Gulf countries led by Saudi Arabia sharply improved their rankings in the World Bank’s latest Doing Business report, while Latin American countries largely lagged in reforms and New Zealand took the top spot for the fourth year in a row.
The report released in Washington late Wednesday night ranks countries on their business climates, and found that the most improved countries over the previous year were Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China, India and Nigeria.
Saudi Arabia climbed 30 places to 62nd, while Jordan climbed 29 to 75th, driven by reforms aimed at building more economic diversification, the World Bank said.
It said Saudi Arabia’s reforms included establishing a one-stop shop for business registration, introducing a secured transactions law and an insolvency law, improving protections for minority investors, and measures to bring more women into the workforce.
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“Something clearly is happening in the Gulf which has not happened before,” Simeon Djankov, World Bank senior research director and founder of the Doing Business report, told Reuters ahead of a launch event in Riyadh attended by ministers.
“Everybody here in this region figured out we better diversify the economy in some direction and I think this is actually why the reforms are happening now.”
Two to three years ago when countries started work on some of these reforms, oil prices were unstable, he added.
Saudi Minister of Commerce and Investment Majid al-Qasabi said the ranking bump was “a good milestone. But this has to be sustainable. This is a journey (which) requires continuous efforts.”
The report coincides with the scheduled appearance next week of World Bank President David Malpass at a Saudi investment conference, a year after his predecessor pulled out of the same event amid a global outcry over the murder of journalist Jamal Khashoggi in Saudi Arabia’s Istanbul consulate.
U.S. officials said that after cancelling last year, Treasury Secretary Steven Mnuchin and presidential adviser Jared Kushner would also attend the forum, which aims to showcase Saudi Arabia as a business destination.
“Removing barriers facing entrepreneurs generates better jobs, more tax revenues, and higher incomes, all of which are necessary to reduce poverty and raise living standards,” Malpass said in a statement.
Critics say the report is too heavily weighted in favor of deregulation.
“This is a pure measure of deregulation. This index takes a fairly extreme position on market fundamentalism,” said Justin Sandefur, a fellow at the Washington-based Center for Global Development.
The survey’s top 10 rankings were largely unchanged from last year, with New Zealand holding its top spot followed by Singapore, Hong Kong, Denmark, South Korea, the United States, Georgia, Britain, Norway and Sweden.
China climbed 15 places to 31st, a move Djankov attributes to domestic reforms prompted by trade tensions with Washington.
Pakistan and Nigeria also made big jumps due to internally-focused reforms in the face of trade difficulties.
Latin American countries lagged, with Argentina falling seven places to 126th, and Mexico, the region’s highest-ranking economy, falling six spots to 60th. The World Bank said that for the second consecutive year, Mexico made no major improvements.
Chile fell three places to 59th. The South American commodity exporter was at the center of a controversy in January 2018 over changes to the study’s methodologies, which former World Bank chief economist Paul Romer said may have been biased against socialist then-president, Michelle Bachelet.