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Switzerland behind Azerbaijan: World Bank list of countries’ business friendliness is struggling with “irregularities”.
Four of the 190 countries that participate in the World Bank’s entrepreneurial fitness rankings are said to have manipulated data. According to media reports, these are China, Azerbaijan, the United Arab Emirates and Saudi Arabia. The World Bank does not disclose exactly what is wrong with its data.
Ominous progress
It is noteworthy that three of the four countries in the highly prestigious ranking have made a great leap in the last five years. China has risen from 90th to 31st. Azerbaijan from 80th to 34th, and is even ahead of Switzerland (36th). The increase could be related to the fact that countries have provided embellished data. So far that’s just a guess.
The World Bank’s annual ranking is based on ten criteria: for example, it assesses how quickly a business can be established in a certain country, how many loans can be obtained, or how low the taxes are. On this basis, the World Bank assesses how favorable a country’s economic climate is for business.
Critics complain that these criteria paint too one-sided a picture: the less regulation, the better a country’s ranking. Stronger environmental and social laws could lead to deductions. Thus, the evaluation leads to downward competition. In contrast, other important criteria, such as the extent of corruption in a country, are not recorded at all. Even business associations criticize this, although corruption can slow down investments.
Questioning neutrality
Another claim is that the index is not as neutral as it claims to be. For example, former World Bank chief economist Paul Romer criticized two years ago that the valuation was prone to political manipulation. Chile’s economic data was deliberately less rated by the World Bank to discredit the left-wing government of Michele Bachelet. The World Bank denied that Romer had to remove his hat. But the criticism remained.
However, the World Bank’s “Doing Business” report, published annually since 2003, has received global attention. For investors, it is an indicator of where a country is and where there are problems. According to the World Bank, the placement should be an incentive to improve. In other words, to facilitate market entry, in the sense of the strictly defined catalog of criteria specified by the Washington-based development bank.
Switzerland in 36th place
According to representatives of Swiss business associations, the World Bank classification can only be an additional argument for investors to invest in this country. More important are criteria such as legal certainty, the availability of workers or access to the EU market.
Switzerland is currently ranked 36th out of 190 countries, somewhat unhappy. It has dropped over the years because now other countries are doing better, for example when it comes to the pace of business start-ups.
Perhaps Switzerland can regain some spots if the World Bank concludes that countries like China or Azerbaijan do not deserve a better rating. The bank has announced that it will systematically examine the last five rankings. However, in the current state, she doesn’t want to give up her controversial “doing business” index entirely, as critics have demanded.
