The ease of doing business comes with trade-offs

Content from the Brookings Institution India Center is now archived. After seven years of an impactful partnership, as of September 11, 2020, Brookings India is now the Centre for Social and Economic Progress, an independent public policy institution based in India.

Editor's note:

This article first appeared in Mint. Brookings India is an independent, non-partisan public policy research organisation based in New Delhi. The views are of the author(s).

The World Bank’s annual “Doing Business” (DB) report is probably its most-cited publication. It is also the Bank’s most contentious, and with the release of Doing Business 2018 last October, the controversy surrounding the report has reached new heights, with some critics accusing it of obfuscation, data rigging, and political manipulation.

I was closely involved with the DB report from 2012 to 2016, so I had to restrain myself from jumping into the debate on the topic. But now, a review of the DB index and annual report seems worthwhile.

I first became familiar with the DB report when I was an adviser to the Indian government and would look to it for ideas about how to cut India’s notoriously cumbersome bureaucratic red tape. So, when I moved to the World Bank and learned that I would be overseeing the DB team, it was like a regular restaurant patron suddenly being asked to supervise the kitchen.

The upshot was that I learned all that went on behind the scenes. And although I had some conceptual disagreements, I was impressed by the integrity of the process.

The DB index aims to measure, across countries, the ease of starting a business, obtaining the relevant permits, accessing essential infrastructure, and so forth. It comprises 10 indicators, each of which is based on various sub-indicators, and all of which are aggregated, according to a fixed rule, into a final score that determines a country’s ranking among 190 economies. According to the 2018 report, New Zealand and Singapore are the world’s best and second-best places to do business, and Eritrea and Somalia are the worst, at 189 and 190, respectively.

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