Doing Business (World Bank Rating)

2021

New Rating Launch Plan

In November 2021, it was announced that the World Bank plans to begin publishing a new rating in about two years instead of Doing Business, which was canceled due to the data fraud scandal. This was told by the chief economist of the World Bank Carmen Reinhart.

According to her, some key concepts of the new rating have already been determined. In particular, they will ensure greater transparency of the methodology, greater confidence in these surveys of companies and less attention to ranking countries.

"The main nuts and bolts will become public. Public disclosure is an important pillar in restoring trust, "said Reinhart.

World Bank decides to stop publishing Doing Business rating

On September 16, 2021, the World Bank announced its decision to stop publishing the annual Doing Business rating on assessing business conditions in different countries of the world.

World Bank management decided to stop publishing the Doing Business report. In the future, we will work on a different approach to assessing the business and investment climate, the bank said.

We will act on the basis of the results obtained and retrospectively adjust the data of the countries that were most affected by the violations, the bank assured then.

After that, a "systematic review and assessment of data changes" of the last five Doing Business publications began. A number of violations were identified regarding data changes in the Doing Business-2018 and Doing Business-2020 reports.

The World Bank has been rating Doing Business since 2002. Favorable conditions for doing business were estimated by ten categories: registration of enterprises, obtaining a building permit, connecting to power grids, registering property, obtaining loans, paying taxes, etc.

The Doing Business rating was used by governments in various countries, including Russia, as an official KPI. In 2019, the Ministry of Economic Development, on behalf of Vladimir Putin, included in the plan of its activities the goal of reaching the 20th position in this rating by 2024. In early 2020, Mikhail Mishustin, one of his first decisions as prime minister, approved changes in the Business Climate Transformation action plan, for which the Ministry of Economic Development is responsible, adding events aimed at promoting Doing Business in the ranking: in particular, a target guideline was outlined to reduce the period of technological connection in Moscow and St. Petersburg to the power supply system, respectively, from 70 to 39 days and from 80 to 45 days by 2022.

According to RBC in the Ministry of Economic Development, during joint meetings with the participation of the executive directors of the countries participating in the World Bank, approaches to assessing the business climate and further steps to transform the rating will be determined.

Just Doing Business rating does not measure the stability of regulators. Frequent changes in conditions, low predictability - this is what concerns investors most. We coped with the procedures, now we need to cope with stability, "Maxim Oreshkin explained his point of view.

In 2019, Mishustin, then head of the Federal Tax Service, also spoke about claims to the Doing Business rating in terms of assessing tax administration.

In December 2020, after an internal investigation, the World Bank reported that its managers pressured employees directly involved in the preparation of the rating to manipulate data on Saudi Arabia and China, artificially overstating their positions in the rating. Incorrect data also affected the position of Azerbaijan in the ranking, but on the contrary - for the worse, follows from the report of the American law firm WilmerHale published on September 16 on the results of the investigation at the World Bank. Russia does not appear in this report^[1].

2020: Identification of irregularities in rating

The publication of the annual Doing Business rating, which assesses the conditions for entrepreneurship in different countries of the world, in August 2020 was suspended for the duration of the assessment of violations committed during its compilation, the World Bank announced.

"A number of violations were noted regarding data changes in the Doing Business-2018 and Doing Business-2020 reports published in October 2017 and 2019. These data changes are not consistent with the Doing Business methodology, "the report said.

The Independent Internal Audit Department of the World Bank will review and evaluate the data of the last five Doing Business reports. The results of this work will retrospectively correct the data for the countries that were most affected by the violations.

2019: Russia takes 28th place

2017: World Bank Chief Economist: rating is made from fabricated data

In January 2018, a high-profile dismissal questioned the reputation of the World Bank: chief economist Paul Romer left the organization with a scandal. The chief economist at the World Bank does not make decisions - he is just an analyst, experts told Kommersant FM. But Paul Romer in this position allowed himself more: he analyzed not only the macroeconomic situation, but also the principles of the World Bank itself. In particular, he publicly criticized the methods of calculating the famous Doing Business rating, which the organization annually makes. In an interview with The Wall Street Journal, he accused colleagues of "shameless self-promotion" and the use of "clearly fabricated data."

Oleg Buklemishev, director of the Center for Economic Policy Research at the Faculty of Economics of Moscow State University, believes that Romer could not do otherwise:

"He is still an academic scientist, and it is quite difficult for academic scientists to enter back into the world of real economics, real corporate obligations. Because what is a good position of a scientist - he can at any moment say what he thinks, give assessments based on his own mind, his own conscience. It turned out to be more important for him to give assessments and be honest to himself than corporate considerations^[2].

Doing Business has been criticized before: for example, when in 2016 Rwanda in the ranking overtook Italy, Croatia and Belgium.

Paul Romer criticized the World Bank for constantly changing calculation methods, and this gave space for manipulation. In some cases, this was necessary, retorts Sergey Khestanov, macroeconomics adviser to the general director of Otkritie Broker:

opponents of this approach are divided roughly equally, but some changes in the methodology are simply inevitable. Suppose the same amount of public debt in conditions of relatively high interest rates significantly lowers creditworthiness. Conversely, in conditions where fairly low rates dominate, credit risks increase quite slightly. "

Who will be the bank's new chief economist, and whether he will be more flexible, is unknown. So far, it seems that a once influential organization of the last forces is trying to save face. But what unreliable ratings lead to, economists remember from the experience of 2008.

After the interview in The Wall Street Journal, Romer hastened to declare that his words were misunderstood. "I see no signs of data manipulation," he said on social networks.

2017: Russia in 35th place

In 2017, Russia is on the 35th line of the rating.

2016: Russia in 40th place (+ 11), New Zealand - leader

Russia rose 11 positions in the Doing Business 2017 business comfort rating from the World Bank compared to 2015.

The Russian Federation took 40th place out of 190. New Zealand leads the rating, the leader of last year - Singapore - dropped to second place. Closes the three Denmark.

The rating of the comfort of doing business is measured by several indicators, including the protection of the rights of minority shareholders, the ease of registering enterprises, building permits and connecting to power grids, the ease of obtaining loans and a number of others. In 2016, Russia was on the 51st line of the rating, also rising by 11 lines over the year.

In mid-summer 2016, Russian Prime Minister Dmitry Medvedev said at a meeting to improve the investment climate that RUSSIAN FEDERATION he considered unacceptable 170th place Russia in the Doing Business ranking in terms of foreign trade activity.

"We are also working to accelerate the procedures for controlling goods that cross our border, the results should improve our position in the direction of international trade. Here, by the way, everything is bad. We have 170th place in the Doing Business ranking. You can count the number of UN members yourself, and 170th place, in general, is a very bad result, this is unacceptable, "he said

The user Reddit compiled^[3] map Europe based on the Doing Business index - or more precisely, the Distance to Frontier^[4] indicator^[5]which systematizes the results of the ranking since 2005. This map helps to understand in which countries of the continent it is easier to start their business.

2012: Russia in 124th place. Putin demands to enter the top 20 by 2018

In 2012, when Russia was in 124th place, Vladimir Putin demanded to enter the top twenty by 2018.

See also

• Russia in IT ratings
• Russian economy

Notes