Why the abandonment of the “Doing Business” rankings was necessary

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Leave the almighty “Doing Business”, which is published every year by the World Bank. It was definitely abandoned on Thursday, September 16, 2021. So much the better, rejoice all those who have disputed it for many years already.

And there are plenty of them. There are, of course, the poorly rated and therefore dissatisfied states. But there are also hundreds of NGOs. In March 2021, 360 organizations or researchers in economics and development signed a petition calling for it to be abolished. The sling broke out with the World Bank’s chief economist resigning in 2018, just over a year after his arrival. American Paul Romer, who is crowned Nobel Prize a few months later, is shocked by the lack of intellectual honesty in the rankings. He had publicly condemned the manipulation of Chile’s score. Degraded after socialist Michelle Bachelet came to power, then upgraded when liberal Pinera became president. Only to fall back again when Michelle Bachelet was re-elected while the business environment was almost stable during this period.

It took one last polemic to spray the IMF CEO for “Doing Business” to be abandoned

A few weeks before the annual meetings of the two banks, it was urgent to put out the fire as soon as possible. Kristalina Georgevia, formerly of the World Bank, is suspected of exerting pressure for the benefit of several countries, including China. Facts go back to 2018 for China. The bank then has an urgent need for financing. Its first contributor, the United States by Donald Trump, is unenthusiastic, difficult in this context to disrupt its third contributor, China, which that year was to fall by 8 steps in the rankings. China will finally retain its 78th place. Facts, if true, show the extent to which the immediate interests of the institution have taken precedence over its independence.

For the realities, critics of the rankings point out that the World Bank can not be a judge and jury

On the one hand, the bank finances and advises the governments of poor countries or countries in crisis, and on the other hand, it gives them a rating that plays a crucial role in their future. Roles that collide more and more because this relationship, which was created almost twenty years ago, has gained disproportionate importance. Some states like India or Rwanda are reforming only to better meet the expectations of “Doing Business”. For developing or emerging markets, it is a highly publicized business card, especially when performance improves, in order to attract foreign investors. It is included in the calculation of the country risk, which has an impact on the interest rate that a state borrows at. And until 2019, the World Bank even provided paid advice to countries that wanted to improve their ranking, advice sought by, among others, the United Arab Emirates or Saudi Arabia. Faced with the outcry caused by this practice, it was stopped dead.

He is also criticized for his Anglo-Saxon prism

This is a critique issued by France in 2015. Paris was then furious at being ranked 44th that year, after Jamaica. France believes that the liberal vision of the Anglo-Saxon world prevails in the analysis. Moreover, the enactment of laws is taken into account, but not their application, leading to a very distorted view of reality. Keynesian economists believe that this “Doing Business” is the natural son of the monetary adjustment programs of the 1980s and 1990s, which were painfully imposed by the IMF. The elements that facilitate the liberalization of the economy are driving up the average, and the protections that the states have put in place are driving it down, as they are playing a stabilizing role in the event of a crisis, as seen with the Covid-19 pandemic.

MAP

► The stock market in Hong Kong fell sharply. It lost 4% this morning due to the sinking of Chinese promoter Evergrande, listed on this exchange. Evergrande, on the verge of bankruptcy, lost 17%, pulling down other real estate giants and a Chinese insurance giant.

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