Daily Management Review

World Bank’s 'Doing Business' Rankings Has Deeper Rot, Finds External Review


A group of external advisers to the World Bank has suggested a complete reshaping of the flagship Doing Business rankings in order to curb the efforts of countries to "manipulate their scores", and this report was passed on the Bank weeks prior to the scrapping of the rankings following a damning independent probe.
Three weeks ago, the 84-page review that had been compiled by senior academics and economists was submitted to World Bank chief economist Carmen Reinhart and was published on the bank's website on Monday.
On Thursday last week, the World Bank announced the cancellation of the "Doing Business" series on country business climates because of findings of internal audits as well as the conclusions of a separate independent probe by law firm WilmerHale in which the external agency indicted senior World Bank leaders, including Kristalina Georgieva, who is now the chief of the International Monetary Fund, of exerting pressure on the bank’s staff to change analysis methodology of data to favor China while Georgieva was the CEO of the bank.
The findings have been strongly denied by Georgieva.
The WilmerHale report "speaks for itself", said World Bank President David Malpass in an interview to CNBC in what was his first public comment since the data rigging controversy broke last week. He added that new approaches to helping countries improve their business climates will be explored by the bank.
A group assembled by the World Bank in December 2020 wrote the review published on Monday. the group was entrusted with the job following revelations of data irregularities in reports on China, Saudi Arabia, the United Arab Emirates and Azerbaijan as found by a series of internal audits at the bank.
The recommendations of the review asks the bank to implement a series of remedial actions and reforms so that the "methodological integrity" of the Doing Business report can be upheld strongly as the reviewers pointed out to what they defined as "a pattern of government efforts to interfere" with scoring for the reports in past years.
"The World Bank needs an introspection. It has been advocating country reforms for better governance, transparency, and practices. Now it has to use the prescription for its own reform," said Mauricio Cardenas, the Columbia University professor and former Colombian finance minister who chaired the expert panel.
A dearth of transparency in the underlying data and questionnaires that is used for calculating the rankings of countries in the Doing Business series was blamed by the experts as they called for building up a firewall between the Doing Business team and other World Bank operations while also creating a permanent, external review board.
"We have been informed of multiple cases where national governments have attempted to manipulate the DB scores by exerting pressure on individual contributors," the report said, pointing to lawyers, accountants, or other professionals.
"World Bank staff mentioned several countries where they believe government officials have instructed contributors how to respond. And even in the absence of explicit government pressure, of course, the perceived threat of retaliation may influence the scores contributors report."