ENTERPRISE SURVEYS WHAT BUSINESSES EXPERIENCE Solomon Islands 2015 ENTERPRISE SURVEYS Country Profile 1 Contents Introduction......................................................................................................................................................... 3 Firms Characteristics ........................................................................................................................................... 4 Workforce............................................................................................................................................................ 5 Firm performance................................................................................................................................................ 5 Physical Infrastructure ........................................................................................................................................ 6 International Trade ............................................................................................................................................. 6 Access to Finance ............................................................................................................................................... 7 Crime and Informality ......................................................................................................................................... 8 Regulations, Permits, and Taxes ......................................................................................................................... 8 Corruption ........................................................................................................................................................... 9 Business Environment Obstacles ........................................................................................................................ 9 Appendix ........................................................................................................................................................... 11 The Country Profiles produced by the Enterprise Analysis Unit of the World Bank Group provide an overview of key business environment indicators in each economy, comparing them to their respective geographic region and group of countries with similar income levels. The same topics are covered for all countries with slight variations of indicators. All indicators are based on the responses of firms. To learn more about the Enterprise Analysis Unit and to obtain Country Profiles for other countries, please visit www.enterprisesurveys.org © 2014 International Bank for Reconstruction and Development / The World Bank Group 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank Group with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank Group, its Board of Executive Directors, or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank Group concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because The World Bank Group encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Group Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Please cite Enterprise Surveys data as follows: Enterprise Surveys www.enterprisesurveys.org The World Bank Group. The Enterprise Surveys team can be contacted at: The World Bank Group 2121 Pennsylvania Avenue, NW Washington DC, 20433 USA Tel. (202) 479-3800 2 Economy Overview Sector coverage is defined consistently across all economies and includes the entire manufacturing sector Solomon Islands 2015 and most services sectors: retail, wholesale, automotive Region: East Asia & Pacific repair, hotels and restaurants, transportation, storage, Population: 583,591 communications, construction, and IT. Public utilities, GNI per capita (US $): 1,940 government services, health care, and financial services sectors are not included in the sample (Figure 1). The ES Income Group: Lower middle income interview takes place with top managers and business owners. Introduction The ES are repeated approximately every four years for a The Enterprise Surveys (ES) focus on many aspects of the particular economy (or region). By tracking changes in the business environment. These factors can be business environment, policymakers and researchers can accommodating or constraining for firms and play an look at the effects of policy and regulatory reforms on important role in whether an economy’s private sector firm performance. Repeated surveys aid in studying the will thrive or not. An accommodating business evolution of the business environment and how it affects environment is one that encourages firms to operate the dynamics of the private sector. efficiently. Such conditions strengthen incentives for firms to innovate and to increase productivity — key This document summarizes the results of the Enterprise factors for sustainable development. A more productive Survey for the Solomon Islands. Business owners and top private sector, in turn, expands employment and managers in 151 firms were interviewed from September contributes taxes necessary for public investment in 2015 to May 2016. Figure 2 provides a description of the health, education, and other services. Questions sample breakdown across the three survey design contained in the ES aim at covering most of the topics categories: business sector, firm size, and location. mentioned above. The topics include infrastructure, trade, finance, regulations, taxes and business licensing, corruption, crime and informality, access to finance, Figure 1: Sectors of the economy covered by the innovation, labor, and perceptions about obstacles to Enterprise Surveys doing business. Excluded Included SECTORS SECTORS The ES are conducted by the World Bank Group and its Agriculture Manufacturing (all subsectors) partners across all geographic regions and cover small, Fishing Construction medium, and large firms. The size of the firm is Mining Motor vehicles sales and determined by the number of employees: 5 to 19 (small), Public utilities repair Financial intermediation Wholesale 20 to 99 (medium), and 100 or more (large). Firms with Public administration Retail less than five employees are ineligible for the survey. Education, health and social Hotels and restaurants Firms that are 100% state-owned are also ineligible. work Storage, transportation, and Partners for the ES have included the European Bank for communications Reconstruction and Development (EBRD), the European IT Investment Bank (EID), and the UK's Department for ADDITIONAL CRITERIA ADDITIONAL CRITERIA International Development (DFID).  < 5 employees  5+ employees  Informal firms  Formal (registered) firms  100% state-owned firms  Minimum of 1% private The surveys are administered to a representative sample1 ownership of firms in the non-agricultural, formal, private economy. 3 Figure 2: Characteristics of firms surveyed Sector 42 Manufacturing [42] Services [109] 109 Size 20 61 Small (5-19) [61] Medium (20-99) [70] Large (100+) [20] 70 Location Honiara [151] 151 Firms Characteristics Figure 3: Age distribution of firms (percent of firms) 50 45 In addition to collecting information on the business environment and firm performance, the ES also collect 40 information on characteristics of private firms. Figure 3 % of Firms shows the distribution of firms in the private sector 30 according to their age, measured by the number of years 19 they have been in operation. The effect of the business 20 16 environment on firm performance may depend on firms’ 9 10 7 experience and longevity. Also, older firms and young 3 firms may differ in their ability to successfully navigate the 1 0 business environment. 0-10 11-20 21-30 31-40 41-50 51-60 60+ Firm Age (Years) 4 Figure 4 exhibits the percentage of female participation in The incidence of training is measured by the percent of employment, in top management and in firm ownership, firms that offer formal training and the intensity of compared to the equivalent percentages for the region training is measured by the share of workers receiving and for economies with similar income levels. Female training in the manufacturing sector. inclusion in economic activity is necessary for promoting shared prosperity, one of the twin development goals of Figure 6: Within firms offering training, proportion of the World Bank Group. workers trained* 100 85 Figure 4: Female participation in employment, top 80 60 management and ownership 60 % of Firms 60 54 40 47 20 50 0 38 0 40 34 Percentage Solomon East Asia & Pacific Lower middle 30 25 Islands2015 income 23 21 24 * only for manufacturing firms 20 15 10 Firm performance 0 % of employees % of firms w/ a % of firms w/ If an economy’s business environment is supportive and that are female female top female competitive, resources are often channeled to the most manager participation in productive uses and firms invest to further increase their ownership productivity. Using the responses to questions on annual Solomon Islands2015 East Asia & Pacific sales and the total number of permanent full-time Lower middle income employees, both in the last fiscal year and three fiscal years earlier, growth measures can be computed for each Workforce firm. Figure 7 displays the resulting annual growth rate in employment and in real sales. By looking at business The ES collect workforce information such as the number environment measures in conjunction with available of permanent full-time employees, the number of performance measures, policymakers can determine temporary employees, employees by gender, whether which aspects of the business environment may be formal training is offered, and the top manager’s impeding or enabling the growth of the private sector. experience working in the firm’s sector. In addition, for Figure 7: Annual employment and sales growth manufacturing firms, the ES also collects the breakdown 20 of the workforce between production and non- production workers and between skilled and unskilled 15.4 production workers. Figures 5 and 6 highlight firms’ 15 12.2 investment in the skills and capabilities of their 10 % Annual workforce. 7.3 6.7 Figure 5: Percent of firms offering formal training 5 3.3 60 57 50 42 0 40 Annual employment growth Real annual sales growth (%) 30 25 (%) % of Firms -5 -2.8 20 Solomon Islands2015 East Asia & Pacific 10 Lower middle income 0 Solomon East Asia & Pacific Lower middle Islands2015 income 5 Physical Infrastructure Figure 9: Days to obtain an electrical connection 30 25 A well-developed physical infrastructure, including roads, 25 20 electricity, water and telecommunications, is central to Days 15 12 competitiveness and growth of an economy. Quality 9 10 infrastructure efficiently connects firms to markets for 5 inputs, products, and technologies. It reduces the cost of 0 production and enhances the competitiveness of firms in Solomon East Asia & Lower middle domestic and international markets. Islands2015 Pacific income For many industries in the manufacturing sector water is The ES capture the dual challenge of providing a strong also an important input in the manufacturing process. infrastructure for electricity, water supply and Figure 10 presents the average number of water telecommunications in addition to information on the insufficiencies in a typical month experienced by firms in development of institutions that effectively provide and the manufacturing sector. Interruptions in water maintain these public services. provision can have serious harmful effects on firms’ operations. Efficiency in the operation of the private sector requires a reliable supply of electricity. Figure 8 shows the extent to Figure 10: Reliability of water supply* which firms face failures in the provision of electricity and 1.0 0.8 No. of Insufficiencies their effect on sales as measured by the losses they 0.6 generate. Inadequate electricity provision supply can 0.5 increase costs, disrupt production, and reduce profitability. 0.0 0.0 Solomon East Asia & Pacific Lower middle Figure 8: Reliability of electricity supply and related Islands2015 income losses * only for manufacturing firms 2.5 2.2 9.0 10 2.1 2.0 8 International Trade 6 No. of Power Outages 1.5 4.9 Participation in international trade allows firms to % Sales 1.0 4 expand, raise standards for efficiency, import materials at lower cost, and acquire updated and better technologies. 0.5 0.2 2 0.3 However, trading also requires that firms deal with 0.0 0 customs and trade regulations, and often firms are also % losses due to No. of power outages required to obtain export and import licenses. power outages Solomon Islands2015 East Asia & Pacific The ES quantify the trade activity of firms and collects Lower middle income information on the operational constraints faced when exporting and importing. Figure 11 provides a measure of Figure 9 displays the efficiency of infrastructure services the intensity of foreign trade in the private sector, by quantifying the number of days it takes to obtain an captured by percentage of firms’ exporting (either electricity connection. Service delays impose additional directly or indirectly) and also the percentage of costs on firms and may act as barriers to entry and manufacturing firms using inputs or supplies of foreign investment origin. 6 Figure 11: Percentage of exporting and importing firms Figure 13 compares the various sources used to finance 100 purchases of fixed assets (investments). Investment 86 purchases can be financed by internal sources, banks, 80 inputs’ supplier credit, or other sources, including non- % of Firms 60 bank financial institutions or personal networks. 40 36 Excessive reliance on internal funds may indicate 18 19 17 potentially inefficient financial intermediation. 20 12 0 Figure 14 displays two indicators of the use of financial % exporting directly or % using inputs of foreign services by private firms: the percentage of firms with a indirectly origin(manufacturing firms checking or savings account and the percentage of firms only) with a bank loan. The former indicator measures the use Solomon Islands2015 East Asia & Pacific of deposit mobilization services which helps firms to Lower middle income manage their liquidity and payments. The second indicator measures the use of financial services on the Efficient customs procedures enable businesses to credit side. Availability of credit permits funding projects directly export and import goods. Figure 12 displays the that otherwise would be constrained by each firm’s average number of days to clear customs for exports and limited pool of funds. imports. Delays in clearing customs for exports and imports create additional costs to the firm, can interrupt Figure 13: Sources of financing for purchases of fixed production, interfere with sales, and may result in assets damaged supplies or merchandise. Figure 12: Average days to clear exports and imports Solomon Islands2015 12 2 7 71 9 through customs 15 14 East Asia & Pacific 64 2 86 2 9 9 % of Firms 10 8 6 6 5 Lower middle income 15 6 3 71 6 0 0 20 40 60 80 100 Exports at customs Imports at customs % of investment Solomon Islands2015 East Asia & Pacific Financed by banks Financed by equity Lower middle income Financed by supplier credit Financed internally Other Access to Finance Figure 14: Use of financial services Well-developed financial markets provide payment 100 93 96 100 services, mobilize deposits, and facilitate funding for the 80 purchase of fixed assets – such as buildings, land, % of Firms 60 46 49 machinery, and equipment – as well as working capital. 41 Efficient financial markets reduce the reliance on internal 40 funds or informal sources such as family and friends by 20 connecting firms that are creditworthy to a broad range 0 of lenders and investors. Small (5-19) Medium (20-99) Large (100+) The ES provide indicators on the sources of firms financing With checking/savings account With bank loan and on the characteristics of their financial transactions. 7 Crime and Informality Figure 16: Firms and informality 100 89 88 83 Firms can become the target of theft, robbery, vandalism, 80 or arson. Protecting themselves against crime imposes 60 % of Firms 55 52 costs as firms are forced to divert resources from 60 productive uses to cover security costs. Moreover, both 40 foreign and domestic investors perceive crime as an 20 indication of social instability, and crime drives up the cost of doing business. 0 Compete with informal Registered when started firms operations Figure 15 displays the direct costs of security incurred by firms as well as their losses due to crime. These resources Solomon Islands2015 East Asia & Pacific represent the opportunity cost of crime since they could Lower middle income have been invested in productive activities. Figure 15: Firms’ cost of crime Regulations, Permits, and Taxes 3 2.7 Good economic governance in areas such as regulations, business licensing, and taxation is a fundamental pillar of % of Firms 2 1.3 a favorable business environment. Registered firms pay 0.9 0.9 1 taxes and are supposed to comply with regulations. 0.2 0.3 0 Figure 17: Time tax and meetings with tax officials Security costs Losses due to theft 9.2 1.8 10 1.6 9 1.6 8 1.4 No. of Meetings Solomon Islands2015 East Asia & Pacific 7 1.0 1.0 1.2 Lower middle income 6 1.0 % of Time 5 4.0 0.8 4 0.6 When firms are formally registered, they are required to 3 1.6 2 0.4 abide by rules and regulations, which are commonly set 1 0.2 by governments. Paying taxes is usually the most tangible 0 0.0 consequence of becoming part of the formal private Senior mgmt time w/ No. of tax meetings in a sector. Some firms try to avoid these consequences by govt regulations year not registering their business and thereby remaining in Solomon Islands2015 East Asia & Pacific Lower middle income the informal sector. A large informal sector may represent a challenge to competing formal firms as informal firms Permits and licenses are usually required for business to are able to engage in practices that can give an unfair operate, build a new structure, and to import directly, advantage over formal firms that must comply with the among other activities. Ideally, these regulations and prevailing rules and regulations. permits safeguard the general public’s interest while remaining transparent and not imposing heavy burdens Figure 16 provides two measures of the incidence of on the private sector. informality in the private sector. The first indicator is the percentage of firms that indicate that they face The ES provide quantitative measures of regulations such competition from unregistered or informal firms. The as business licensing and taxation. Figure 17 illustrates second indicator is the percentage of currently registered the “time tax” imposed by regulations, which is the firms that started operations being formally registered. percentage of time spent by senior management dealing with regulatory compliance. Figure 17 also presents the number of required meetings with tax officials in a year. 8 Figure 18 focuses on the efficiency of business licensing The ES capture individual transactions where bribes may and permit services. The indicators measure the time be solicited. Figure 20 displays the extent to which firms required to obtain an import license, a construction are requested to pay a bribe in order to receive selected permit, and an operating license. Delays in obtaining public services. Businesses may be asked to pay bribes licenses can be costly to entrepreneurs as they add when they request a construction permit, while trying to uncertainty and additional costs to much needed business secure a government contract, or during meetings with transactions. tax officials. These three types of transactions are common instances where opportunities for bribery occur. Figure 18: Number of days to obtain permits 35 33 Figure 19: Bribery Incidence (percent of firms 30 experiencing at least one bribe payment request) 22 50 44 25 22 20 21 19 40 20 18 % of Firms 30 24 15 Days 12 16 9 20 10 10 5 0 0 Solomon East Asia & Pacific Lower middle Import license Construction Operating license Islands2015 income permit Solomon Islands2015 East Asia & Pacific Figure 20: Percentage of firms requested or expected Lower middle income to give gifts or informal payments Complying with regulations is costly for businesses. 45 44 50 Excessive or inefficient regulations can discourage private 41 39 sector activity and foreign direct investment. 40 35 31 31 30 % of Firms Corruption 20 14 18 10 Corruption by public officials can be a major administrative and financial burden on firms. Corruption 0 For construction For govt contract In mtgs w/ tax creates an unfavorable business environment by permit officials undermining operational efficiency and raising the costs Solomon Islands2015 East Asia & Pacific and risks associated with running a private firm. Lower middle income Inefficient regulations constrain firms’ operations as they present opportunities for soliciting bribes, where firms Business Environment Obstacles are required to make “unofficial” payments to public officials to get things done. In many economies bribes are Most indicators in the ES are derived from survey common and quite high and they add to the bureaucratic questions that ask businesses for their actual experiences costs in obtaining required permits and licenses. They can dealing with the business environment. For example, be a serious impediment for firms’ growth and “How many days did it take to get a permit?” or “How development. many hours did the power outage last?”. A small number of survey questions ask business owners or top managers Figure 19 provides a composite index of corruption, the for their subjective opinion regarding the importance of bribery incidence, that reflects the percentage of firms various business environment elements. experiencing at least one bribe payment request across Figure 21 shows the percentage of firms that consider a six different transactions including paying taxes, obtaining specific business environment obstacle as the most permits or licenses, and obtaining utility connections. important one. The respondent was asked to choose the 9 biggest obstacle to their business from a list of 15 perceptions of managers of medium and small firms. This business environment obstacles. The figure presents the is related to the capacity to navigate business top 10 ranking obstacles compared to the regional environment obstacles: larger firms may have more averages. options to face obstacles but at the same time they are also more visible and more exposed to failures of the Figure 22 displays the top 10 obstacles for small, medium, business environment. and large firms. In many economies, the perceptions of managers of large firms are very different from the Figure 21: Top ten business environment constraints (percent of firms) 30 28 Solomon Islands2015 East Asia & Pacific 25 20 18 % of Firms 15 12 12 10 6 6 5 4 4 3 3 0 Corruption Tax rates Inadequately Access to land Practices of Political Labor Access to Business Tax educated the informal instability regulations finance licenses and administration workforce sector permits Figure 22: Top three business environment constraints by size (percent of firms) Small (5-19 employees) Medium (20-99 employees) Large (100+ employees) 25 35 32 20 40 30 36 20 35 16 25 22 30 % of Firms % of Firms 14 % of Firms 15 20 25 21 13 20 10 15 15 11 10 10 5 5 5 0 0 0 Corruption Access to Tax rates Corruption Tax rates Inadequately Corruption Tax rates Inadequately land educated educated workforce workforce 10 Appendix The following tables contain the values of all indicator variables used in the country profile. Lower Solomon Small Medium Large East Asia & middle Islands2015 firms firms firms Pacific income Firm Characteristics Age of the establishment (years) 16.8 12.9 18.2 24.1 13.3 16.6 Gender Percent of firms with female participation in ownership 47.4 51.4 43.8 48.2 53.8 24.0 Percent of firms with a female top manager 22.6 26.4 21.4 14.8 21.4 15.4 Proportion of permanent full-time workers that are female (%) 34.0 40.4 29.2 25.3 37.5 25.2 Percentage of permanent full-time non-production workers that are n.a. n.a. n.a. n.a. 39.2 20.4 female. Percentage of permanent full-time production workers that are n.a. n.a. n.a. n.a. 37.3 18.1 female. Workforce Percent of firms offering formal training 42.0 38.4 44.1 45.3 56.9 25.3 Proportion of workers offered formal training (%)* n.a. n.a. n.a. n.a. 84.9 60.3 Years of the top manager's experience working in the firm's sector 11.5 8.7 12.3 17.7 14.8 14.5 Number of permanent full-time workers 45.0 11.2 35.3 202.9 50.1 40.3 Number of temporary workers 3.5 1.1 4.4 8.1 4.9 5.0 Number of permanent production workers* 96.2 8.5 33.3 354.0 71.0 52.3 Number of permanent non-production workers* 10.5 3.8 8.1 24.0 18.6 11.9 Number of permanent skilled production workers* 80.6 7.2 25.3 303.6 36.7 37.1 Number of permanent unskilled production workers* 15.6 1.4 8.1 50.4 37.5 14.2 Proportion of unskilled workers (out of all production workers) (%)* 18.8 16.4 22.1 12.7 43.8 28.2 Performance Real annual sales growth (%) 15.4 19.7 12.7 14.3 7.3 -2.8 Annual employment growth (%) 12.2 12.7 12.4 9.7 6.7 3.3 Infrastructure Number of electrical outages in a typical month 4.9 3.9 5.7 4.8 0.3 9.0 Losses due to electrical outages (% of annual sales) 2.2 2.6 2.3 0.5 0.2 2.1 Days to obtain an electrical connection (upon application) 12.0 14.7 9.8 21.0 9.3 25.3 Number of water insufficiencies in a typical month* 0.6 1.3 0.5 0.0 0.0 0.8 Trade Days to clear direct exports through customs 6.3 7.0 6.6 5.5 7.5 6.3 Percent of firms exporting directly or indirectly (at least 1% of sales) 18.4 11.4 19.3 38.2 18.8 12.2 Days to clear imports from customs* 13.6 11.6 14.2 14.9 9.5 9.1 Percent of firms using material inputs and/or supplies of foreign 86.0 100.0 79.4 87.6 17.0 35.8 origin* Finance Percent of firms with a checking or savings account 95.1 93.1 95.6 100.0 85.3 74.9 Percent of firms with a bank loan/line of credit 44.4 41.3 45.9 49.3 26.8 25.0 Proportion of investment financed internally (%) 71.4 74.3 67.6 76.6 85.9 71.0 Proportion of investment financed by banks (%) 11.6 8.3 15.6 6.4 6.2 14.6 Proportion of investment financed by supplier credit (%) 6.6 2.4 8.6 9.4 2.2 2.9 Proportion of investment financed by equity or stock sales (%) 1.6 1.0 2.1 1.2 3.6 5.7 Crime Security costs (% of annual sales) 2.7 2.6 3.1 1.9 0.9 1.3 Losses due to theft and vandalism against the firm (% of annual 0.9 1.5 0.6 0.3 0.2 0.3 sales) Informality Percent of firms competing against unregistered or informal firms 59.7 61.5 57.6 62.1 55.1 52.0 11 Lower Solomon Small Medium Large East Asia & middle Islands2015 firms firms firms Pacific income Percent of firms formally registered when they started operations in 88.7 85.5 89.8 95.3 88.0 83.0 the country Regulations and Taxes Senior management time spent dealing with the requirements of 9.2 12.4 6.5 9.3 1.6 4.0 government regulation (%) Number of visits or required meetings with tax officials 1.6 1.3 1.6 2.2 1.0 1.0 Days to obtain an import license 9.2 8.2 9.6 12.0 21.5 18.2 Days to obtain a construction-related permit 19.8 37.1 13.3 28.9 20.6 33.3 Days to obtain an operating license 11.7 10.3 10.7 21.1 19.4 22.3 Corruption Bribery incidence (percent of firms experiencing at least one bribe 43.8 49.3 40.7 39.2 15.9 24.2 payment request) Percent of firms expected to give gifts to get a construction permit 40.6 63.6 31.9 55.8 31.5 35.2 Percent of firms expected to give gifts to secure government 45.4 28.4 49.5 64.9 44.1 38.6 contract Percent of firms expected to give gifts in meetings with tax officials 30.9 35.6 26.7 34.6 13.5 17.9 Biggest Obstacle Access to finance 3.5 5.3 2.9 0.0 17.1 11.6 Access to land 11.8 15.7 10.3 4.9 5.2 3.8 Business licenses and permits 3.3 3.1 3.0 5.6 2.4 3.4 Corruption 27.7 20.4 31.6 36.4 2.5 11.0 Courts 0.0 0.0 0.0 0.0 1.5 1.1 Crime, theft and disorder 1.4 3.5 0.0 0.0 1.1 2.9 Customs and trade regulations 1.4 1.7 1.4 0.0 3.0 3.1 Electricity 0.0 0.0 0.0 0.0 4.5 9.5 Inadequately educated workforce 12.1 11.3 12.9 11.2 9.4 4.3 Labor regulations 4.0 8.3 1.4 0.0 2.7 3.2 Political instability 5.5 5.3 4.4 11.0 4.2 12.3 Practices of the informal sector 6.3 8.8 5.7 0.0 22.3 17.1 Tax administration 2.5 3.0 1.5 4.9 4.0 2.8 Tax rates 18.5 13.6 21.8 21.2 13.9 10.8 Transportation 2.0 0.0 3.0 4.9 6.3 3.1 * These indicators are computed only for the manufacturing sector 1. The sample for each economy is stratified by industry, firm size, and geographic region. The level of detail of the stratification by industry depends on the size of the economy. Stratification by size follows the three levels presented in the text: small, medium, and large. Regional stratification includes the main economic regions in each economy. Through this methodology estimates for the different stratification levels can be calculated on a separate basis while, at the same time, inferences can be made for the non-agricultural private economy as a whole. For more details on the sampling strategy, review the Sampling Note available at www.enterprisesurveys.org. 12