10 Years Doing Business, Measuring Results, and Now Bill Gates

Rumors are flying around that the World Bank will water down or even abandon its ten-year old Doing Business series which measures the extent and quality of pro-growth economic policies in individual countries round the world. A committee has been set up by World Bank president Jim Yong Kim to review the series. People are naturally writing and worrying about the outcome.

What a terrible mistake it would be to end or dilute this useful measurement system. I remember when the Doing Business reports first started. I was Under Secretary of Treasury with responsibility for U.S oversight of the World Bank. The Doing Business series was part of a response to a concentrated effort by the U.S government to improve effectiveness and measurement of development assistance—both multilateral and bilateral—a subject I gave a bunch of speeches about. It was at that time that the U.S. proposed and created the Millennium Challenge Account whereby U.S. bilateral development aid would be directed more toward countries following good pro-growth policies based on certain measurable criteria. A lot of economic research at the Treasury and other U.S. agencies went into choosing those selection criteria, which ended up including items such as those now covered in the Doing Business report, including the time it takes to start a business.

This was also the first time that the U.S. insisted on linking the size of its contributions to the World Bank’s program for poor countries to specific measures of the delivery and effectiveness of the aid. The straightforward idea was that insisting on measurable results would make aid more effective in reducing poverty and improving people’s lives. The story of the “measurable results” campaign is told in my book Global Financial Warriors.

It’s good that Bill Gates is now writing a lot about this idea. As he put it in his recent Wall Street Journal piece My Plan to Fix The World’s Biggest Problems “In the past year, I have been struck by how important measurement is to improving the human condition. You can achieve incredible progress if you set a clear goal and find a measure that will drive progress toward that goal….This may seem basic, but it is amazing how often it is not done and how hard it is to get right.”

The committee reviewing Doing Business should read the Gates piece, examine the positive benefits of this approach when used over the past 10 years, and strengthen, not weaken, Doing Business.

About John B. Taylor 117 Articles

Affiliation: Stanford University

John B. Taylor is the Mary and Robert Raymond Professor of Economics at Stanford University and the Bowen H. and Janice Arthur McCoy Senior Fellow at the Hoover Institution. He formerly served as the director of the Stanford Institute for Economic Policy Research, where he is now a senior fellow, and he was founding director of Stanford's Introductory Economics Center.

Taylor’s academic fields of expertise are macroeconomics, monetary economics, and international economics. He is known for his research on the foundations of modern monetary theory and policy, which has been applied by central banks and financial market analysts around the world. He has an active interest in public policy. Taylor is currently a member of the California Governor's Council of Economic Advisors, where he also previously served from 1996 to 1998. In the past, he served as senior economist on the President's Council of Economic Advisers from 1976 to 1977, as a member of the President's Council of Economic Advisers from 1989 to 1991. He was also a member of the Congressional Budget Office's Panel of Economic Advisers from 1995 to 2001.

For four years from 2001 to 2005, Taylor served as Under Secretary of Treasury for International Affairs where he was responsible for U.S. policies in international finance, which includes currency markets, trade in financial services, foreign investment, international debt and development, and oversight of the International Monetary Fund and the World Bank. He was also responsible for coordinating financial policy with the G-7 countries, was chair of the working party on international macroeconomics at the OECD, and was a member of the Board of the Overseas Private Investment Corporation. His book Global Financial Warriors: The Untold Story of International Finance in the Post-9/11 World chronicles his years as head of the international division at Treasury.

Taylor was awarded the Alexander Hamilton Award for his overall leadership in international finance at the U.S. Treasury. He was also awarded the Treasury Distinguished Service Award for designing and implementing the currency reforms in Iraq, and the Medal of the Republic of Uruguay for his work in resolving the 2002 financial crisis. In 2005, he was awarded the George P. Shultz Distinguished Public Service Award. Taylor has also won many teaching awards; he was awarded the Hoagland Prize for excellence in undergraduate teaching and the Rhodes Prize for his high teaching ratings in Stanford's introductory economics course. He also received a Guggenheim Fellowship for his research, and he is a fellow of the American Academy of Arts and Sciences and the Econometric Society; he formerly served as vice president of the American Economic Association.

Before joining the Stanford faculty in 1984, Taylor held positions as professor of economics at Princeton University and Columbia University. Taylor received a B.A. in economics summa cum laude from Princeton University in 1968 and a Ph.D. in economics from Stanford University in 1973.

Visit: John Taylor's Page, Blog

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