B-Ready for Another Disappointment: Assessing the Doing Business Index's Ability to Reflect Business Environments and Predict Private Investment Flows

The World Bank's "Doing Business" (DB) report ranked nearly 190 countries on their private-sector business climate from 2003 to 2020, grading countries primarily on de jure regulatory performance. Using panel data for 2010–2014 and 2016–2019, we test whether DB scores are associated with or predictive of private investment flows, measured by both Foreign Direct Investment (FDI) and Gross Fixed Capital Formation (GFCF). Across pooled OLS, two-way fixed-effects, and Jordà local projection specifications, we find no robust relationship between DB score improvements and either investment measure. DB's apparent cross-sectional relevance for GFCF dissolves once institutional fragility is controlled for, revealing the index as a proxy for stability rather than a measure of regulatory quality. Capital account openness is the dominant within-country predictor of domestic investment intensity, a dimension entirely absent from DB's framework. A synthetic index of our construction, combining institutional stability, capital account openness, and trade integration consistently outperforms DB in cross-sectional horse races. These findings carry direct implications for Business-Ready (B-Ready), DB's successor due in late 2026, whose continued reliance on de jure scoring risks reproducing the same structural limitations and ultimately fail to capture the conditions firms actually face.