Washington: Giving credence to the theory that the World Bank’s popular ease of doing business (EODB) ranking is not credible and accurate, its chief economist Paul Romer has announced to recalculate the national rankings of business competitiveness going back to at least four years.
The announcement, which has raised several questions on the authenticity of the EODB report, was made by Romer in an interview to The Wall Street Journal in which he made a personal apology to Chile, the ranking of which has come down from 34th in 2014 to 57th in 2017.
“I want to make a personal apology to Chile, and to any other country where we conveyed the wrong impression," Romer told The wall Street Journal. Romer’s statement that the national ranking of ease of doing business would be carried for last four years, could have notable impact on India as its ranking jumped from 140 in 2014 to 100 in 2018. The problems with the report, he said, were “my fault because we did not make things clear enough".
According to the daily, Romer said the World Bank is “beginning the process of correcting the past reports and republishing what the rankings would have been without the methodology changes". Romer said he couldn’t defend “the integrity" of the process that led to the methodology changes, according to The Wall Street Journal.
The last major changes in the methodology and parameter of the EODB rankings were done under the watch of Romer’s predecessor Kaushik Basu, the eminent economist from India who currently is C. Marks Professor of International Studies and Professor of Economics at the prestigious Cornell University.
Basu, who was World Bank’ s chief economist from 2012- 2016, was not immediately available for comment. Questions left to the World Bank for Romer were not immediately responded.
Following Romer’s interview, the World Bank in a statement announced to conduct an external review of Chile’s indicators in the Doing Business report. However, the World Bank spokesman David Theis refuted any notion, in particular the one alleged by the current Government of Chile that its business ranking had political influence.
“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.
“Since we developed this vital report, 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," Theis said.
“It is important to note that 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," he said.
Augusto Lopez-Claros, the former director of Global Indicators and Analysis at the World Bank, who is currently at the Georgetown University defended the report. He told The Wall Street Journal that all changes were made following “extensive internal peer review and the Bank went out of its way to announce these changes to the authorities of its member countries and to other uses."
“Preliminary rounds of the new data collected were shared for comment and, in general, the whole process was undertaken in a context of transparency and openness," he asserted. But Romer disagrees.
Over time, World Bank staff put a heavy thumb on the scales of its report by repeatedly changing the methodology that was used to calculate the country rankings, he told the financial daily.
He said he “didn’t have confidence in the integrity" of the report’s data. Lopez-Claros refuted the allegations and said that the claim that methodological changes targeted Chile is “wholly without merit". He said the changes were made “without focusing on the impact these changes will have on particular countries," The Wall Street Journal said.