Revelations about how the World Bank’s Doing Business list was rigged

With the Doing Business Ranking, the World Bank attempted to rank individual world economies according to criteria that looked at ease of doing business in each of the ranked countries.

Over time, this list has become a sort of promotion of economic excellence to foreign investors, an important document that has strongly influenced global capital flows. This year, however, the list will not compiled, as an independent investigation has established that the World Bank’s management put pressure on its employees to adjust the results in favour of certain countries.

Consequently, the rankings on the two lists were annulled – the Doing Business 2018 and the Doing Business 2020. Serbia was highly ranked on both of these lists.

On the Doing Business 2018 list, published in September 2017, Serbia ranked even better than China, which 78th on the list. That year, according to one indicator – the speed of issuing building permits –  Serbia was among the top 10 economies in the world.

On the Doing Business 2020 list, Serbia had the highest rated economy in the region, followed by Slovakia, Montenegro, Croatia, Hungary, Romania, Bosnia and Herzegovina, Bulgaria, Belgium, Luxembourg and Italy.

Economist Simeon Djankov is the list’s creator and, over time, the list has become a sort of promotion of economic excellence for foreign investors. It has become an important document that has strongly influenced global capital flows, because every investor, before deciding in which country to invest his money, looked at this list as if it were Holy Scripture. And every government, including the Serbian one, looked at the list as the Holy Scriptures, because the list was a measure of reforms a particular government was conducting.

Nikola Altiparmakov, a member of the Serbian Fiscal Council, told Oko magazine that the way the World Bank compiled this list is a textbook example of conflict of interest.

“There is the World Bank, which, on the one hand, measures the quality of doing business in countries and ranks them, and the same, there is the World Bank that gives loans to developing countries in exchange for them advancing on the same list,” he says.

Nobel Prize winner Paul Romer, who worked at the World Bank, had previously noted irregularities in the case of Chile: “Here, the World Bank established the results in favour of the right-wing government, as opposed to the left. And nobody reacted!”

On the World Bank’s list, North Macedonia was rated better than Japan and Bulgaria, the country where Kristalina Georgieva, the head of the International Monetary Fund (IMF), which, in turn, was ranked better than Luxembourg.

Georgia was very often in the top ten countries, but not Germany, Japan or Switzerland. “If you look at that list, you would think that the conditions for doing business in Rwanda are the same as in Switzerland. The countries had to accept this game because being demoted on the list would have been perceived negatively by the public. For China, this was a minor problem because investors were investing there regardless, but for countries like Serbia, which were forced to take out expensive loans in exchange for good rankings on the list, the scandal is much bigger,” Nikola Altiparmakov warns.

However, the biggest problem with this list is that the focus has always been on international comparisons.

(RTS, 24.10.2021)

https://www.rts.rs/page/oko/sr/story/3229/ekonomija/4561888/igra-zvana-duing-biznis.html

 

This post is also available in: Italiano

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