Don't get us wrong: we don't want to see Doing Business scrapped. We know that a tool that helps governments to get the environment right for business is important. Our organization, the UK-based Catholic Agency for Overseas Development (CAFOD), works in some of the most deprived developing countries in the world to help poor men and women lift themselves out of poverty, keep their dignity, realize their potential, and contribute to the common good. We know from experience that giving people the tools and skills they need to start a business is only half the job. You'll have little success if the business environment in which they operate is not conducive. A reformed Doing Business can help to start a discussion on investment climate reform and provide guidance for governments that is backed up by good data.
Doing Business started out as an exercise to collect easily available date on business regulations across countries. It is not designed, therefore, to tell you everything you need to know about a country's business environment -- or even what needs to change. It does not pretend to consider local context (which is important in determining what kind of reforms are appropriate), nor does it claim to give guidance on trade-offs that might be involved in decisions around types and levels of regulation or taxation. By itself, Doing Business is a poor tool for governments that are trying to decide what sorts of reforms are important or appropriate to their business environments. So when increasing numbers of leaders across Africa and beyond publicly state that their primary ambition is to move up the Doing Business rankings, it's only right to wonder whether their priorities make sense.
That's why we and other non-government organizations are asking for a reformed Doing Business, one that can be used alongside complementary tools such as enterprise surveys, which ask local businesses directly about their experiences and can thus tell a government far more about what sorts of reforms it needs to implement. We also ask the Bank to reconsider the practice of ranking countries according to their compliance with a universal checklist of preferred reforms; this approach tends to undermine objective discussion of what sorts of reforms make sense in a local context. Finally, we also have our doubts about the large media budget allocated to the project -- money that is used to celebrate countries that have done the most to move up in the rankings, rather than those that have looked at what is needed locally.
In our experience, the Doing Business team is aware of these criticisms and of the need for corresponding change. Recent editions of the survey reference its limitations and place important qualifications on the use of the data (although governments and media still tend to pay more attention to the rankings). The Bank has suspended the Employing Workers Indicator, which encourages labor market deregulation (but has not yet abolished or reformed it). The Paying Taxes Indicator no longer encourages governments to reduce taxes to zero (although it still encourages them to be lowered).
The Bank is also looking at the possibility of adding a Getting Electricity Indicator, a new measure based on enterprise surveys that have highlighted the importance of this issue to local businesses. Most importantly, the team is also re-examining specific indicators according to their effectiveness in achieving desired economic objectives, such as poverty eradication. Presumably, if the data shows that an indicator isn't helpful, the Bank will reform it or drop it. We are encouraged by this willingness to change, but much more needs to be done.
By lamenting the "uniquely democratic" debate around Doing Business, its self-appointed supporters are doing it a disservice. An independent review and a public debate are exactly what is needed. Much of the debate around Doing Business has become polarized and politicized, and internal Bank politics have been mixed into a debate already charged by national competition. This review is a timely and important exercise. Without it, Doing Business may well survive as an influential museum piece, but it will cease to be relevant to governments genuinely striving to develop their economies.