By Robert Hutton and Sandrine Rastello
LONDON - The World Bank should stop ranking countries on how business-friendly they are, according to an independent review that said an annual listing creates perverse incentives for governments.
The bank’s annual “Doing Business” publication should continue under a new title and with a new methodology, Trevor Manuel, a former South African finance minister who led the audit, told reporters in London today.
World Bank President Jim Yong Kim has already said he’s committed to continuing the report, which nonprofit groups including Oxfam have criticized and governments including India’s have reportedly objected to. He has also pledged to push staff to improve its data, methodology and rankings. Jeffrey Owens, of the Institute for Austrian and International Tax Law, said governments had started trying to game the report.
“Tax is a good example,” Owens told reporters at the publication of the audit. “In some countries policy has been defined by the need to move up the rankings.”
The audit cites Georgia as a country that saw a “substantial” improvement in the index in 2007 partly as a result of scrapping labor protections. “They went to the point of abolishing their health and safety agency,” said Peter Bakvis, director of the International Trade Union Confederation, one of the advisers to Manuel’s panel.
The panel was appointed in October by Kim, citing “issues that have been raised by policy makers, executive directors and other stakeholders” about the 10-year-old report.
Indian Economic Affairs Secretary Arvind Mayaram, whose country ranked 132nd in the 2013 report, said in a March speech the methodology of the ranking was “not proper” and that his government had written a letter of complaint to the bank, according to The Hindu newspaper.
“It is indisputable that ‘Doing Business’ has been an important catalyst in driving reforms around the world,” Kim said earlier this month after receiving early conclusions from Manuel. “I am committed to the ‘Doing Business’ report, and rankings have been part of its success.”
Topping the report’s 2013 edition, published in October last year, was Singapore, followed by Hong Kong, New Zealand and the U.S. Farther down the list was China, the world’s second- largest economy, which was placed 91st, behind No. 76 Mongolia, 83rd-ranked Moldova and Albania in the 85th position.