Washington - The World Bank’s scorecard on the ease of doing business around the world had spurred thousands of regulatory reforms in the past decade, it said on Monday, pushing back against critics who argued the national rankings stigmatised rather than inspired.
In its latest “Doing Business” report, the bank said Ukraine was the country that had improved the most over the past year in making it easier to run a business, while Rwanda was most improved since 2005.
Singapore retained its top spot in overall rankings for the eighth consecutive year, followed by Hong Kong, New Zealand and the US. The report judges 189 countries on 10 criteria, such as ease of opening a business or paying taxes, and assigns each country a rank. Since their inception in 2003, the rankings have come to carry a huge weight with governments eager to attract private enterprise.
In fact, the report had directly inspired or informed about a quarter of the 2 100 regulatory changes tracked since 2003, said the World Bank, whose mission is to eradicate extreme poverty.
But some governments and watchdog groups say that the ratings are misleading, subjective, or overly focused on cutting red tape for businesses at the expense of workers.
Countries such as China – ranked 96 in the latest report – have also complained that the ratings unfairly stigmatise fast-growing developing economies.
“Doing Business [report] is not about less regulation but about better regulation,” the World Bank said in the report. Countries can get lower ratings if they reduce investor protections, for example.
But in a seeming nod to critics, the bank also said the ratings should be considered in the broader context of how much countries had improved their business regulations, and should not be seen to represent every factor that impacted economic growth.
The overall ranking reflects how a country compares with others, but may not capture how much it has done in absolute terms to reduce red tape. It also does not show the huge variations that can exist among various indicators.
For example, Estonia ranks 22nd overall, but is 68 on the specific criterion of protecting investors, and in seventh place for trading across borders.
“I would just like to underscore… this effort we’re making quite deliberately is to de-emphasise the rankings and move to measures of overall improvement,” said Augusto Lopez-Claros, the director in charge of the World Bank’s global indicators.
But he said the bank decided to keep the overall rankings because they helped countries aspire towards the best practices in the world, such as the regulations in Singapore, New Zealand and Denmark.
“The World Bank decided to continue with the rankings because there is really overwhelming support for them in the world.”
World Bank president Jim Yong Kim appointed an independent panel last year to review the “Doing Business” report after criticism about it from some of the bank’s board members.
The panel, headed by South African Planning Minister Trevor Manuel, said in June the bank should scrap the headline rankings altogether, and instead provide scores for various indicators. - Reuters