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The impact of the business environment on the business creation process

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  • Klapper, Leora
  • Delgado, Juan Manuel Quesada

Abstract

New data from the 2008 World Bank Group Entrepreneurship Survey indicates a very strong and statistically significant relationship between entrepreneurship and a better business environment. Data for 100 countries on the number of total and newly registered corporations over an eight-year period (2000-2007) were collected directly from registrars of companies around the world. Data were also collected on the functioning and structure of business registries. Empirical evidence suggests that greater ease in starting a business and better governance are associated with increased entrepreneurial activity. After controlling for economic development (gross domestic product per capita), higher entrepreneurial activity is significantly associated with cheaper, more efficient business registration procedures and better governance. Although the degree of progress in the modernization of business registries varies greatly, countries usually have a common goal to evolve from a paper-based business registry to a one-stop, automated, web-enabled registry capable of delivering products and services online via transactions involving authenticated users and documents. Tests show that business registry modernization (often a component of broader private sector reforms) has a positive impact not only on the ease of creating a business, but also on new business registration. Overall, the data show that a quick, efficient, and cost-effective business registration process is critical for fostering formal sector entrepreneurship.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4937.

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Date of creation: 01 May 2009
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Handle: RePEc:wbk:wbrwps:4937

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Related research

Keywords: E-Business; Competitiveness and Competition Policy; Business in Development; Business Environment; Governance Indicators;

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References

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  1. Leora Klapper & Juan Manuel Quesada Delgado, 2007. "Entrepreneurship : New Data on Business Creation and How to Promote It," World Bank Other Operational Studies 11163, The World Bank.
  2. Klapper, Leora & Amit, Raphael & Guillen, Mauro F. & Quesada, Juan Manuel, 2007. "Entrepreneurship and firm formation across countries," Policy Research Working Paper Series 4313, The World Bank.
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Cited by:
  1. Alcina Nunes & Elsa de Morais Sarmento, 2010. "Business Survival in Portuguese Regions," GEMF Working Papers 2010-22, GEMF - Faculdade de Economia, Universidade de Coimbra.
  2. Elsa de Morais Sarmento & Alcina Nunes, 2011. "Criação de empresas em Portugal e Espanha: análise comparativa com base nos dados do Banco Mundial," GEE Papers, Gabinete de Estratégia e Estudos, Ministério da Economia e da Inovação 0036, Gabinete de Estratégia e Estudos, Ministério da Economia e da Inovação, revised May 2011.
  3. Alcina Nunes & Elsa Sarmento, 2010. "Business Demography Dynamics in Portugal: A Non-Parametric Survival Analysis," GEMF Working Papers 2010-09, GEMF - Faculdade de Economia, Universidade de Coimbra.
  4. Thai, Mai Thi Thanh & Turkina, Ekaterina, 2014. "Macro-level determinants of formal entrepreneurship versus informal entrepreneurship," Journal of Business Venturing, Elsevier, vol. 29(4), pages 490-510.
  5. Elsa Morais Sarmento & Alcina Nunes, 2010. "Business creation in Portugal: Comparison between the World Bank data and Quadros de Pessoal," GEE Papers, Gabinete de Estratégia e Estudos, Ministério da Economia e da Inovação 0029, Gabinete de Estratégia e Estudos, Ministério da Economia e da Inovação, revised Dec 2010.
  6. Elsa de Morais Sarmento & Alcina Nunes, 2012. "The Dynamics of Employer Entreprise Creation in Portugal Over the Last Two Decades: A Firm Size, Regional and Sectoral Perspective," Notas Económicas, Faculdade de Economia, Universidade de Coimbra, Faculdade de Economia, Universidade de Coimbra, issue 36, pages 6-22, December.
  7. Hassan Gholipour Fereidouni & Tajul Ariffin Masron & Reza Ekhtiari Amiri, 2011. "The effects of FDI on voice and accountability in the MENA region," International Journal of Social Economics, Emerald Group Publishing, Emerald Group Publishing, vol. 38(9), pages 802-815, August.

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