Based on being able to do well on a test. Very different kind of merit than I think is actually useful in a lot of real life.

Off the top of my head I’m not sure, but my question isn’t asking about merit-based selection in the abstract. I’m asking if there are drawbacks to the specific system mentioned; that is, competitive entrance exams with anonymous review.

Choosing based on merit is viewed as both racist and sexist in the US. For example, check out the controversy over the “meritocracy” rug at github.