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The effects of business environments on development : surveying new firm-level evidence

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  • Xu, Lixin Colin

Abstract

In the past decade, the World Bank has promoted improving business environments as a key strategy for development, which has resulted in a significant amount of investment in collecting firm-level investment climate surveys across countries. What lessons have emerged from the papers using these new data? The key finding is that the effects of business environments are heterogeneous and depend crucially on industry, initial conditions, and complementary institutions. Some elements of the business environment, such as labor flexibility, low entry and exit barriers, and a reasonable protection from the"grabbing hands"of the government, seem to matter a great deal for most economies. Other elements, such as infrastructure and contracting institutions (courts and access to finance), hinge on their initial status and the size of the market.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5402.

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Date of creation: 01 Aug 2010
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Handle: RePEc:wbk:wbrwps:5402

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Keywords: Environmental Economics&Policies; Labor Policies; Debt Markets; Emerging Markets; Access to Finance;

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Cited by:
  1. Wang, Yuanyuan & You, Jing, 2012. "Corruption and firm growth: Evidence from China," China Economic Review, Elsevier, vol. 23(2), pages 415-433.
  2. Hallward-Driemeier, Mary & Pritchett, Lant, 2011. "How business is done and the'doing business'indicators : the investment climate when firms have climate control," Policy Research Working Paper Series 5563, The World Bank.
  3. Clarke, George & Li, Yue & Xu, Lixin Colin, 2013. "Business environment, economic agglomeration and job creation around the world," Policy Research Working Paper Series 6706, The World Bank.
  4. Firth, Michael & Gong, Stephen X. & Shan, Liwei, 2013. "Cost of government and firm value," Journal of Corporate Finance, Elsevier, vol. 21(C), pages 136-152.

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