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The Development Effectiveness of the Use of Doing Business Indicators

Report to the Board from the Committee on Development Effectiveness

The Committee on Development Effectiveness met to consider the report by the Independent Evaluation Group (IEG) The Development Effectiveness of the Use of Doing Business Indicators, Fiscal Years 2010–20, the World Bank management response, and the International Finance Corporation management response.

The committee commended IEG for the comprehensive evaluation and appreciated IEG’s commitment to review and correct any facts or misrepresentations in the draft before its public disclosure. IEG noted the implications of its findings and recommendations for new business environment indicators, including strongly connecting the design of new indicators and diagnostics to research and country experience, using new indicators alongside complementary analysis to help inform well-designed and comprehensive reforms focused on binding constraints rather than as ends of themselves, and ensuring that claims linking reforms captured by the indicators are validated by robust evidence. Members noted that although the Doing Business (DB) flagship report has been discontinued, enabling a business environment remains a relevant task for the World Bank and the International Finance Corporation. Important lessons could be drawn from the rich and high-quality analysis to shape the strategic focus and design of the new approach, including connecting policy advice more strongly to research and data and deploying appropriate safeguards to assure accuracy and validity of indicators, focusing on statutory regulations along with their actual implementation. Therefore, they encouraged management to deploy appropriate mechanisms and safeguards to assure the accuracy and validity of global indicator-based reports using robust and transparent standards of evidence and that indicators should be considered and interpreted along with complementary diagnostics and analytics, updated periodically and tailored to country contexts. Members stressed that the evaluation’s findings and lessons on the creation and use of indicators were still timely and should thus be used to shape the strategic focus and design of the World Bank’s new approach to global indicators on business reform and investment climate.

Given that the DB was one of the Bank Group’s most widely read publications and most used set of indicators on business regulations to motivate clients to engage in business environment reforms, members and nonmembers reiterated that the process of designing a successor to the DB should be comprehensive and stressed the need for management to consult the Board of Executive Directors and client countries. They highlighted that the original objectives of the DB remain relevant and encouraged management to incorporate in the new approach the positive features found in the evaluation as well as IEG’s conclusions and the conclusions of other recent evaluations on the DB, in particular on validity, relevance, and the need to focus more on binding constraints, sustainability, and issues such as working conditions. Members acknowledged that the engagement with the Board on the new approach would begin with the informal meeting scheduled on January 18, 2022.

Members agreed that movements in indicators should be interpreted carefully and encouraged management to ensure that country strategies, policies, and development agendas reported reform implementation accurately. They suggested that complementary sources of data, as well as analytical guidance, should be used to validate the relevance of the reform topics. Acknowledging that the DB indicators had had strong weight on legal information (according to statutory laws and regulations), management reassured members that the new approach would seek for better balance with actual indicators, including surveys in the field, for a better match between regulations and business practice.