On March 29, at a virtual meeting held by the London School of Economics ahead of the World Bank-IMF Spring Conference in 2021, World Bank President David Malpass called for long-term strategies, integration emphasizes “green, inclusive and sustainable development” to address what he calls COVID-19 the “epidemic of inequality”. Emphasizing the importance of helping countries improve their future pandemic readiness through policies supporting sustainable development, he urged policymakers to avoid duplication. “Mistakes of the past”.
World Bank representatives reiterated the same speech at last week’s Spring Meetings and the United Nations Development Funding Forum. However, one of the Bank’s most powerful policy advisory tools, the Business rankings, continues to introduce misleading policy regulations, hindering developing countries’ pandemic recovery efforts. developing and limiting the ability to cope with future crises.
For 17 years, political leaders and policymakers around the world have nervously reviewed the Bank’s annual Business report. The Bank’s flagship publication ranks 190 economies on how easy and cheap it is for companies to do business there. The less regulation, the higher a country scores on the Doing Business, increasing its chances of attracting foreign investment. According to the Bank, this leads to economic growth with smaller benefits for the people.
The report launched in 2004 as the new face of the heavily criticized Structural Adjustment Programs (SAPs) stems from the idea that deregulation and privatization of investment incentives, promoting promote development and economic growth. There is a lot of evidence of the negative consequences of SAP, which was widely practiced through World Bank and International Monetary Fund loans in the 1980s and 1990s. Bank lending has changed over time, and similar ideological incentives continue to be enhanced in the Business rankings to this day.
With its Doing Business, the Bank has regarded itself as both an arbitrator and a rule-maker for implementing its investor-friendly policy reform and its global benchmarking. Governments wanted to signal to the world that they were opening the door to international business, racing to cut the red ribbon and claim a spot on the Bank’s “top ten innovators” list. But this race to bottom has eroded workers and environmental measures in the meantime. The report’s recommendations have a specific impact on policy shaping in developing countries.
Policies rewarded in the ranking include cuts in corporate income taxes and contributions to employee retirement programs in India; reduce social tax rates in Hungary and Kazakhstan, and abolish social security contributions in Georgia.
Meanwhile, the Business report does not encourage welfare and environmental protection. Bolivia and Trinidad and Tobago scored lower in improving social security contribution rates for employers, while Guatemala gained points thanks to loosening requirements for environmental impact assessment and Vietnam gained points. when waste of environmental protection. Some countries, such as India and Indonesia, design national reforms with the sole purpose of climbing the rankings. Rwanda has a complete set for this purpose.
New Indian laws to deregulate agricultural markets show how far governments can go to protect the interests of private investors and comply with Bank policy rules. World. Legal reforms that will affect 800 million Indians whose livelihoods depend on agriculture have been passed without controversy. The largest ever farmer protests in response to it were met with paramilitary violence, arbitrary arrests and internet shutdowns.
The enactment of the Omnibus Act of 2020 in Indonesia is another example of a reform package clearly designed to help a country climb up the Business ranking. Although the bill encountered great opposition from labor unions and social movements for its effects on workers’ rights and the environment, it received unconditional endorsement by World Bank.
A study by Cambridge University in 2019 clearly illustrated the overwhelming effect of Business ratings on investors. In one experiment, researchers provided a group of investors with different economic and political indicators for a group of countries. They found that even when most of the other metrics seemed positive, a low rating on the Business index caused investors to refuse to invest in a country. This finding raises the question: Should the World Bank promote a deregulation scheme disproportionately serving the companies headquartered in rich countries that administer it, with Costs of workers’ rights and climate and ecological sustainability in many developing countries?
US Treasury Secretary Janet Yellen, in an effort to raise corporate taxes, recently stated that competitiveness “is to ensure that governments have stable tax systems to increase sufficient revenue to invest in essential public goods and crisis response ”. However, this is exactly what the World Bank, whose largest shareholder is the United States, cannot achieve through the Business formula to attract private investment.
Privatization, outsourcing and budget cuts have undermined countries’ capacity to respond to the COVID-19 crisis. And the World Bank-encouraged policies promoting inequality will continue to be harmful in the post-pandemic world. The erosion of social safety nets, considered “burdensome” and “costly” according to Bank indicators, has affected 2.7 billion people who are facing unemployment and loss. income.
Since its inception, the Business Index has been criticized by the World Bank’s civil society organizations, academics, trade unions and chief economists, and an independent panel of experts.
In August 2020, the Bank was forced to suspend publishing due to “some anomalous”. An internal investigation concluded that the Bank management’s excessive pressure on the Business team to manipulate data in 2017 and 2019 has resulted in variable results for Azerbaijan, China, and Saudi Arabia. Saudi Arabia and United Arab Emirates. An external panel was tasked with conducting a comprehensive review of the Business methodology, but the process so far lacks transparency and accountability, with limited social consultation. Civil.
As the Bank prepared to release its Business report for 2021, more than 360 civil society organizations, scholars, former United Nations employees and independent experts from 80 countries signed an open letter. call termination and report on Business. If the World Bank is serious about building a sustainable and comprehensive recovery from the coronavirus pandemic, it’s time it must align its speeches with its actions. Negative Business Ranking is a good start.
The views expressed in this article are those of the author and do not necessarily reflect the editorial stance of Al Jazeera.