China, the United Arab Emirates, Saudi Arabia and Azerbaijan may have manipulated their 2018 and 2020 data for the annual Doing Business report in order to enhance their attractiveness as investment destinations. In a terse Statement, the World Bank has announced that the precise nature and object of the manipulation were unclear. But these countries have significantly improved their placement. China moved from 78th to 31st place, Azerbaijan from 57th to 34th, Saudi Arabia from 92nd to 62nd and the United Arab Emirates from 21st to 16th. They have been accused of providing the World Bank with falsified data, and the Bank now plans to review and assess the situation.
Doing Business assesses a country's investment climate using ten criteria. They encompass factors like the time it takes to set up an enterprise, ease of access to credit, and corporate tax rates. The less a country regulates, the better the marks it gets from the World Bank for the ranking. Hoping to improve their position and attract foreign investment, developing countries are vying with one another, in particular to offer as little protection as possible to workers or to tax multinationals the least. The World Bank's list of criteria has long been criticised, among other things, for failing to take account of the scale of corruption and bribery in a country and for the arbitrary rather than neutral nature of the yardsticks used to determine a pro-business environment. We know from former World Bank Chief Economist Paul Romer that Chile was once penalised in the rankings for having elected the socialist Michelle Bachelet as President.
What is the reaction of Switzerland, which according to UNCTAD's World Investment Report (2018) attracts the ninth largest inflow of investment worldwide in absolute figures, yet occupies a not very flattering 36th place in the Doing Business ranking, behind Russia, Turkey or China? "The data irregularities in the Doing Business reports recently disclosed by the World Bank must be taken seriously", says Lorenz Jakob of the State Secretariat for the Economy (Seco). The integrity of the data and the impartiality of the analysis are paramount for the credibility of the report. Switzerland urges the World Bank to investigate the situation thoroughly and welcomes the decision to pause publication of the new 2021 report [normally due out in October 2020]. The Seco external relations and events coordinator continues: "The Doing Business report has important developmental implications, as it enables developing and emerging countries to identify key areas for reform and verify specific advances. A ranking can act as an incentive to tackle critical areas and introduce regulatory reform. (…) Critical questions had already been raised in the past about the report's methodological flaws."
Alliance Sud is in no doubt that these revelations will further fuel distrust of China – and its influence over multilateral organisations. In the wake of the scandal, consideration should be given to scrapping this ranking altogether, as it has long been regarded with scepticism. Quite apart from the fraudulent deception practised by authoritarian States, the indicators of this beauty contest are at odds with the UN Sustainable Development Goals which the world community pledged to realise by 2030. Abolishing this list with its rather dubious impact would be a step in the right direction.