How many scandals will it take for the World Bank to start doing rights not rankings?
- The publication of the World Banks’ 2021 Doing Business Report was stopped in August 2020 following a scandal that uncovered data manipulation and altered scores in four countries.
- As a result of these irregularities, Saudi Arabia was named the top improving economy of 2020 around the time of the “Davos in the Desert” summit and a year after the Khashoggi murder.
- The World Bank has launched another review of the Doing Business methodology and is finally seeking feedback from CSOs, but for a meaningful and participatory consultation it must extend the deadline for feedback and organise a follow-up discussion.
In August 2020, the World Bank announced that the publication of the 2021 Doing Business report and rankings had been temporarily stopped following irregularities in the reporting of data.
Doing Business is the most controversial publication of the World Bank, ranking 190 countries for their performance in 10 areas and 41 indicators of business regulation. It has been highly criticised for pushing countries into a race to the bottom in deregulation and liberalisation.
Often, it has been a competition entrenched with business interests and geo-political motivation, guided by attracting foreign investment to the detriment of local workers and businesses. Improved Doing Business rankings help countries to acquire legitimation over poor human rights records. For instance, data irregularities led Saud Arabia to be placed in the ‘Doing Business 2020 top ten improvers’ at about the time the country was hosting its “Davos in the Desert” summit. Just a year later the same summit was boycotted by business leaders over the killing of Washington Post journalist Jamal Khashoggi.
Anatomy of a scandal
The irregularities that halted the publication last August are the latest in a series of scandals. The internal investigation that followed found that between 2016 and 2020 data had been unduly manipulated during the production of the index leading to changes to the scores of four countries:
- Azerbaijan (DBR 2020): this concerned the Getting Electricity, Enforcing Contracts, and Trading Across Borders indicators. Without irregularities, Azerbaijan’s global ranking would have been 28 (instead of 34) and it would have been on the list of top 10 improvers in the Doing Business 2020.
- Saudi Arabia (DBR 2020): this concerned the Getting Credit and Paying Taxes indicators. Without irregularities, Saudi Arabia’s global ranking would have been 63 (and not 62), and it would not have been the top improving economy in Doing Business 2020.
- United Arab Emirates (DBR 2020): irregularities affected the Paying Taxes indicator. Without irregularities, the United Arab Emirates’ global ranking would have been unchanged at 16.
- China (DBR 2018): had irregularities affecting the Starting a Business, Getting Credit, and Paying Taxes indicators. Without irregularities, China’s global ranking in Doing Business 2018 would have been 85 instead of 78, a decline of 7 places relative to the previous year.
The internal investigation also included allegations by 9 out of the 15 staff in the Doing Business team that they had been pressured to manipulate data. According to the investigation report: “The lack of a safe speak-up environment within the Doing Business team led to a fear of retaliation for those who would escalate and report pressures to manipulate data. This contributed to the compromise of data integrity in the Doing Business report.”
The external review of the Doing Business methodology: an opportunity for change?
The WB has tasked an external panel to undertake an in-depth review of the Doing Business methodology, touching on several fundamental aspects of its concept and purpose, including:
- The inclusion of new topic areas (e.g., support for digital transformation) and the elimination of existing components of the Doing Business;
- The appropriateness of the balance that the Doing Business approach strikes between streamlining regulations and providing public services for a business-friendly environment, and of the balance between measuring the cost, quality, and benefits of regulation;
- The appropriate role of the Bank as a producer and consumer of Doing Business data and as the provider of policy advice on the business regulatory environment.
A well-planned, consultative and serious review of these and other aspects of the Doing Business’s methodology, based on robust exchanges with civil society and other external actors, could begin to address some of the long-standing criticisms of the report. For instance, it could mean revisiting the WB’s policy blueprint for enabling a business environment towards the needs of local businesses and the protection of workers’ rights. It could also address the bias inherent in Doing Business against all government regulations, and challenge its use of ranking as a tool to unduly influence countries’ policy space and political deliberations.
This exercise should lead the World Bank to finally cease the publication of the Doing Business report and rankings and promote a vision of the economy where the state plays a critical role in ensuring that the private sector puts people and planet before profit.
After CSOs asked to be consulted, the World Banks launched a feedback process which unfortunately falls short of what is needed: the timeline is too short (three weeks), it is top down (the scope of the review itself should have been discussed with stakeholders) and does not promote proper engagement (it consists in a feedback form, with no follow up discussion).
Time to do rights, not rankings
Nearly 350 civil society organisations, grass roots movements and academics have written to the World Bank’ Executive Directors calling for the permanent scrapping of the report, in the light of its harmful impacts and weak empirical foundations.
Join them signing the letter here.
Taking part in the consultation, CSOs can expose the shortfalls in its methodology, data selection and scope, and provide evidence of the harmful impact that the Doing Business has had in many countries. But this is only possible if the World Bank agrees to extend the timeline for providing input and make provision for a follow-up discussion on the feedback received by the external panel.
Join us in asking the WB to turn the stakeholder consultation into a meaningful and participatory process
Tweet and email WB Chief Economist Carmen Reinhart to tell the WB that it must adopt a participatory process in the methodology consultation.