January 15, 2018

Paul Romer Explains the “Doing Business” Ranking FUBAR

I don’t want to spend forever on the controversy over the World Bank’s “Doing Business” rankings, but Paul Romer put up a post today that shows what kind of effect the new ranking methodology had on Chile. Here it is:

The new rankings (light orange) started in 2013 and showed Chile improving under its conservative president. Then Chile’s ranking fell substantially starting in 2014, when socialist Michelle Bachelet took office.

If the old ranking methodology (dark orange) had been used throughout this period, Chile’s rank would have fallen substantially under the conservative president and then stayed pretty much flat under Bachelet.

I have no idea how much difference this made to anything. As for how it happened, Romer says, “the fundamental failure can be traced back to a lack of clarity in our communication.” Stay tuned.

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