The Power of Ranking: The Ease of Doing Business Indicator and Global Regulatory Behavior

The proliferation of Global Performance Indicators (GPIs), especially those that rate and rank states against one another, shapes decisions of states, investors, bureaucrats, and voters. This power has not been lost on the World Bank, which has marshaled the Ease of Doing Business (EDB) index to amass surprising influence over global regulatory policies – a domain over which it has no explicit mandate and for which there is ideological contestation. This paper demonstrates how the World Bank’s EDB ranking system affects policy through bureaucratic, transnational, and domestic-political channels. We use observational and experimental data to show that states respond to being publicly ranked and make reforms strategically to improve their ranking. A survey experiment of professional investors demonstrates that the EDB ranking shapes investor perceptions of investment opportunities. Qualitative evidence from India’s interagency EDB effort show how these mechanisms shape domestic politics and policy in the world’s second-largest largest emerging economy