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How business is done and the 'doing business' indicators : the investment climate when firms have climate control (English)

This paper examines de jure and de facto measures of regulations, finding the relationship between them is neither one for one, nor linear. "Doing Business" provides indicators of the formal time and costs associated with fully complying with regulations. Enterprise Surveys report the actual experiences of a wide range of firms. First, there are significant variations in reported times to complete the same transaction by firms facing the same formal policy. Second, regulatory compliance appears "under water" as firms report actual times much less than the Doing Business reported days. Third, the data reveal substantial differences between favored and disfavored firms in the same location. Favored firms show minimal variation, so Doing Business has little predictive power for the times they report. For disfavored firms, the variation is greater, although still not significantly correlated with Doing Business. Fourth, where multiple Enterprise Surveys are available, there is little association over time, with reductions in Doing Business days as likely to be accompanied by increases in Enterprise Surveys days. Comparing these two types of measures suggests very different ways of thinking about policy versus policy implementation, what "a climate" for firms in a country might mean, and what the options for "policy reform" really are.

Details

  • Author

    Hallward-Driemeier,Mary C., Pritchett,Lant Hayward

  • Document Date

    2011/02/01

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS5563

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    World,

  • Region

    The World Region,

  • Disclosure Date

    2011/02/01

  • Disclosure Status

    Disclosed

  • Doc Name

    How business is done and the 'doing business' indicators : the investment climate when firms have climate control

  • Keywords

    apparent relationship, bribe, bribes, Business Climate, Business Environment, business environments, Business indicator, Business Indicators, business licenses, business people, business registration, Business Regulations, business transactions, capabilities, climates, company, corruption, customs, Development Economics, domain, Economic Activity, Economic Development, economic growth, employee, Employment, Enterprise Development, Enterprise Survey, Enterprise Surveys, Entrepreneurial Activity, Entrepreneurship, external finance, facilitation, firm size, government policies, import tariffs, imports, income, inequality, Informal Economy, innovation, International Bank, laws, lawyers, legislation, level playing field, license, licenses, manufacturing, market value, open access, operating permits, party, private company, Private Credit, Private Sector, Private Sector Development, private sector firms, productivity, profitability, property rights, Public Economics, regulatory environment, Regulatory Reforms, regulatory requirements, result, results, Role of Institutions, search, Small Firms, state owned enterprises, stock market, tax code, tax exemptions, tax revenues, Taxation, Technological Innovations, transaction, transport, uses, warehouse, Web

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Citation

Hallward-Driemeier,Mary C. Pritchett,Lant Hayward

How business is done and the 'doing business' indicators : the investment climate when firms have climate control (English). Policy Research working paper ; no. WPS 5563 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/346921468348848431/How-business-is-done-and-the-doing-business-indicators-the-investment-climate-when-firms-have-climate-control