Differentiating and connecting indicators: the quality and performance of law in the World Bank's Doing Business Project

Abstract

Scholars have long argued that transnational legal indicators (TLIs) suffer from significant validity problems. In response to such critiques, the World Bank (WB) reformed its Doing Business (DB) legal indicators in 2014. This paper evaluates two important results of this reform: the WB distinguished between the quality and performance (efficiency) of law indicators and also claimed that they are positively correlated. I argue that this distinction is based on two different utilitarian perspectives; therefore, these indicators try to quantify different aspects of laws. However, new empirical tests indicate that they are not correlated. The statistical tests on the DB Resolving Insolvency Indicators do not show any strong correlation, and the case of Turkey's WB-led insolvency-law reform suggests that the developing countries can even incur efficiency losses from legal-quality improvements. Thus, this study demonstrates that the 2014 DB reform reproduced the validity problems inside the new distinctions and connections between its indicators, potentially creating new misconceptions for policy-makers.

Gaming country rankings: Consultancies as knowledge brokers for global benchmarks

“…The report identified the idea that "less regulation is preferable" as one of three main principles underlying the construction of the DBIs (Independent Evaluation Group, 2008: 6). Despite substantive methodological changes to the DBIs over the 15 years in which they were issued (Arslan, 2020), this continued to be a key assumption shaping the design of the indicators and how country rankings were produced.…”

“…As an early evaluation of the indicators used to construct the EDB rankings by the World Bank's Independent Evaluation Group (2008: xvi) noted, “most of the indicators presume that less regulation is better.” The report identified the idea that “less regulation is preferable” as one of three main principles underlying the construction of the DBIs (Independent Evaluation Group, 2008: 6). Despite substantive methodological changes to the DBIs over the 15 years in which they were issued (Arslan, 2020), this continued to be a key assumption shaping the design of the indicators and how country rankings were produced.…”

“…The methodology was altered each year for at least one category of indicators between the launch of the EDB rankings in Doing Business 2006 and Doing Business 2018 , which reduced the comparability of country rankings over time (World Bank, 2020b). In 2015, for example, the methodology was changed for 9 of the 10 categories of indicators with the launch of “distance to frontier” scores to better capture regulatory “quality” alongside “efficiency” (Arslan, 2020).…”

Recursive recognition in the international political economy

“…A World Bank taskforce promotes the importance of streamlining fast track insolvency reforms, noting the Indian case (WB IRC 2016, p. 26), while Ernst & Young, a prominent GPSF, note the importance of insolvency reforms to "give a fillip to India's ease of doing business ranking" (E&Y/ASSOCHAM 2017, p. 14). This drive occurs in a context of legal inconsistency from IGOs over what reforms are suggested (see Arslan, 2020). Nevertheless, agreement on these best practices is affirmed over successive rounds of surveillance and assessment.…”