Why the World Bank must do better at Doing Business
Tomorrow the World Bank will issue its latest Doing Business report. Over the years, the report has been much criticised as one of the last remnants of the neo-liberal ‘Washington consensus’ for the way it stresses the advantages of deregulation, unfettered markets and the abandonment of workers’ rights. Unions and NGOs will be hoping that tomorrow’s 2014 report will take account of the recommendations made in June by an independent panel nominated by new World Bank President Jim Kim himself, and chaired by South African minister Trevor Manuel.
The June report concluded that the publication was a “poor guide” for policy-makers and gave a list of reforms needed to make the World Bank flagship research publication more robust, as well as less ideologically biased.
The recommendations included ending the ranking of countries according to an ‘Ease of Doing Business’ index and permanently removing the report’s controversial tax and labour indicators which promoted low corporate taxation and low labour standards. Advance information suggests that the recommendations for its comprehensive reform have not yet been implemented. The Panel also recommended that Doing Business be moved to the World Bank’s research department so that it can be aligned with progress in development thinking and the Bank’s poverty eradication mandate.
Commenting on Doing Business, long-time critic and CAFOD lead economic analyst Christina Chang says:
“Decision makers will rightly wonder how much weight to give to a publication that has ranked Zambia 12th in the world on access to credit for businesses, when over 90% of small businesses there cite this as a major constraint for their success. The reform of Doing Business is important if we are going to achieve the World Bank’s new corporate goals to eradicate poverty by 2030 and achieve shared prosperity.”
And Peter Bakvis, Washington director of the International Trade Union Confederation, who had this to say on the 2013 report last year, adds:
“For a decade, Doing Business has been publishing data on labour regulations, based on the wrong assumption that driving down labour standards is good for the economy and good for business.”
Jesse Griffiths, director of Eurodad (the European Network on Debt and Development) concludes that:
“The World Bank needs to keep up with new thinking and directions on development. It is unthinkable that the Bank still issues a publication that promotes the lowest corporate taxation rates as the ideal for development. The problem of most developing countries is that they have collected too little tax from transnational corporations, not too much.
“It’s time for the Bank to listen to its independent panel of experts and stop ranking countries based on the partial and controversial indicators in Doing Business. They should also slash the outrageous publicity budget for this flawed report.”