What happened with the International Ease of Doing Business Index?

A report used around the world

When companies are looking to expand abroad, there are a number of factors that go into choosing a new market. Is the demand there for the product? Does the market have a sufficiently trained workforce? Will it be cost-effective to produce/deliver locally? One of the biggest questions is often ‘Is it easy to do business there.’ Yes, a country might be filled with skilled workers and land prices may be super cheap, but if corruption is rife and regulations burdensome, it might not be that easy.

This is where the ‘Ease of Doing Business Index’ came in.

For nearly 20 years from 2004 to 2020, each year leading economists from the World Bank published the ‘Doing Business’ report. It ranked each country, giving them a score from 0 to 100 on literally how easy it was to do business there. It provided a detailed analysis of rules, regulations and business environments on a country by country level.

The report grew in stature over the years and was used by a huge range of people from CEOs to Professors to Civil Servants. Many saw it as a flagship product of the World Bank, used truly globally. It was so effective and influential that it was common for senior politicians and business leaders to try and lobby for changes in listings the following year for their respective countries.

And here’s where the problem came….

Data irregularities and internal investigations

Following the publication of the 2018 Doing Business report, a number of concerned stakeholders flagged issues with the data regarding China.

Similar issues were flagged again following the 2020 Doing Business report, this time concerning Saudi Arabia, the UAE and Azerbaijan.

The Bank commissioned an independent external body to investigate the irregularities and the circumstances behind them. What followed was a pretty difficult ‘report on the reports’ for the Bank.

The investigation found that essentially data had deliberately been changed to boost various countries’ scores, all with the aim of having nations look favourably on the World Bank or in the case of Azerbaijan, to punish them.

As a result of the investigation and after a number of resignations, the World Bank pulled the report in 2021.

The bank is now in the process of creating something similar but new called the ‘Business Enabling Environment (BEE) project’ which will be a replacement for this once incredibly popular and internationally significant report.

Note- you can read the full external investigation report here

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