Loayza stated that, while the rankings have been criticized as encouraging political pressure in order to raise country scores, they have also helped to spur nearly 4,000 reforms of regulatory laws and regulations both in developed and developing economies over the last two decades.
He said that the new project will focus on 10 topics, covering the entire lifecycle of a company, such as business entry, utility service, labor, dispute settlement, market competition and taxation. This is another step to address criticisms of the previous product.
He said that he took into consideration not only the viewpoint of the private entrepreneurs, but also workers, consumers, and other participants in the market.
The bank released two documents to explain the new approach: the Business Ready Manual, which outlines detailed protocols and safeguards. These include how the bank interacts and works with government agencies and approval lines, and a methodology guide that explains its indicators and scoring method.
Prachi, an accomplished Chief-Editor at The Sustainable Brands Journal, has 15+ years of experience in Europe, the Middle East, and India, managing 90+ global sustainable brands. She’s a prolific writer in sustainability, contributing to various publications. Prachi’s unwavering passion and expertise make her a recognized authority, driving positive change and inspiring a sustainable future.
