LONDON, Sept. 17 Reuters - Some investors and campaigners expressed dismay on Friday at revelations that World Bank staff pressured staff to boost China's score in an influential report that ranks countries on how easy it is to do business there.
They said also that the World Bank's subsequent discontinuation of Doing Business series annual reports could make it harder for investors to gauge where to put their money.
The more I think about this, the worse it looks, said Tim Ash of BlueBay Asset Management, adding that the studies published since 2003 have become important for banks and businesses around the world.
If any country risk model was built into ratings, how would this compare to other countries risk tests? Money and investments are allocated on the back of this series. An investigation by law firm WilmerHale https: www.reuters.com/wilmerhale.html world-bank sustainable business world-bank - kills-business - climate-report - after-ethics - ask-cites - undue-pressure - 2021 - 09 - 16, at the request of the World Bank ethics committee, found that World Bank chiefs including Kristalina Georgieva - now Head of International Monetary Fund - had applied undue pressure to boost China's scores in the Doing Business 2018 report.
At the time, the Washington-based lender was seeking China's support for a big capital increase.
Georgieva said that she disagreed fundamentally with the findings and interpretations of the report, which was released on Thursday, and briefed the IMF's executive board.
Advocacy group Tax Justice Network welcomed investigation into ethics committee.
The biggest question is how can the Bank stop corruption, if it is possible?
Economists said such reports - the World Bank and others - were vulnerable but had long been useful to manipulation.
They said some governments, especially in emerging market countries who want to show progress and attract investment, could become obsessed with their position in the reports, which assess everything from ease of paying taxes to legal rights.
The United Arab Emirates, 6th in the latest 2020 report, had targeted topping the ranking in 2021, while Russia surged up rankings to 30th in 2020 from a dismal 120th in 2011. Vladimir Putin set a challenge to the country to break into the top 20 by the end of the last decade.
When asked to comment on the World Bank dropping ratings, Kremlin spokesperson Dmitry Peskov said on Friday: The task of improving the business climate is not tied to any ratings. Previous research by the World Bank tally to however suggest that foreign direct investment flows were higher for economies performing better in its reports.
Richard Robertson, chief economist at Renaissance Capital, said the ease of doing business has been losing credibility for years now. Some countries employ investment firms, including the foreign leaders of his own, and even former government leaders to advise them on how to improve their rankings.
There have been wide divergences between some countries corruption ranking s and the ease of doing business scores, which implies that these were just face-value improvements than refining underlying economic change, he said.
As an economist, though, it would a real shame if we lose access to the underlying data. It is really interesting, for example, to know that it takes a company in Argentina 900 hours to process taxes, whereas it takes 70 to process documents elsewhere, Robertson said.
Emerging markets-focused investment manager Gustavo Medeiros engaged a third party data provider that used Doing Business findings as one of their sources, but ultimately relied on its own research for investment decisions, said Ashmore Group's deputy head of research at the investment firm.