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Doing Business, Singapore Style

August 20, 2013 in Economics

By Steve H. Hanke

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Steve H. Hanke

Since 2004, the World Bank has produced the annual Doing Business report, which ranks countries on ten factors reflecting the ease with which entrepreneurs and businesses may conduct economic activity in a given country.

At first glance, such a survey would hardly seem controversial. After all, with so much unreliable data coming out of official government statistics offices these days, one would think that an unbiased system for ranking the ease of doing business would be a useful tool — not only for businesses, but for governments as well. Indeed, since 2005, a total of 1,940 reforms have been implemented by countries to improve their rankings. And, several prominent heads of state, such as Russia’s Valdimir Putin have made public pledges to improve their countries’ Doing Business rankings.

As it turns out, however, a few countries (specifically those with low rankings) are none too happy about the Doing Business report. While some world leaders have adopted the Putin model of viewing their country’s relatively low rankings as a challenge to institute economic reform, other countries, most notably China (which ranks 91 out of 183), have been pressuring the World Bank to scrap the Doing Business rankings and weaken the report’s analysis to the point of irrelevance. It hasn’t helped that certain less-market-friendly NGOs, such as OXFAM, have also joined the Chinese government’s crusade.

Indeed, under pressure from China, World Bank President Jim Yong Kim commissioned a panel to “study”the Doing Business rankings and present recommendations for “improvement.” Not surprisingly, the commission recommended doing away with the actual ordinal rankings, and switching to a less embarrassing evaluation of each country.

Yes, the panel’s recommendations are nothing more than a thinly-veiled attempt to gut the Doing Business report. Stripping the ordinal rankings and “reforming” the report’s methodology would have the effect of completely destroying the report’s credibility and usefulness as a policy tool. Fortunately, the Doing Business report has one very important ally, Jim Yong Kim himself. A campaign to save there port has also been mounted by Doing Business report co founder, former World Bank Group Vice President Michael Klein.

These World Bank insiders recognize a simple fact — one which many businessmen, politicians, civil servants, and economists, like myself, have long understood. The Doing Business report represents one of the few uniform, objective metrics available for measuring the ease of doing business across 183 countries. Indeed, in 2005, when asked what I thought …read more

Source: OP-EDS

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