World Bank urged to end economic study

Singapore topped World Bank's competitiveness rankings for this year. Stephen Morrison / EPA

An internal review has thrown into question the validity of the World Bank publishing a competitive economic ranking of countries according to how business-friendly they are.

An independent panel set up by the World Bank's new president, Jim Yong Kim, to look at one of its highest profile country report said yesterday the bank should stop producing it because it may be misleading.

The bank's annual "Doing Business" study judges 185 countries on 10 criteria and compiles an index on the ease of doing business, assigning each country a rank. The rankings can carry huge weight with governments.

But the panel found that the rankings could too easily be affected by small factors and were sometimes not objective.

"The panel believes the bank should make a clean break with this practice," it said in a report. The panel was headed by South Africa's planning minister Trevor Manuel, who said yesterday that the publication should continue under a new title and with a new methodology.

"It is important to remember that the [Doing Business] report is intended to be a pure knowledge project. As such, its role is to inform policy, not to prescribe it or outline a normative position, which the rankings to some extent do," the report added.

Mr Kim has already said he is committed to continuing the report, which non-profit groups including Oxfam have criticised and governments including India's have objected to. He has also pledged to push staff to improve its data, methodology and rankings.

Singapore topped the rankings for this year, released in October, while Central African Republic was bottom. Reduced red tape, enabling businesses to file and pay fees online and better access to utilities helped to propel the UAE up seven places to 26th in the report.

Jennifer Bibbings, a partner with the law firm Trowers & Hamlins in Dubai, who contributed to a survey used to rate the UAE, said at the time that the country's score was based on how easy it was for a 100 per cent locally owned firm to set up a business. As a result, the report might not be directly relevant to potential foreign investors, she told The National.

"It is a useful report at a high level and is useful for marketing the UAE but whether an executive for a foreign company sitting overseas actually looks at these reports, I'm not sure," she said.

The Russian president Vladimir Putin last year declared a policy objective of raising Russia's ranking to 20th by 2018 from the current 120th place.

According to several sources, China has pushed for modifying the report and getting rid of the ratings system, arguing that the World Bank should not rank its members.

China was ranked number 91 in the most recent report, prompting suspicions that its opposition was motivated by the low ranking.

Jeffrey Owens, of the Institute for Austrian and International Tax Law, said governments had started trying to game the report. "Tax is a good example," Mr Owens said at the publication of the audit. "In some countries policy has been defined by the need to move up the rankings." The audit cites Georgia as a country that benefited from "substantial" improvement in the index in 2007, partly as a result of scrapping labour protections. "They went to the point of abolishing their health and safety agency," said Peter Bakvis, director of the International Trade Union Confederation, one of the advisers to Mr Manuel's panel.

Instead of a ranking, the panel suggested assigning scores for each of the indicators for each country.

Another leading international ranking, the World Economic Forum's Global Competitiveness Report, published in September, ranked the UAE 24th out of 144 countries, up three places on the previous year.

* with agencies