Someone Tell the World Bank About Corruption in Russia

The pervasiveness of corruption in Russia is a well-documented fact--yet it's one that's curiously absent from a World Bank report on doing business there. On Oct. 29, the World Bank published its annual "Doing Business" project, which measures the ease of doing business in 189 countries. One of the most improved countries on the list is Russia, which jumped 19 places to 92nd, four places ahead of China. Trying to control for variations, the report looks at an imagined domestic small or medium-sized firm in the country's financial capital -- in this case, Shanghai in China and Moscow in Russia -- and the ease in with the firms can perform in 10 areas, including things like starting a business, dealing with construction permits, and paying taxes. But the list doesn't measure corruption, a baffling absence -- especially in cronyism-ridden Russia, which ranked 133 out of 176 on Transparency International's latest Corruption Perceptions Index survey.

In an interview Rita Ramalho, the lead author of the report, said they didn't factor in corruption because they are "trying to measure a policy variable, rather than an outcome variable." In other words, assuming a firm complies with the law, how long are different tasks supposed to take -- as opposed to how long do they actually take in practice? Another reason, she added, is because they are trying to look at very specific factors, though it's hard to imagine how to measure the ease of "registering property" and "paying taxes" without factoring in issues relating to the need to pay off police and tax inspectors. "I don't know if you can start a business without paying unofficial fees, we just ask about the official fees," Ramalho said. Good to remember that it's nature, and not the World Bank, that abhors a vacuum.