Global Policy Forum

Doing Business Report “Strongly Flawed”

eurodadCampaigners and citizens groups have been questioning why the World Bank would publish its Doing Business Report (DBR), released on 29 October, when officials have failed to fix "strong flaws" which undermine the Bank’s goals to eliminate absolute poverty and promote shared prosperity. The DBR, which ranks countries based on the "friendliness" of their business environments, has come under sharp criticism in recent years from two independent panels, one of which cited "strong flaws" in its methodology. They made a series of recommendations on how it should be reformed, including the removal of the overall rankings system, which creates a distorted picture for decision makers and risks promoting the wrong types of policy reform. Yet despite these far-reaching recommendations, the Bank has only made minor changes and continues to use flawed and controversial indicators as the basis of its rankings.



28 October, 2014 | Eurodad

Trade unions and campaigners slam “strongly flawed” Doing Business report, after World Bank snubs call by two independent panels for root and branch reform

Campaigners and citizens groups are questioning why the World Bank is still planning to release its Doing Business Report (DBR) tomorrow (29 October 2014) even though officials have failed to fix ‘strong flaws’ which undermine its goals to eliminate absolute poverty and promote shared prosperity.

The DBR, which ranks countries based on the ‘friendliness’ of their business environments, has come under sharp criticism in recent years from two independent panels, one of which cited ‘strong flaws’ in its methodology. They made a series of recommendations on how it should be reformed, including the removal of the overall rankings system, which creates a distorted picture for decision makers and risks promoting the wrong types of policy reform.

Despite these far-reaching recommendations, the Bank has only made minor changes and continues to use flawed and controversial indicators as the basis of its rankings.  

Peter Bakvis, director of the International Trade Union Confederation’s (ITUC) Washington office, said: “We are baffled that the Bank has taken no action on most of the Independent Panel’s proposals, including some widely shared by civil society and many governments. They include completely removing the promotion of labour market deregulation from the report and instead developing a balanced approach to labour issues - one that supports the creation of quality jobs - outside the Doing Business project.”

The report – published annually since 2003 – ranks nations on the basis of their business environments through several indicators that have proved problematic. The ‘paying tax’ indicator promotes a race to the bottom in corporate taxation and the ‘access to credit’ indicator gives a distorted picture that excludes the informal sector, which is where the majority of developing countries’ SMEs are. The “employing workers indicator”, which has been widely criticised by trade unions and other organisations, continues to be present in an annex that promotes labour market reforms leading to a deterioration of wages and working conditions.

Antonio Gambini, researcher at CNCD-11.11.11, the Belgian francophone umbrella organisation for development NGOs, added that: ”Against a growing realisation by the public and international organisations such as the IMF and the OECD that tax systems are increasingly dysfunctional and regressive, and that big corporations increasingly manage to avoid bearing their fair share of taxes to contribute to collective expenses, the DBR is still advocating massive tax cuts for corporations, based on questionable data provided by partial and biased actors in the tax debate such as Price Waterhouse Coopers (PWC). Corporate tax payments are, alongside job creation and technology transfer, one of the most important contributions to poverty eradication and fighting inequality that developing countries depend on. Promoting this indicator for corporate tax is setting us two steps back for every one we advance in the fight for better domestic resource mobilisation.”  

Tiago Stichelmans, Policy and Networking Analyst at the European Network on Debt and Development (Eurodad), said: “It is unacceptable that the World Bank has failed to put this report right, and continues to trumpet its findings despite serious concerns about its methodology from its self-appointed critics. If the Bank is unable or unwilling take the reform of the DBR seriously they should drop the entire exercise “

See the full media release, including details of the independent panels, here.

 

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