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Business regulations and poverty


  • Djankov, Simeon
  • Georgieva, Dorina
  • Ramalho, Rita


Using panel data for 189 economies from 2005 to 2013, we show that business-friendly regulations are correlated with the poverty headcount at the country level. This association is significant using the World Bank’s Doing Business indicators on getting credit and contract enforcement. We suggest that the conduit for poverty reduction is business creation, both as a source of new jobs and as a manifestation of thriving entrepreneurship.

Suggested Citation

  • Djankov, Simeon & Georgieva, Dorina & Ramalho, Rita, 2018. "Business regulations and poverty," Economics Letters, Elsevier, vol. 165(C), pages 82-87.
  • Handle: RePEc:eee:ecolet:v:165:y:2018:i:c:p:82-87
    DOI: 10.1016/j.econlet.2018.02.002

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    References listed on IDEAS

    1. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2002. "The Regulation of Entry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 1-37.
    2. Aart Kraay & David McKenzie, 2014. "Do Poverty Traps Exist? Assessing the Evidence," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 127-148, Summer.
    3. Dollar, David & Kleineberg, Tatjana & Kraay, Aart, 2016. "Growth still is good for the poor," European Economic Review, Elsevier, vol. 81(C), pages 68-85.
    4. Kraay, Aart & McKenzie, David, 2014. "Do poverty traps exist ?," Policy Research Working Paper Series 6835, The World Bank.
    5. Simeon Djankov, 2016. "The Doing Business Project: How It Started: Correspondence," Journal of Economic Perspectives, American Economic Association, vol. 30(1), pages 247-248, Winter.
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    Cited by:

    1. Choudhury, Sanchari, 2023. "The causal effect of regulation on income inequality across the U.S. states," European Journal of Political Economy, Elsevier, vol. 80(C).
    2. Chambers, Dustin & O'Reilly, Colin, 2022. "Regulation and income inequality in the United States," European Journal of Political Economy, Elsevier, vol. 72(C).
    3. Ramalho,Rita & Saltane,Valentina, 2019. "Does Media Stimulate Reform Efforts ?," Policy Research Working Paper Series 8984, The World Bank.
    4. Ashenafi Biru & Pia Arenius & Garry Bruton & David Gilbert, 2024. "Firm Formalization Strategy : The Interaction of Entrepreneurs and Government Officials in the Enforcement of Regulation," Post-Print hal-04493248, HAL.
    5. Dustin Chambers & Colin O’Reilly, 2022. "The economic theory of regulation and inequality," Public Choice, Springer, vol. 193(1), pages 63-78, October.
    6. Rafiou Raphaël Bétila, 2021. "The impact of Ease of Doing Business on economic growth: a dynamic panel analysis for African countries," SN Business & Economics, Springer, vol. 1(10), pages 1-34, October.
    7. Richard Adjei Dwumfour, 2020. "Poverty in Sub-Saharan Africa: The Role of Business Regulations, Policies and Institutions," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 149(3), pages 861-890, June.
    8. Chambers, Dustin & O'Reilly, Colin, 2019. "Entry Regulations and Income Inequality at the Regional Level," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 49(1), April.
    9. Emenalo, Chukwunonye O. & Gagliardi, Francesca, 2020. "Is current institutional quality linked to legal origins and disease endowments? Evidence from Africa," Research in International Business and Finance, Elsevier, vol. 52(C).
    10. Yusef Ali Yusef Yakubi & Basuki Basuki & Rudi Purwono & Indrianawati Usman, 2022. "The Impact of Digital Technology and Business Regulations on Financial Inclusion and Socio-Economic Development in Low-Income Countries," SAGE Open, , vol. 12(3), pages 21582440221, August.
    11. Aziz N. Berdiev & James W. Saunoris & Friedrich Schneider, 2020. "Poverty and the shadow economy: The role of governmental institutions," The World Economy, Wiley Blackwell, vol. 43(4), pages 921-947, April.

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    More about this item


    Property rights; Poverty; New business formation;
    All these keywords.

    JEL classification:

    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus


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