The EconomistJanuary 20th 2018 Finance and economics 63(^2) ally controversial. In some quarters, they
are seen as scorecards for a deregulatory
race to the bottom. Such critics may not ac-
cept Mr Romer’s apology at face value.
Other evidence may reassure them.
First, the broadening of the tax indicators
can be traced to an independent review of
“Doing Business” published in 2013, before
Ms Bachelet’s election. Second, not all of
the methodological changes hurt Chile’s
standing. After four of them, the country’s
sub-ranking improved (see chart). Third,
Augusto Lopez-Claros, who oversaw the
report’s work from 2011-2017, is indeed a
former University of Chile professor. But
he is not Chilean and lived there for only
two years in the early 1980s.
Moreover, the reports did little to high-
light Chile’s purported decline. On the con-
trary: they play down changes in any coun-
try’s relative standing. Each new edition
mostly avoids mentioning the previous
year’s rank. Instead, the first and most
prominent table in the report details three
things: the country’s current rank, current
score and whether that score (not rank) has
improved since the previous year. This im-
provement is calculated using the same,
latest method of assessment for both
years. This table showed an increase in
Chile’s score in each of the past four re-
ports, highlighting an improvement in the
ease of doing business under Ms Bachelet.
One final loose end does, however,
need tying up: a previously unreported er-
ror in one indicator. Chile’s “post-filing” in-
dex (which reflects the ease of obtaining
tax refunds and resolving errors) was re-
corded as 5.58 out of 100 in “Doing Busi-
ness 2017”. According to the bank’s online
database, it should have been 57.67. Conse-
quently, Chile’s rank on paying taxes
should have been 65th not 120th. But the
country need not feel too singled out. The
bank’s online database contains over
1,000 revisions and corrections for that re-
port. “DoingBusiness” is not easy. 7
Feeling the Chile?
Sources: World Bank;
The Economist
2015 report refers to “Doing
Business 2015”, published in 2014
Chile, change in rank in the World Bank’s “Doing
Business” reports, by subtopic, places lost/gained
compared with previous report
100 50 – 0 + 50
Credit
Investors
Insolvency
Construction
Electricity
Property
Trade
Contracts
Startups
Property
Tax
Contracts
2015
report
2016
report
2017
report
A
S A boy, Antoine Hubert used to catch
butterflies. These days, the agro-engi-
neer has eyes only for meal worms. In a de-
monstration factory nearDole in eastern
France, he shows how trayfuls of plump,
half-grown worms are fed, left to grow in a
darkened dormitory, and then—after two
months—slaughtered and cleaned with a
blast of steam. A machine divides the re-
sulting mush into oil and protein powder.
Around 70% of a worm is protein, mak-
ing it ideal for animal feed. Demand is soar-
ing, notably at fish and shrimp farms. Mr
Hubert predicts aquaculture businesses
will need 70m tons of feed annually in ten
years’ time, up from 40m now. The global
market for animal feed, he reckons, is al-
ready worth €500bn ($610bn).
Ynsect, his firm, thus expects to grow
once it opens a new factory this year. He
dreams of annual output exceeding 1m
tonnes, hinting at a hunger for scale often
left unsatisfied in a French entrepreneur:
local startups find it notoriously difficult to
get beyond the pupa stage, partly because
of a lack of capital. But Ynsect has so far
raised a decent €22m, some of it from Bpi-
france, a bank owned by the Caisse des Dé-
pôts, a two-century-old investment arm of
the state. Bpifrance wasset up in 2013 to
channel venture capital (VC) to startups.
The bank is “accelerating the startup
ecosystem” in France, says Paul-François
Fournier, its head of innovation. It invested
in 1,500 startups in 2013, risingto 4,000 last
year. Over lunch (beef, not worms), he out-
lines broader goals. Bpifrance already has
€20bn invested directly in various smalland large companies. The government of
President Emmanuel Macron is to raise
€10bn from privatisations, such as of air-
ports in Paris. That will be deployed to fi-
nance more startups and train 4,000 exist-
ing firms in the better use of digital tools.
Bpifrance is also shifting how it invests
in VCfunds. As it tries to expand, it has
stakes in roughly half of France’s 200 or so
funds. On average it invests in funds man-
aging €180m of capital, up from €80m in- Mr Fournier says its role helps to ex-
plain why the VC industry is growing fast-
er in France than elsewhere in Europe; a
typical round of public financing of €10m
is enough, he suggests, for firms to get heft
without crossing the Atlantic to tap deeper
capital markets. It remains tough, however,
to raise bigger sumswithout going abroad.
Some argue it makes no sense for a gov-
ernment to place VCbets, directly or other-
wise. Mr Fournier says it happens every-
where. VCfunds in Britain raise lots of
public money from the EU, via the Euro-
pean Investment Fund. Post-Brexit, more
of that could flow to France. Massimo Co-
lombo, an academic who studies govern-
mentVC in Europe at the Polytechnic Uni-
versity of Milan, reckons government
involvement can be beneficial, but admits
that, when results are measured by jobs
created or productivity boosted, the priv-
ate sector is far better at deploying capital.
Studying 25,000 governmentVC in-
vestments in 28 countries, between 2000
and 2014, he and colleagues concluded
that they worked only when they did not
compete directly with the private sector. If
Bpifrance is typical, the most successful in-
vestments, in terms of drawing in private
money and boostingsmall businesses, are
in science-oriented and manufacturing ac-
tivities (not, say, e-commerce), and in start-
ups in remote spots such as Ynsect’s base in
Dole. About half its funds go out of Paris. If
the insect business does grow fat, it will be
an advertisement for incubation in more
ways than one. 7
Government venture capital in EuropeThe worm’s turn
DOLE
The French state will funnel ever more
venture capital to startupsDon’t be coy, carp about the food