Rob Katz

Doing Business Series Gets Slammed by World Bank Watchdog

Doing Business 2008“So, what do you think about the IEG report?” I was g-chatting with my friend Smita the other night when she brought up the World Bank. “What IEG report? What’s the IEG?” I replied, showing my ignorance of the latest Bank goings on (and of the acronym–it stands for Independent Evaluation Group). Smita sighed. “I’m surprised you haven’t heard. I’ll forward you an e-mail from this listserve I’m on. Take a look.”

That’s how I found out about Doing Business: An Independent Evaluation. Released on June 12, the report criticizes Doing Business’ (DB) reliability and robustness, suggesting that top-ranked countries may achieve high scores due to the absence of regulation, not necessarily the presence of smart, socially-beneficial regulation. Furthermore, the report found “no statistically significant relationship” between the DB indicators and any kind of economic outcome such as investment, gross domestic product growth or employment.For those interested in business’ role in fostering sustainable development, the IEG report ought to prompt some serious reflection. I know it’s been on my mind since I read it. After all, I’ve been promoting the Doing Business reports for years here on and to scores of colleagues, companies, development agencies and NGOs interested in base of the pyramid strategy. Perhaps it was na’ve of me to assume that–as a World Bank / International Finance Corporation report–the DB indicators are robust and well-vetted. The IEG says they?re not–which calls into question a lot of my advice.

There has been some discussion of Doing Business: An Independent Evaluation both in the press and the blogosphere. Bob Davis at the Wall Street Journal gives a good, general overview, noting that the report prompted some serious self-reflection within the Bank’s management. In the blogosphere, Rainer Falk of the European Civil Society Roundup weighs in, noting that

By rewarding countries having the lowest level of regulation, DB frequently gave some of its best scores to countries known as serious violators of workers’ rights, including Belarus, Georgia and Saudi Arabia, all have which have severely restricted or even prohibited trade union activities.


More scathing commentary at IFIs Choike, which reports that

one executive director at the lending agency has suggested that the new critique be included as part of the Doing Business report so users would know not to take the rankings too seriously.

Of course, the Doing Business blog weighs in?right? No. Nothing. Just a lousy reference to the Hitchhiker’s Guide to the Galaxy (great book, but why here?)

When it comes to transparency and accountability, the DB Blog’s silence here is deafening. Simeon Djankov–I’d expect more from you. Just because the news isn?t complimentary doesn’t give you a free pass on writing about it. You created the Doing Business series–and you have a blog–which means you have a platform to defend your methodology and results. I’m listening?but until I hear a serious defense, I won’t be using Doing Business when discussing the BoP.