Word Bank to review 'Doing Business' rankings amidst Chile criticism

15 January 2018

World-Bank has offered to undertake a review of Chile's indicators in the `Doing Business' report amidst concerns expressed by its own chief economist Paul Romer. The World Bank said it "will conduct an external review of Chile's indicators in the Doing Business report".

Chilean officials have criticised the World Bank, saying it treated the South American country unfairly in its closely watched annual ''Doing Business'' competitiveness rankings.

''What happened with the World Bank's competitiveness rankings is very concerning,'' Chile's socialist President Michelle Bachelet, whose four-year term ends in March, wrote on Twitter after the World Bank's chief economist apologised for Chile's slippage in the rankings under her tenure.

Chile currently ranks 55th out of 190 countries on the list, down from 34th in 2014, the year Bachelet took office. Its ranking declined to 41st in 2015, 48th in 2016, and 57th in 2017, the World Bank's reports show.

''Rankings that international institutions conduct should be trustworthy, since they impact investment and countries' development,'' Bachelet wrote, adding that the government would formally request a complete investigation from the World Bank.

The World Bank's chief economist Paul Romer told The Wall Street Journal on Friday that the organisation changed the methodology of its 'doing business' rankings in ways that were unfair and misleading, and the organisation will recalculate the rankings for at least the past four years.

The Bank, however, allayed doubts over 'doing business' rankings of certain countries insisting that the ranking indicators and methodology are designed with no single country in mind and rankings are based on "hard data".

"We treat all countries equally in our research, and the Doing Business indicators and methodology are designed with no single country in mind but so that the overall business climate can be improved," the World Bank said in a statement.

Romer had cast doubts over Chile's ranking and had not said anything on India, which in the latest ranking jumped 30 places to be ranked 100th out of 190 countries after it implemented reforms in most indicators, including starting a business, getting credit, paying taxes and resolving insolvency.

Romer said that at least in Chile's case the methodological changes could have been politically motivated, and that it was not driven by an actual deterioration in the South American nation's business environment.

"Over the 15 years of its existence, the Doing Business Index has been an invaluable tool for countries looking to improve their business climate, tracking thousands of reforms," the World Bank said.

Since then, 'doing business' has undergone a number of reviews, both internal and external,  and "we are always looking for new ways to refine and strengthen its methodology," the bank said.

"Any changes to the Doing Business methodology are done through a rigorous consultative process, where our Board, individual countries, practitioners, academics, and staff across the Bank Group can provide input.

"The indicators are based on hard data, such as actual tax rates and legislation passed, and they are subjected to internal and external validation. Objective data is not subject to political influence," it said.

On concerns expressed by Romer, the World Bank said it "will conduct an external review of Chile's indicators in the Doing Business report".

Since 2006, Chile's presidency has alternated between socialist Michelle Bachelet, who was in office from 2006 to 2010 and from 2014 to now, and pro-business Sebastian Pinera, who was in office from 2010 to 2014.

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