Ease of Doing Business at World Bank
An index that fails to correctly represent two of the best-performing economies of the world cannot get a pass from serious observers. And 2.5 billion people cannot be dismissed as exceptions.
In its 2008 "Ease of Doing Business" (EDB) rankings, the World Bank ranks India 120th out of 178 countries. This poor ranking stands in sharp contrast to investor behaviour. Gross investment in the country rose from a high of 25% of the GDP in the early 2000s to 34% in 2005-06. Likewise, foreign investment has been pouring into the country - it rose from $8 billion in the early 2000s to $26 billion in 2006-07.
True, Indian multinationals are increasingly investing abroad, acquiring foreign firms. But this is not to be interpreted as their flight from India, as many on the lecture circuit fashionably do. Having been freed to invest abroad, Indian multinationals are now doing what their foreign counterparts had been doing for decades: acquire trade marks, get closer to customers, diversify production facilities and seek new sources of input supply.
China offers a similar contradiction: while it has the highest investment-to-GDP ratio in the world and receives more in direct foreign investment than any other developing country, it ranks 83rd in the latest EDB ranking. Such developing countries as Mexico, Mongolia, Colombia, El Salvador, Kenya and Pakistan rank above China and India. Additionally, Lebanon, Swaziland, Ethiopia, Bangladesh, Nigeria, Nepal, and Guatemala rank above India.
True, Indian multinationals are increasingly investing abroad, acquiring foreign firms. But this is not to be interpreted as their flight from India, as many on the lecture circuit fashionably do. Having been freed to invest abroad, Indian multinationals are now doing what their foreign counterparts had been doing for decades: acquire trade marks, get closer to customers, diversify production facilities and seek new sources of input supply.
China offers a similar contradiction: while it has the highest investment-to-GDP ratio in the world and receives more in direct foreign investment than any other developing country, it ranks 83rd in the latest EDB ranking. Such developing countries as Mexico, Mongolia, Colombia, El Salvador, Kenya and Pakistan rank above China and India. Additionally, Lebanon, Swaziland, Ethiopia, Bangladesh, Nigeria, Nepal, and Guatemala rank above India.