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October 29, 2021
The World Bank’s Doing Business Report
In September 2021, the World Bank announced it was
of investment, economic growth, and broader measures of
discontinuing its annual Doing Business Report (DBR) after
development.
nearly two decades of publication. The DBR attempts to
quantitatively measure the “ease of doing business” in
The World Bank expanded the scope and coverage of the
annual report in subsequent years. The report grew to
countries around the world, focusing on business
incorporate additional topic areas, including indicators on
regulations and property rights protections. The World
the cost and quality of business regulation and on the
Bank canceled the report because an independent
quality of legal frameworks, with each area composed of a
investigation found that senior World Bank officials
number of individual measures. The most recent report,
improperly influenced results in previous iterations of
report, including to improve China’s ranking
released in 2020, captures 294 individual regulatory
.
reforms. Figure 1 illustrates the many number of steps
Governments and investors take these DBR rankings
involved with opening a new business that the DBR seeks
seriously, and the report has been credited with driving pro-
to measure. In 2020, the World Bank was collecting data on
growth reforms in developing countries. The report also has
the efficiency of public procurement and was planning on
been controversial even before the most recent
introducing the “Contracting with the Government”
investigations, with critics arguing, among other things, that
indicator in the 2021 report.
the report penalizes countries for adopting labor and safety
The number of countries in the report also expanded, from
protections.
133 countries in 2003 to 190 in 2020. Based on the
The circumstances surrounding the cancellation of the DBR
quantitative data, the report annually ranked countries on
raise a number of issues for Congress, including the value
the “ease of doing business.” The most recent U.S. ranking
of the DBR as a resource, the research independence of
was 6, behind South Korea at 5.
international organizations, leadership roles at the
Impact of the Report
international financial institutions (IFIs), and China’s
changing role at the World Bank. Congress authorizes and
The DB rankings have been widely used in a range of
appropriates U.S. funding to the IFIs, and exercises
settings. Politicians in developing countries have cited the
oversight over U.S. policy at the IFIs.
World Bank’s rankings in their political campaigns, and the
Origin and Development of the Report
report was frequently mentioned in major international
newspapers such as the New York Times and the Financial
The annual World Bank’s DBR began in 2004. It has been a
Times. The ratings were a component of other indexes,
key report for countries and businesses in understanding the
including the World Economic Forum’s Global
investment and business climate in key economies, until its
Competitiveness Index and the Heritage Foundation Index
termination in 2021. In the product, the Bank attempted to
of Economic Freedom, among others. According to Google
measure member countries’ legal and regulatory
Scholar, the phrase “Doing Business Report” is included in
environments for local firms and allow comparisons to be
more than 10,000 academic articles.
made across countries and over time.
By simplifying a complex group of regulatory policies into
The origin of the report is a 2002 World Bank report that
a single metric, which was heavily marketed and promoted,
covered five topic areas: starting a business, enforcing
the Bank created competitive pressure among countries to
contracts, resolving insolvency, employing workers, and
introduce policies to improve their rankings. For example,
getting credit. At the time, economic researchers at the
the World Bank noted in a 2008 series of case studies, King
World Bank turned their attention to the costs of business
Abdullah of Saudi Arabia declared in 2006, “I want Saudi
regulations and found empirical evidence between
Arabia to be among the top ten countries in Doing Business
regulatory burdens and economic outcomes, such as levels
in 2010.”
Figure 1. Doing Business Report Coverage Areas
Source: World Bank, 2020 Doing Business Report.
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The World Bank’s Doing Business Report
Many policymakers and analysts credit the DBR in
raised concerns about China’s influence at the IFIs and the
contributing to the dramatic decrease in the cost of starting
integrity of the World Bank and the International Monetary
a business in developing countries over the past 15 years
Fund (IMF). World Bank President David Malpass
(Figure 2). As the report gained prominence, criticisms also
announced that the Bank is taking “several steps” to
emerged. Critics argued that the report ignored the social
improve research integrity, including elevating the Bank’s
benefits of regulation, focusing only on the private sector
chief economist to a role in senior management.
costs, and encouraged countries to engage in a regulatory
“race-to-the-bottom.” Concerns have also been raised that
Questions about IMF Leadership
the DBR is too focused on the regulatory burden that a firm
Kristalina Georgieva’s involvement in the DBR data irregularities
would face if it followed the letter of the law in a particular
during her tenure as CEO of the World Bank immediately raised
jurisdiction and ignored the more complex reality facing
questions about whether she should continue in her current role.
firms in many developing countries.
Since October 2019, Georgieva has served as the head (Managing
Figure 2.Cost of Starting a Business in
Director) of the International Monetary Fund (IMF).
Developing Economies
The IMF Executive Board reportedly held eight meetings on the
issue, including interviews with Wilmer Hale lawyers and
Georgieva, who denied any wrong doing. The board was
reportedly divided on whether Georgieva should retain her
position at the IMF, with the United States and Japan (the two
largest shareholders) favoring removal, while several European
economies (France, Germany, Italy, and the UK), China, and
Russia continued to support Georgieva.
Ultimately, the Executive Board issued a statement on October
11, 2021, supporting her continued leadership at the IMF.
However, the endorsement was seen by many as weak, stating
that the review did not “conclusively demonstrate” an improper
Source: World Bank, Doing Business Database.
role by Georgieva in the DBR.
The DBR was reformed somewhat over the years to address
some of these concerns. For example, pressure from some
Select Policy Questions for Congress
Members of Congress and the International Labor
The United States has traditionally been a leader at the IFIs,
Organization led to the suspension of the DBR’s
and Congress has a number of policy options for directly
“Employing Workers” indicator, which awarded the best
influencing IFI policies. Congress can hold hearings to
scores to countries that had the least amount of regulation in
gather additional information about specific issues, direct
areas such as minimum wage levels, maximum work hours
the U.S. representatives at the IFIs to advocate and vote for
per week, and other worker safeguards. In March 2021, a
specific policies, and/or tie U.S. financial contributions to
group of more than 350 civil society organizations, trade
specific institutional reforms. Issues surrounding the DBR
unions, and academics from 80 countries sent a letter to the
raise a number of policy issue for Congress. For example:
World Bank’s Executive Board calling on it to end
The report by Wilmer Hale included several
publication of the DBR based on a number of concerns,
including “methodology, data selection and scope,
recommendations to limit political interference in the
DBR, such as embargoing the rankings until the report
questionable robustness of the aggregate rankings, and its
is finalized or making the underlying data available to
anti-regulation bias.” However, one commentator has
external researchers. Why did the World Bank decide to
argued in The Hill newspaper that “the ‘Doing Business’
cancel the report rather than adopt such
report is the most important contribution the World Bank
recommendations? Is this data available elsewhere, and
has made to global development in the last 25 years.”
is it useful to inform policy and funding decisions?
Recent Controversy and Cancellation of
the Report
Does canceling the DBR, rather than reforming it, make
it more or less likely that countries will try to influence
On January 20, 2021, the World Bank engaged the U.S.-
IFI research in the future?
based law firm, Wilmer Hale, to investigate data
irregularities in the 2018 and 2020 editions of the DBR that
What steps are being taken at the World Bank, and other
were reported internally in June 2020. The law firm
IFIs, to promote nonretaliation policies and encourage
released its findings on September 15, 2021, determining
staff reporting of concerns?
that in 2017, then-World Bank President Jim Yong Kim and
What would be required to revive the DBR and better
then-World Bank CEO Kristalina Georgieva pressured staff
insulate it from political pressure?
to modify their methodology in the 2018 Doing Business
Report to bolster China’s score. Wilmer Hale also found
Rebecca M. Nelson, Specialist in International Trade and
that senior Bank staff likely interfered with data pertaining
Finance
to Saudi Arabia, the United Arab Emirates, and Azerbaijan
Martin A. Weiss, Specialist in International Trade and
to influence the 2020 edition of the report.
Finance
On September 16, 2021, the World Bank Group
IF11959
Management announced the decision to discontinue the
Doing Business Report. Several Members of Congress
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The World Bank’s Doing Business Report
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