Some African countries, including Mauritius and Rwanda, have used Doing Business as a focal point for their reform programs. Through a comprehensive set of reforms, Rwanda improvedits position from 150 in the 2008 edition of the Doing Business report to 52 in 2012. On the same ranking, Mauritius comes in at 19th place. These aggressive reformers have not only seen significant economic growth, but have also witnessed dramatic improvements in governance and a fall in corruption. Mauritius now enjoys an average income per capita of $15,600 and ranks 43rd on Transparency International's Corruption Perception Index (higher than Lithuania, Croatia, and Hungary).
It may be a coincidence that the review, which may prompt significant changes in the Doing Business project, comes after a change in the leadership of bank. But perhaps it's not. The new president of the Bank, Jim Yong Kim, has, in the past, sounded like a harsh critic of pro-market reform policies prescribed to developing countries by the World Bank or the International Monetary Fund. " Even where neoliberal policy measures have succeeded in stimulating economic growth, growth's benefits have not gone to those living in ‘dire poverty,'" he wrote in the introduction to a 2000 volume he edited, entitled Dying for Growth: Global Inequality and the Health of the Poor. Among other things, the book sings praises of Cuban healthcare system, which, according to Kim, "prioritizes social equity."
Critics of the Doing Business project raise a variety of substantive objections. For example, the CAFOD submission claims that the project's measure of the ease of employing workers ("Employing Workers Indicator") encourages countries to reduce worker protection legislation, whereas there is "no proven" link between such reforms and "jobs, growth, or other economic outcomes."
That is a somewhat curious argument by CAFOD, as most economists would expect a strong relationship between the two. An influential 2004 paper (partially supported by the World Bank) by Botero, Djankov, La Porta, Lopez-de-Silanes, and Shleifer in the Quarterly Journal of Economics examines the experience of 85 countries and concludes that "heavier regulation of labor is associated with lower labor force participation and higher unemployment, especially of the young."
The critics also urge the World Bank not to represent business taxation as "an unnecessary burdensome cost to business that needs to be minimized." Because the "Paying Taxes Indicator" used by the Doing Business project measures, in part, the tax rate facing businesses, it is feared that the report "can incentivize states to progressively reduce tax rates that affect corporations to an arbitrarily low level."
Among many economists, however, denying the existence of costs of business taxation is akin to denying evolution. A huge body of evidence shows the debilitating effects of high income taxes on investment, growth and employment (see here, for example). Measuring business taxation is not a sneaky way of advocating zero tax rates on corporate income but simply a way of accounting for the real cost that taxes impose on entrepreneurs. Even if one believes that corporations in developing countries should be taxed at relatively high rates, they ought to understand the economic trade-offs that such policy entails.