The World Bank's Doing Business Indicators Still Work - Foreign Policy - 1 views
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The Doing Business indicators measure the costs and the number of steps for starting a formal business — for example, a car dealership. If one were to open a car dealership in Madagascar, it would take eight days and cost 35.8 percent of the average annual income (this cost includes official fees and fees for legal or professional services). If one wanted to open a car dealership in Malaysia, it would take 18 to 19 days and cost 5.4 percent of the average annual income. Contrast this with opening a car dealership in United States, where it would only take around four days and cost 1.3 percent of the average annual income. The steps and costs reflect rules, and sometimes the corruption, in a system.
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The existence of Doing Business has brought about thousands of reforms across the world over the last 15 years. They have led to job creation and improved access to credit and business registration, enhancing competition and investment opportunities worldwide.
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Doing Business uses country pride and even national chauvinism as a form of jiu jitsu to get countries to reform policies that impact business regulations
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Doing Business is a sort of economic cholesterol check — important, even critical, but not the whole story.
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some critics perceive Doing Business as a libertarian argument against the collection of taxes. On the contrary, Doing Business facilitates the participation of companies in the formal economy, including the payment of taxes and respect for the legal framework
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The consensus, quite reasonably, calls for more women’s economic empowerment in the developing world. If we want to see empowerment, that generally means women participating in the formal economy, accessing loans from banks, and participating in global supply chains. Any business that seeks bank loans or seeks to participate in supply chains needs to be a formal business. Making it easier for anyone to start a business also has a positive impact on women’s economic empowerment
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The Doing Business indicators have been subject to a number of methodological adjustments. These have been relatively minor in impact on most countries’ rankings. In the case of Chile, for a variety of reasons, the rankings swung more wildly, in such a way that the center-left Michelle Bachelet administration accused the World Bank and the rankings of being politically motivated. To make matters worse, Paul Romer, then the chief economist of the World Bank, in response to a question from the Wall Street Journal about the possibility of the the ranking being “tainted by the political motivations of bank staff” seemed to imply that he found the rankings unfair and misleading, and he said he would “recalculate national rankings of business competitiveness.” This caused a furor. Romer retracted his statement within 72 hours, the World Bank board reviewed the indicators, and management formally responded.
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In the future, the World Bank’s money will be less and less important. Instead, its analytics, data, and ability to share lessons across countries are going to be increasingly valued. The World Bank imprimatur also matters more than we appreciate in the United States. The Doing Business indicators should be a big part of the World Bank’s future. Countries that seek to make improvements in their rankings of Doing Business are countries that seek to have better governance and have reform-minded governments. After 15 years of effort, Doing Business has improved with time and is one of the most valuable assets of the World Bank Group.