Doing Business redux | The Financial Express

Doing Business redux

World Bank’s revamped business climate report should help investors besides furthering research on the topic

Doing Business redux
World Bank is gearing up with a new series on the Business Enabling Environment (BEE), the first report of which will be released in April 2024.

After discontinuing its Doing Business indicators in September 2021, which had a good run since 2003 but became controversial, the World Bank is gearing up with a new series on the Business Enabling Environment (BEE), the first report of which will be released in April 2024. Doing Business rankings provided a snapshot of the business environment confronting a representative small and medium firm for potential investors in 190 countries, with indicators like the ease of starting and closing a business, dealing with construction permits, cost and time taken to get an electricity connection, registering property, the number of documents and the average cost of containers for export and import shipments and enforcing contracts. Improving a county’s overall ranking became an aspirational objective. Since 2014, India sought to break into the ranks of the top 50 countries. It made impressive strides by climbing 79 places in its global ranking from 142 in 2014 to 63 in 2019. But the credibility of this annual exercise was severely dented when the Bank’s internal audits and an independent probe revealed irregularities in the reports on China, Saudi Arabia, the UAE and Azerbaijan. Four years ago, the Bank’s chief economist Paul Romer also alleged that the Doing Business report was deliberately skewed against the socialist government in Chile then headed by Michelle Bachelet.

For such reasons, the World Bank is revamping this exercise with all the data that it has been gathering like its Enterprise Surveys in which thousands of firms in each country are asked about their actual experience in doing business. The new series is also much broader in scope in providing a quantitative assessment of the business environment for private sector development rather than just for a representative small and medium firm. The focus is on the regulatory framework and public service provision at the microeconomic level, using not only de jure information on laws and regulations but also de facto measurements reflecting practical implementation. The Enterprise Surveys database will prove highly useful in this regard. Macroeconomic data on government corruption and accountability, gender and human capital will not be a part of this exercise but will feature in the BEE website as complementary resources. However, according to the pre-concept paper, how these indicators will be grouped to provide aggregate scores by economy or topic is yet to be decided. The Bank is obviously keen to avoid the earlier controversies by minimising the hype around aggregate rankings, including the possibilities of gaming the system to push a country up the rankings.

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According to a report in FE, the first BEE report will have only a limited coverage of only 40-50 countries. The second and third reports will add a similar number of countries, reaching 120-150 countries going forward. A Washington-based spokesperson of the Bank stated that the gradual increase in country coverage will be accompanied by refinements in methodology, consistent with improvements in the new measurement project. The Bank, for its part, has also received over 2,000 comments from 410 feedback providers, including donor and client governments, civil society, private sector entities and the academic community. All eyes will therefore be on the revamped BEE report not just for potential investors but also for furthering research on this topic. If the earlier Doing Business indicators served a useful purpose, the BEE report will provide a more authoritative measurement of the business environment in many countries.

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First published on: 05-11-2022 at 04:30 IST