After a three-year hiatus, the Ease of Doing Business Index is back with a new name and a new look. Once so powerful it shaped government policies, its success ended in scandal. Now rebranded as Business Ready, can the revamped index overcome its tarnished reputation to become as influential as before?
You know your ranking model is influential when national governments change policies indian mobile number list with the explicit goal of boosting their position on your index. That was the power of the Ease of Doing Business Index (also known as Doing Business) until 2021.
However, the index’s success became its downfall. Some governments set up dedicated teams with an explicit goal of improving the country’s performance on the index. If those teams’ activity was solely focussed on positive policy reform, that would be great; unfortunately, in at least some cases, they were simply trying to game the results.
World Bank’s Business Ready Index
Index ranking optimisation (aka gaming the results)
To give an example of how that could happen, we need to take a brief detour into the world of qualitative indicators. Bear with me. In many indexes grappling with complex topics, there is a perennial problem of data availability. Imagine you want to measure the number of days it takes to set up a new business (this was one of the indicators in Doing Business). You will find that most of the time the data either doesn’t exist or is rarely updated by governments. Instead, put very simplistically, you’d need to ask a few experts or businesses for their views, and use those to create a numerical score for your index.
This is a valid approach, and it’s used in a lot of studies. Take Transparency International’s long-running Corruption Perceptions Index (CPI). Transparency International goes to great lengths to use robust and comparable data across countries, but measuring actual corruption is not viable — for obvious reasons. So the CPI does something different, and the clue is in the name: it measures people’s perceptions of corruption. It asks local businesses and experts whether they think there’s much bribery, nepotism and other forms of corruption in their country. This foundational input is then bolstered with other data points. The data doesn’t aim to measure corruption; instead, it’s about assessing which countries are more, or less, corrupt.