Ease of doing business index

[4][5] Higher rankings (a low numerical value) indicated better, usually simpler, regulations for businesses and stronger protections of property rights.

Empirical research funded by the World Bank to justify their work show that the economic growth effect of improving these regulations is strong.

[6] Other researchers find that the distance-to-frontier measure introduced in 2016 after a decision of the World Bank board is not correlated with subsequent economic growth or investment.

Several background papers, including by Nobel Prize winners Robert Shiller, Amartya Sen and Gabriel García Márquez, were published in academic journals or books.

[17][18][19][20] In 2023 the Templeton Foundation extended a grant to Professor Robert Lawson at Southern Methodist University to propose a methodology for restarting the project in academia.

The workshops also served to raise awareness about this new benchmarking initiative and disseminate its potential for reform advocacy, policy advice, and development research.

The Doing Business report has its origins in a 2002 paper published in the Quarterly Journal of Economics by Simeon Djankov, Rafael La Porta, Florencio Lopez-de-Silanes and Andrei Shleifer under the title "The Regulation of Entry".

The main findings of the paper are that: "Countries with heavier regulation of entry have higher corruption and larger unofficial economies, but no better quality of public or private goods.

The paper became widely known, with over five thousand academic references, because it provides quantitative evidence that entry regulation benefits politicians and bureaucrats without adding value to the private sector or granting any additional protection.

[27][28] These efforts are motivated to a great scope by the fact that the World Bank Group publishes the data, and hence coverage by the media and the private sector every year.

These economies include Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation, and the United States.

This Nobel-prize-winning economist and philosopher published the first volume of his magnum opus, “Law, Legislation and Liberty” in 1973, where he argued that the common-law approach is more amenable to freedom than its civil-law counterpart.

Many of them may have been relatively easy to implement and uncontroversial (except perhaps among corrupt officials who may gain from onerous regulations requiring bribes to bypass).

It was published by the World Bank Group every year from 2003 to 2019 and aimed to measure the costs to firms of business regulations in 190 countries.

The DB was widely known and used by academics, policy-makers, politicians, development experts, journalists, and the business community to highlight red tape and promote reforms.

As stated by the IEG study from the World Bank: "For country authorities, it sheds a bright, sometimes unflattering, light on regulatory aspects of their business climate.

For the World Bank Group, it demonstrates an ability to provide global knowledge, independent of resource transfer and conditionality.

Attention given to the indicators may inadvertently signal that the World Bank Group values less burdensome business regulations more highly than its other strategies for poverty reduction and sustainable development.

[47] On 12 January 2018, Paul Romer, the World Bank's chief economist, announced that past releases of the index would be corrected and recalculated going back at least four years.

Romer apologized to Chile, saying that the former director of the group responsible for the index had repeatedly manipulated its methodology, unfairly penalizing the country's rankings during the administration of left-wing President Michelle Bachelet.

[50][51] The Economist claimed that the project's director Augusto Lopez Claros had pressed staff to not show improvements in the indicators during Michelle Bachelet's term in office.

[52] Several major newspapers – including the Financial Times, The Economist, and The Wall Street Journal – report that the data of China, Azerbaijan, United Arab Emirates, and Saudi Arabia among others were suspected to be "inappropriately altered" in the 2020 Doing Business publication.

The lack of a safe speak-up environment within the DB team led to a fear of retaliation for those who would escalate and report pressures to manipulate data.

[64][16] The report from WilmerHale provided details on the 2018 and 2020 manipulation scandals, implicating the then-president of the Bank Jim Yong Kim, the then-CEO of the Bank Kristalina Georgieva, and one of the founders of the report Simeon Djankov, in data manipulation for the purposes of raising the scores of some countries (China and Saudi Arabia) and reducing the scores of others (Azerbaijan).

Beyond these allegations, the report documents a culture of pressure from the highest levels of World Bank management, particularly under the leadership of Djankov.

Professor Robert Lawson, Fullinwider Chair in Economic Freedom at Southern Methodist University described this decision as "throwing the baby out with the bathwater.

"[80] According to Ian Vasquez, director for policy at the Cato Institute, a US-based libertarian think tank:"It was a serious mistake for the World Bank to discontinue the Doing Business report.

The report recommended that the index be clearer about what is and is not measured, disclose changes to published data, recruit more informants, and simplify the Paying Taxes indicator.

[86] In 2013, an independent panel appointed by the President of the World Bank and headed by Trevor Manuel of South Africa issued a review expressing concern about the potential for the report and index to be misinterpreted, and the narrowness of the indicators and information base.

While there is a persuasive case for paying attention to these aspects of doing business, the Bank will need to carefully consider the correct way to assess the regulation and legal environment of these areas if these indicators are to be retained.