Ease of doing business is not the same as poverty alleviation

I am a little bit puzzled about the complaints listed in a Guardian piece last week criticising the World Bank’s rankings of the easiest countries in the world for doing business. Surely if such a ranking is to be meaningful it has to see the world substantially from the point of view of business people? I.e. fewer environmental rules, and lower levels of unionization will be just as much of interest to a businessman considering where to invest as the amount of red tape that s/he will have to deal with. Conversely s/he is unlikely to take much account of inequality and poverty indicators except where they may directly affect their intended workforce, so why should they feature in the rankings?

If the World Bank were not putting out these ratings, I imagine someone else would be by now. So, rather than shooting the messenger, complainants might want to focus on or more of the following solutions:

  1. Raising minimum standards worldwide so there can be less labour rights arbitrage.
  2. Simplifying regulations to focus on the important stuff.
  3. Improving consistency of implementation / enforcement.

Long rulebooks filled with obscure stipulations are a corrupt official’s paradise! (And civil society organisations are just as much affected by barmy employment law as businesses.) Furthermore, if implementation is uneconomic or enforcement uneven you can actually have a negative affect on workers’ rights and the environment since the more honest employers are put off from investing, leaving the field free for those who never have any intention of playing fair.

That aside, I can guess at one underlying cause of the complaints which is completely skated over in the article. Maybe the problem is not so much the rankings (which by increasing information flow can only be a good thing), but the emphasis put upon them by Western donors as a proxy for supporting the concerns of their own multinational firms, at the expense of broader development issues. E.g. the complaint from Zambian civil society that credit is only available to big businesses. Now it might be that national governments in places like Zambia are misinterpreting donor concerns (à la isomorphic mimicry), but it wouldn’t surprise me if, on this point, many donors were guilty as charged. Don’t expect too much altruism from Official Development Assistance aid.

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