The World Bank on Thursday announced that it was discontinuing its Ease of Doing Business Report following a review of “irregularities” in its data for 2018 and 2020.
The organisation said that irregularities in the data in the two reports emerged after it was flagged internally in June 2020. Following this, the World Bank said that it had put on hold the next Ease of Doing Business Report and began reviews and audits on the methodology used to prepare it.
In recent years, the Indian government and Prime Minister Narendra Modi have placed much emphasis on findings of the Ease of Doing Business, and have taken credit for India’s improvement on the ranking.
Economist Kaushik Basu, who was in charge of the Doing Business ranking from 2012 to 2016, on Saturday termed the alleged manipulation of the rankings as shocking.
“There was pressure from governments,” he said in a tweet. “We NEVER gave in. Sad that this changed. I may add, to India’s credit, I never had pressure from India’s government – current or previous.”
The World Bank said on Thursday that it took the decision to discontinue the report “after reviewing all the information available to date on Doing Business, including the findings of past reviews, audits, and the report the Bank released today [Thursday].”
“In addition, because the internal reports raised ethical matters, including the conduct of former Board officials as well as current and/or former Bank staff, management reported the allegations to the Bank’s appropriate internal accountability mechanisms,” the World Bank statement read.
In its investigation report, the World Bank said China had complained about its 78th rank in the 2017 report.
After several conversations with upper management, the staff preparing the 2018 report had allegedly changed some of the input data that led to an increase in China’s ranking, reported AFP. Without the manipulation in data, China would have reportedly ranked lower than 78 in the report.
“The group discussed methodological changes to the report that might boost China’s ranking, including by incorporating data from Taiwan, China and/or Hong Kong SAR, China into China’s data,” the investigation report, prepared by law firm WilmerHale said.
The World Bank’s investigation report mentions International Monetary Fund chief Kristalina Georgieva, who served as the chief executive officer between January 2017 and September 2019. During this time, she also worked as the interim president of the World Bank Group for three months.
“I disagree fundamentally with the findings and interpretations of the Investigation of Data Irregularities as it relates to my role in the World Bank’s Doing Business report of 2018,” she said in a statement. “I have already had an initial briefing with the IMF’s Executive Board on this matter.”
The investigation report also mentions the involvement of former World Bank President Jim Yong Kim.
What experts say
On the findings, economist Abhijit Sen said that while the Bank has been publishing the data, the extent to which it is taken seriously depends on countries, the Hindustan Times reported.
“This [the Narendra Modi] government has given it utmost importance than most previous governments as have many other comparable countries,” he said.
Eswar Prasad, a professor of trade policy at Cornell University told AP that the World Bank report had already been losing favour. “In recent years, the increasing politicisation of the report’s presentation and analysis of data had already undercut its credibility and diminished its value to international investors,” he said.
Prasad also said that China was “clearly not shy” of using its clout to control the narrative about its economy.
Some experts said that the discontinuation of the reports will make it more difficult for investors to take informed decisions. Tim Ash, a member of United Kingdom-based firm BlueBay Asset Management, told Reuters that the Ease of Doing Business Reports had become important for banks and businesses globally.
“Any quantitative model of country risk has built this into ratings,” he told the news agency. “Money and investments are allocated on the back of this series.”
Ease of Doing Business rankings
In the World Bank report, the economies of countries are ranked according to the ease with which business can be conducted in them. The scale ranges from 1 to 190.
The rankings on the Ease of Doing Business Report help in assessing the “absolute level of regulatory performance over time”, according to the World Bank.
A high ranking in the Ease of Doing Business report meant that the regulatory environment of an economy would be more conducive to the operations of a local company.
“The rankings are determined by sorting the aggregate scores on 10 topics, each consisting of several indicators, giving equal weight to each topic,” according to the World Bank. “The rankings for all economies are benchmarked to May 2019.”