The World Bank says it will redo its competitiveness rankings after unfairly influencing them for years

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The World Bank says changes to the methodology of its “Doing Business” report may have unfairly affected some countries’ rankings.
Political motivations of World Bank staff may have influenced the changes, and Chile may have been a target.
The World Bank says it will revise the rankings for at least the past four years.

The World Bank’s chief economist, Paul Romer, told The Wall Street Journal on Friday that the organization changed the methodology of its “Doing Business” rankings in ways that were unfair and misleading, and the organization will recalculate the rankings for at least the past four years.

The “Doing Business” report ranks countries by things like the ease of opening a business, obtaining construction permits, getting credit, or paying taxes. Countries get penalized for things seen as making the business environment more complicated or onerous. The rankings are one of the World Bank’s most prominent initiatives.

Romers’ promised revision could affect the rankings of a number of countries, but Chile may see the most significant adjustment. Romer told The Journal that changes to the South American country’s rank stemmed from methodological adjustments rather than a deterioration in the country’s business environment and could have been affected by political motivations among the World Bank’s staff.

Since 2006, Chile’s presidency has alternated between socialist Michelle Bachelet, who was in office from 2006 to 2010 and from 2014 and 2018, and conservative Sebastian Piñera, who was in office from 2010 to 2014 and who will start a new term this year.

Over that 12-year period, Chile’s competitiveness ranking has shifted between 25 and 57 — rising under Piñera and falling under Bachelet.

Chile is currently 55 out of 190 countries on the list, down from 34 in 2014. Its ranking declined to 41 in 2015, 48 in 2016, and 57 in 2017.

Romer said World Bank staff affected how rankings were calculated by repeatedly changing the report’s methodology and that corrections will focus on changes that penalized Chile’s ranking during Bachelet’s most recent term.

“Based on the things we were measuring before, business conditions did not get worse in Chile under the Bachelet administration,” Romer told The Journal, offering “a personal apology” to Chile and other countries affected.

He said the report’s problems were “my fault because we did not make things clear enough” and that he couldn’t defend “the integrity” of the process that led to the changes in methodology.

‘Rare to see an action this immoral’

The former director of the World Bank group responsible for the report, Augusto Lopez-Claros, defended those changes, saying they came after “extensive internal peer review” and were announced by the bank. “The whole process was undertaken in a context of transparency and openness,” he told The Journal.

Lopez-Claros said claims that methodogical changes targeted Chile were “wholly without merit” and that the country’s fall came as other countries undertook reforms. Lopez-Claros is a former professor at the University of Chile and is on leave from …read more

Source:: Businessinsider – Finance


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