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

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  • Hallward-Driemeier, Mary
  • Pritchett, Lant

Abstract

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.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5563.

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Date of creation: 01 Feb 2011
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Handle: RePEc:wbk:wbrwps:5563

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Keywords: E-Business; Microfinance; Access to Finance; Climate Change Economics; Banks&Banking Reform;

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References

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  1. Mary Hallward-Driemeier & Gita Khun-Jush & Lant Pritchett, 2010. "Deals versus Rules: Policy Implementation Uncertainty and Why Firms Hate It," NBER Working Papers 16001, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Luca Barbone & Richard Bird & Jaime Vázquez Caro, 2012. "The Costs of VAT: A Review of the Literature," CASE Network Reports 0106, CASE-Center for Social and Economic Research.
  2. Dinuk Jayasuriya, 2011. "Improvements in the World Bank's Ease of Doing Business Rankings: Do they translate into greater foreign direct investment inflows?," Development Policy Centre Discussion Papers, Development Policy Centre, Crawford School of Public Policy, The Australian National University 1108, Development Policy Centre, Crawford School of Public Policy, The Australian National University.
  3. Dutz, Mark A. & Kessides, Ioannis & O'Connell, Stephen & Willig, Robert D., 2011. "Competition and innovation-driven inclusive growth," Policy Research Working Paper Series 5852, The World Bank.

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