The Development Effectiveness of the Use of Doing Business Indicators, Fiscal Years 2010-20

In June 2020, the Committee on Development Effectiveness of the Board of Executive Directors the Bank Group asked the Independent Evaluation Group (IEG) to evaluate the DB indicators, including the Ease of Doing Business country rankings, to “assess the way that DB aligns with the Bank Group’s mandate and a viable development framework for client countries”.

In September 2020, IEG produced an Approach Paper defining a focus on the assessment of DB’s strategic relevance and effectiveness for client countries’ reform priorities and to the Bank Group’s strategic agenda using IEG’s mandated lens of development effectiveness. It acknowledged parallel work being undertaken by the Bank Group’s Group Internal Audit and Development Economics Vice Presidency. The three bodies consulted and exchanged information to assure complementarity.

In March 2021, IEG began producing an Issues Paper for internal and management review that was submitted to the Committee on Development Effectiveness on June 29, 2021. It identified six lines of inquiry for the main DB evaluation.

On September 8, 2021, after internal and peer reviews, IEG produced a draft final report and shared it, in line with IEG-Bank Group protocol, with Bank Group management for their factual review and comment. On September 16, 2021, Bank Group management announced its decision to discontinue the DB report and released an external audit carried out by the law firm WilmerHale. Independent Evaluation Group 

On September 20, 2021, the World Bank released the Development Economics External Panel Review final report.

From Recommendations to Lessons

The September 16, 2021, Bank Group’s management statement said, “Going forward, we will be working on a new approach to assessing the business and investment climate”. In this context and given the use of multiple other global indicators in reforms, the learning from this evaluation report is highly relevant.

The following generalized lessons can be drawn from IEG’s evaluation report:

Lesson 1: Recognizing the powerful motivational effect of reform indicators, especially those that facilitate country rankings, this evaluation notes the limitations in the coverage and guidance offered by any single indicator set on its own and advocates integrating them with complementary analytic tools and indicators.

Lesson 2: Recognizing the granularity and specificity of individual reforms in any given country context, the findings from this evaluation suggest that it is better to avoid using business regulatory or similar global indicators as explicit reform objectives or monitoring indicators in Bank Group projects and country strategies focused on improving the business environment. This does not preclude the use of primary data to agreed targets that track and measure critical Bank Group institutional commitments.

Lesson 3: Global indicators coverage and specifications are improved if, at regular and predictable intervals, they are updated to reflect learning from research and field experience to (i) improve links to important development outcomes; (ii) strengthen relevance to the experience of the subject of coverage; and (iii) adapt to technological changes in the areas covered by the indicators.

Lesson 4: The DB experience indicates the need for mechanisms and safeguards to assure the accuracy and validity of Bank Group global indicator– based reports and related communications, using robust and transparent standards of evidence.

The ultimate outcome sought with this set of lessons is to build on the many good practices observed during this evaluation; to assure that any new approach using evidence-based global indicators considers their substantial power to motivate and engage client countries in business environment reform; and to ensure they are used in a balanced and accurate manner that guides the choice of reform priorities with the greatest development benefits for their socioeconomic situation.

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