No longer Doing Business: A Standards Issue



Standards, badges, certifications, indicators…these are all just labels intended to help the bearer to convey to the observer or consumer a certain level of quality, achievement, or aptitude. What we will refer to here as standards are trying to solve a very real problem; the consumers of these standards – those that buy the products, award the contracts, give the jobs, or invest in the countries – commonly have far less knowledge about the subject matter than the bearer of the standard. As such, the standard itself is designed to increase trust and shorten timelines in differentiating good from bad and, in doing so, drive up quality.


In international development, as in many other fields, people pay attention to which label is attached to an initiative, organisation or programme. Global standards are integral to development strategy, procurement, monitoring and evaluation, from the SDGs (Sustainable Development Goals) down. These standards confer a legitimacy on the interventions, organisations, or institutions that wear them. While some are a passing fad and others stay in vogue for decades, rarely is their legitimacy challenged at an existential level.


As a result, being good can sometimes be less important than being seen to be good by a commonly accepted standard. For exhibit A, look no further than the Doing Business (DB) indicators produced by the World Bank (WB), which have recently attracted a barrage of negative headlines due to revelations arising from internal inquiries into the process of compiling their Doing Business (DB) report and the resulting decision to discontinue that report[1]. Further controversy has arisen as it was confirmed that the embattled Bank chief Kristalina Georgieva would be staying in post. Whilst the scandals that have resulted in this decision highlight severe shortcomings in the internal processes of the Bank, and their vulnerability to outside influence and manipulation, the fudging of the report numbers is perhaps the least surprising or interesting aspect of the reporting process. A handful of countries, including China and Saudi Arabia[2] may have been in a singular position in being able to apply direct political pressure on senior World Bank staff. However, those states and many other countries already benefitted from the poverty of both ambition and rigour in creating and compiling the DB report. Its ignominious end provides an apt moment for reflection not just on the DBI itself, but on the broader problematic culture of global standards and indicators.


Perhaps more troubling and surprising than the issues with the production of DB is the unquestioning consumption which has been prevalent for almost two decades. It has been widely referenced in press outlets as a reliable guide[3][4] to the working environment in different countries for foreign countries, and improvements in ranking have often been trumpeted loudly by the states under review as a strong, meaningful achievement. Having a high ranking allowed a state to present an attractive and welcoming image to the world and to send the message that they were doing the right things to drive economic growth. Similarly, donor money flowed to countries with low DB rankings with the sole goal of improving it – it’s even an indicator in the logframes of a large number of programmes!


In common with other standards, one shortcoming in the logic of DB was a presumed specific and fixed set of constraints and single solution. The DB standard, report and league table was about signalling that you are ‘good’, by an assumed objective measure, without interrogating the merit, appropriateness, and utility of the approach in any specific context, and eliminating the potential for innovation and further improvement. A driving test means you can drive, a swimming badge means you can swim, and a medal for running a marathon means you ran it. There are many different ways to train for those things but, in the ‘test’ there’s a very auditable, objective measure of success. In development, this is, for the most part, not the case.


Another common issue with DB and other global standards is the self-perpetuating political economy that evolved around it. However well-intentioned at the outset, these standards have created and funded organisations as the arbiters of their award and generated millions in revenues for consultants specialising in helping states jump through the right hoops to get their badge. This political economy undermines objectivity, benevolence, and influences the incentive structures that ultimately led to the downfall of Doing Business.


A final common set of issues is the tail wagging the dog with the measures themselves being the drivers of behaviour rather than what those measures were supposed to reflect, discouraging innovation and undermining laudable aims. Where DB sought policy change:


(the) mismatch of policies and capability for implementation creates a situation in which, across the board, the administrative ‘facts’ created by the state for purposes of regulatory implementation are often a complete fiction (Kar et.al 2019)


Enough of the stakeholders involved in the DB report were invested in this and other associated fictions to perpetuate them for close to two decades. As Best (2017) puts it


In too many instance the measurement techniques that were supposed to be the handmaidens to the policy process have instead become its masters.


We wouldn’t want the World Bank to feel singled out here and, indeed, the way that this failure in DB has been exposed is nothing short of miraculous given the political economy which had to be overcome to do so. And so, we are talking to you B Corps and you DCED Standard, and you Doing Development Differently, UPOV, Global GAP, and Sphere. And while we’re at it, the Federation of Master Builders, Lean Six Sigma, and whoever determines what can and can’t be called chocolate! Of course, broadly speaking all of these organisations and standards are forces for good and this is not intended to be a broadside at them. In fact it’s more of a buyer beware cautionary take.


These kind of polemics are always supposed to end with a proposed solution or a call to action, and on this we’re sorry to disappoint – we certainly wouldn’t get a certificate for polemic writing. As outlined at the start, standards are an attempt to solve a real problem and their logic is sound. The ‘consumer’ has neither the time nor skills to be expert in all fields. However, to the extent there is a call to action it is this: there are many ways to be good and possession of a standard shouldn’t be an excuse to park your critical reasoning at the door.


At best standards are a simple, elegant solution to a complex problem. However, when the standard takes on a life of its own, develops its own political economy, and becomes a substitute for expert judgement and synthesised data sources, it is a recipe for disaster. DBI is one such disaster, with performance against the standard itself rather than the changes it is intended to reflect becoming the objective of the bearers.


References

Gerard McCormack, ‘Why ‘Doing Business’ with the World Bank may be bad for you.’, European Business Organization Law Review (2018) 19:649–6


Jacqueline Best, ‘The Rise of Measurement-Driven Governance: The Case of International Development’

Global Governance, 2018


Mary Hallward-Driemeier and Lant Pritchett, ‘How Business is Done in the Developing World: Deals Versus Rules.’

Journal of Economic Perspectives-Volume 29, Number 3, Summer 2015, 121-140


Sabayasachi Kar, Lant Pritchett, Spandan Roy, Kunal Sen, ‘Doing Business in a Deals World: The Doubly False Premise of Rule Reform’, EISD Working Paper 123, Manchester: Effective States and Inclusive Development Research Centre, The University of Manchester, 2019 (August)


About Doing Business, World Bank, 2020, https://openknowledge.worldbank.org/bitstream/handle/10986/32436/9781464814402_Ch01.pdf

[1] https://tinyurl.com/whhhwbc9 [2] https://www.wsj.com/articles/the-china-world-bank-scandal-doing-business-kristalina-georgieva-11633039063 [3] https://www.visualcapitalist.com/ranked-the-20-easiest-countries-for-doing-business/, https://www.reuters.com/article/us-worldbank-regulation-rankings-idUKKBN1X304R, [4]https://marketfinder.thinkwithgoogle.com/intl/en_gb/guide/doing-business-rankings/#overview