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Doing Business not related to growth Letter to the Economist

Letter|Bretton Woods Project|7 June 2013|url
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Below is the full text of a letter sent to The Economist, an extract of which was published on 6 June 2013.

24 May 2013


The future of "Doing Business" has nothing to do with World Bank President Jim Yong Kim's opinion of growth ("Stand up for 'Doing Business'", 25 May). You confuse growth with a set of indicators which many inside and outside the Bank find fundamentally flawed.

You argue that Doing Business "spurs countries to useful reforms". Unfortunately the report also spurs countries to game the rankings and to undertake sometimes damaging deregulation which may harm the prospects for the majority of small and micro businesses in developing countries. The Bank itself recognises that Doing Business is not a template for reform.

Second you claim it furthers understanding of "how legal institutions and regulations affect growth". Yet, ten years since its launch, there is limited evidence that the reforms Doing Business promotes are correlated with growth (with the exception of one - the length of time it takes to register a business). Its focus on one city, even in vast and diverse countries such as Brazil further reduces its usefulness.

Finally, complaints are not the preserve of China; most countries have criticisms, as well as civil society organisations including trade unions and small business associations. A 2008 evaluation by the Bank's own internal evaluation unit found the report flawed.

Neither "fear of losing funding" nor the desire to appease ideologically motivated interests should guide Mr. Kim on the future of Doing Business. He should use the current review to decide on the merits of the case.

Peter Chowla
Bretton Woods Project

Christina Chang

London, UK

Published: 7 June 2013 , last edited: 16 September 2013

Viewings since posted: 1501

Articles: 3465

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