The World Bank’s Doing Business Report

The World Bank’s Doing Business Report

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Updated March 7, 2023
The World Bank’s Doing Business Report
In September 2021, the World Bank announced it was
quality of legal frameworks, with each area composed of a
discontinuing its annual Doing Business Report (DBR) after
number of individual measures. The most recent report,
nearly two decades of publication. The DBR attempted to
released in 2020, captured 294 individual regulatory
quantitatively measure the “ease of doing business” in
reforms. Figure 1 illustrates the multiple steps involved
countries around the world, focusing on business
with opening a new business that the DBR sought to
regulations and property rights protections. The World
measure.
Bank canceled the report after an independent investigation
The number of countries in the report expanded from 133
found that senior World Bank officials improperly
countries in 2003 to 190 in 2020. Based on the quantitative
influenced results in previous iterations of report, including
to improve China’s ranking
data, the report annually ranked countries on the “ease of
.
doing business.” The most recent U.S. ranking was 6,
Proponents credited the DBR with driving pro-growth
behind South Korea at 5.
reforms in developing countries, but skeptics criticized it
Impact of the Report
for penalizing countries for adopting labor and safety
protections. The World Bank is in the process of developing
The DBR rankings were widely cited and influential.
a new approach to assess the business and investment
Politicians in developing countries cited the World Bank’s
climate in countries.
rankings in their political campaigns, and major
international newspapers regularly reported on the DBR.
The circumstances surrounding the cancellation of the DBR
The ratings were a component of other indexes, including
and the planning its revival in a new format raise a number
the World Economic Forum’s Global Competitiveness
of issues for Congress, including the value of the DBR and
Index and the Heritage Foundation Index of Economic
its successor, the research independence of international
Freedom. According to Google Scholar, the phrase “Doing
organizations, and China’s role at the World Bank.
Business Report” is included in more than 10,000 academic
Congress authorizes and appropriates U.S. funding to the
articles.
World Bank and other international finance institutions
(IFIs), and exercises oversight over U.S. policy at the IFIs.
By simplifying a complex group of regulatory policies into
Origin and Development of the Report
a single metric, the Bank created competitive pressure
among countries to introduce policies to improve their
The annual World Bank’s DBR began in 2004. It had been
rankings. For example, the World Bank noted in a 2008
a critical report for countries and businesses in
series of case studies, King Abdullah of Saudi Arabia
understanding the investment and business climate in key
declared in 2006, “I want Saudi Arabia to be among the top
economies, until its termination in 2021. In the product, the
ten countries in Doing Business in 2010.” Many
Bank attempted to measure member countries’ legal and
policymakers and analysts credit the DBR in contributing to
regulatory environments for local firms and allow
the dramatic decrease in the cost of starting a business in
comparisons to be made across countries and over time.
developing countries over the past 15 years (As the report
gained prominence, criticisms also emerged. Critics
The origin of the report is a 2002 World Bank report that
argued that the report ignored the social benefits of
covered five topic areas: starting a business, enforcing
regulation and encouraged countries to engage in a
contracts, resolving insolvency, employing workers, and
regulatory “race-to-the-bottom.” The World Bank
getting credit. At the time, economic researchers at the
reformed the DBR over the years to address some of
World Bank turned their attention to the costs of business
these concerns. For example, pressure from some
regulations and found empirical evidence between
Members of Congress and the International Labor
regulatory burdens and economic outcomes, such as levels
Organization led to the suspension of the DBR’s
of investment, economic growth, and broader measures of
“Employing Workers” indicator, which awarded the
development.
best scores to countries that had the least amount of
The World Bank expanded the scope and coverage of the
regulation in areas such as minimum wage levels and
annual report in su bsequent years. The report grew to
maximum work hours per week.
incorporate additional topic areas, including indicators on
Figure 2).
the cost and quality of business regulation and on the
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The World Bank’s Doing Business Report
Figure 1. Doing Business Report Coverage Areas

Source: World Bank, 2020 Doing Business Report.
the United Arab Emirates, and Azerbaijan to influence the
As the report gained prominence, criticisms also emerged.
2020 edition of the report.
Critics argued that the report ignored the social benefits of
regulation and encouraged countries to engage in a
In September 2021, the World Bank Group Management
regulatory “race-to-the-bottom.” The World Bank reformed
announced the decision to discontinue the Doing Business
the DBR over the years to address some of these concerns.
Report. Several Members of Congress raised concerns
For example, pressure from some Members of Congress
about China’s influence at the IFIs and the integrity of the
and the International Labor Organization led to the
World Bank and the International Monetary Fund (IMF).
suspension of the DBR’s “Employing Workers” indicator,
World Bank President David Malpass announced that the
which awarded the best scores to countries that had the least
Bank is taking “several steps” to improve research integrity,
amount of regulation in areas such as minimum wage levels
including elevating the Bank’s chief economist to a role in
and maximum work hours per week.
senior management.
Figure 2. Cost of Starting a Business in
Developing Economies
Questions about IMF Leadership
Kristalina Georgieva’s involvement in the DBR data irregularities
during her tenure as CEO of the World Bank immediately raised
questions about whether she should continue in her current role.
Since October 2019, Georgieva has served as the head (Managing
Director) of the International Monetary Fund (IMF).
The IMF Executive Board reportedly held eight meetings on the
issue, including interviews with WilmerHale lawyers and
Georgieva, who denied any wrongdoing. 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
Source: World Bank, Doing Business Database.
economies (France, Germany, Italy, and the UK), China, and
Russia continued to support Georgieva. Ultimately, the Executive
Even with reforms, some concerns remained. In March
Board issued a statement in October 2021, supporting her
2021, a group of more than 350 civil society organizations,
continued leadership at the IMF.
trade unions, and academics from 80 countries sent a letter
to the World Bank’s Executive Board calling on it to end
The World Bank’s New Approach
publication of the DBR based on a number of concerns,
including “methodology, data selection and scope,
In February 2022, the World Bank published a “pre-concept
questionable robustness of the aggregate rankings, and its
note” about a new approach for assessing business and
anti-regulation bias.” In contrast, an analyst argued in The
investment climates across countries. Tentatively called the
Hill newspaper that “the ‘Doing Business’ report is the
Business Enabling Environment (BEE), the objective is to
most important contribution the World Bank has made to
quantitatively assess the business environment for private
global development in the last 25 years.”
sector development, focusing on innovation and
Recent Controversy and Cancellation of
entrepreneurship, equality of opportunities, and general
the Report
sustainability of the economy. The pre-concept note stresses
that the BEE is an “attempt to strike better balances as a
In January 2021, the World Bank engaged the U.S.-based
business environment assessment,” incorporating, for
law firm, WilmerHale, to investigate data irregularities in
example, the provision of public services key for
the 2018 and 2020 editions of the DBR that were reported
functioning markets. The World Bank expects to publish
internally in June 2020. The law firm released its findings
the BEE Manual and Guide and the BEE Methodological
on September 15, 2021, determining that in 2017, then-
Handbook in the second quarter of 2023.
World Bank President Jim Yong Kim and then-World Bank
Select Policy Questions facing Congress
CEO Kristalina Georgieva pressured staff to modify their
methodology in the 2018 Doing Business Report to bolster
The United States has traditionally been a leader at the IFIs,
China’s score. WilmerHale also found that senior Bank
and Congress has a number of policy options for directly
staff likely interfered with data pertaining to Saudi Arabia,
influencing IFI policies. Issues surrounding the DBR and
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The World Bank’s Doing Business Report
the BEE raise a number of policy issues for Congress. For
 What steps are being taken at the World Bank, and other
example:
IFIs, to promote non-retaliation policies and encourage

staff reporting of concerns?
The report by WilmerHale included recommendations to
limit political interference in the DBR, such as
 How does the BEE fit with reform efforts at the World
embargoing the rankings until the report is finalized and
Bank to focus more on global public goods?
making the underlying data available to external
researchers. To what extent is the BEE incorporating
Rebecca M. Nelson, Specialist in International Trade and
these recommendations?
Finance

Martin A. Weiss, Specialist in International Trade and
How should BEE treat labor and safety standards,
Finance
unionization, and minimum wages in its assessments of
a country’s business environment?
IF11959
 What measures has the World Bank adopted to limit
political influence in its research?
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The World Bank’s Doing Business Report

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