Welcome news on Doing Business

The World Bank’s Doing Business metrics have been the focus of a review of an independent panel and an intense debate over their usefulness. On June 7, World Bank President Jim Kim pronounced himself in favor of keeping the Doing Business metrics, maintaining the ranking system, and even expanding them. His statement is here. This is a win for development, for the World Bank, and for America and the over 100 countries that support Doing Business.

I have written about the struggle over Doing Business here and here. Strong forces were aligned against Doing Business. With a new World Bank president, those forces saw a chance to end Doing Business. For the rest of Kim’s first (only?) five-year term, Doing Business should continue to bring about hundreds of reforms in the 185 countries it covers.

Significant credit for this turnaround in thinking should go to, among others:

• Barack Obama’s administration and the great work the U.S. Treasury Department did (including strong board advocacy by Sara Aviel, alternate U.S. executive director at the World Bank)
• Excellent support from the Nordic countries and the Russians (yes, the Russians)
• Congressman Ed Royce, chair of the House Foreign Affairs Committee, who along with his colleague Jeb Hensarling, chair of the House Financial Services Committee, sent to Kim at just the right moment a letter that included the signatures of two Democratic colleagues, Greg Meeks and Karen Bass. (Royce’s statement about Kim’s decision can be read here.)
• Michael Klein, former World Bank vice president for private sector development, who helped create with four prominent economists and former World Bank officials a well subscribed open letter on saving Doing Business.
• An importantly timed leader in the Economist on May 25 
• Well timed articles in favor by former World Bank general counsel Ana Palacio
• Andrew Natsios, former administrator of the U.S. Agency for International Development
• An op-ed by Rob Mosbacher, former CEO of the Overseas Private Investment Corp., and U.S. Ambassador Mark Green — the co-chairs of the Consensus for Development Reform
• And finally President Kim for understanding the stakes in the Doing Business controversy and taking the right stand in a strong way both publicly and also by bringing the board and his management team along to the same position.

It is very good news, but we are not out of the woods yet. There remains a bureaucratic danger to Doing Business: There are rumors within the World Bank that Doing Business will be moved to "DEC," the World Bank’s research department, which in theory would provide protection and freedom for Doing Business to operate. Up until now, Doing Business was a shared budget item between the World Bank and International Finance Corp. (IFC). IFC’s board should continue to provide core funding to Doing Business though it may be housed in DEC.

As an insurance policy, supporters of Doing Business such as Singapore, South Korea, the Nordics, the Russians, and the United States would do well by creating a separate fund to protect Doing Business from being crippled financially in a year or two after being moved from its original home. Donors should think about creating a $25 million to $40 million fund to cost-share the expenses of putting the indicators together. This is a big opportunity for "nontraditional donors" that do very well on the indicators and are not going to be seen as "gaming" the indicators since they already do so well on the indicators — I am thinking of Singapore in particular.

Overall this is a big win.