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2 - The Power of Ranking

The Ease of Doing Business Indicator and Global Regulatory Behavior

from Part I - Ratings, Rankings, and Regulatory Behavior

Published online by Cambridge University Press:  28 February 2020

By
Rush Doshi ,
Judith G. Kelley  and
Beth A. Simmons
Edited by
Judith G. Kelley  and
Beth A. Simmons
Judith G. Kelley
Affiliation:
Duke University, North Carolina
Beth A. Simmons
Affiliation:
University of Pennsylvania
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Summary

The World Bank has successfully marshaled the Ease of Doing Business (EDB) Index to amass considerable influence over business regulations worldwide. This success is notable given that the Bank has no explicit mandate over regulatory policy and that questions linger about EDB accuracy and the policy trade-offs a high ranking requires. First, this chapter shows that the EDB has a dominating market share among business climate indicators. Second, it uses media analyses and observational data to show that EDB has motivated state regulatory shifts. States respond to being publicly ranked and some restructure bureaucracies accordingly. Third, it explores plausible influence channels for the EDB ranking. It uses an experiment involving US portfolio managers to build on existing economics research and examine whether the rankings influence investor sentiment within the experiment. It also uses a case study of India’s multiyear interagency effort to rise in the EDB rankings to show how politicians see the ranking as affecting domestic politics, altering investor sentiment, and engaging bureaucratic reputation. Overall, a wide variety of evidence converges to illustrate the pressures through which the World Bank has used state rankings to achieve its vision of regulatory reform.

Keywords

World BankGlobal Performance Indicatorsinternational developmentinternational investmentIndiadomestic politicsbureaucratic politicsstatussocial pressurerankings
Type
Chapter
Information
The Power of Global Performance Indicators , pp. 25 - 60
Publisher: Cambridge University Press
Print publication year: 2020

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