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Explaining Enterprise Performance in Developing Countries with Business Climate Survey Data

  • Jean-Jacques Dethier
  • Maximilian Hirn
  • Stéphane Straub

The authors survey the recent literature which examines the impact of the business climate on productivity and growth in developing countries using enterprise surveys. Comparable enterprise surveys today cover more than 100,000 firms in 123 countries. The literature that has analyzed this data provides evidence that a good business climate favors growth by encouraging investment and higher productivity. Various infrastructure, finance, security, competition, and regulation variables have been shown to have a significant impact on enterprise performance. The authors state their motivation for their review by explaining why a disaggregated, firm-level analysis of the relationship between enterprise performance and business climate--as opposed to a more macroaggregate analysis--is important to gaining insights into these issues. They review the main findings of the empirical microliterature based on enterprise surveys and consider the robustness of the results. To conclude they put forward some ideas to advance research on business climate and growth, and they suggest possible improvements in survey design. Copyright 2011, Oxford University Press.

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Article provided by World Bank Group in its journal The World Bank Research Observer.

Volume (Year): 26 (2011)
Issue (Month): 2 (August)
Pages: 258-309

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Handle: RePEc:oup:wbrobs:v:26:y:2011:i:2:p:258-309
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  1. Aterido, Reyes & Hallward-Driemeier, Mary & Pagés, Carmen, 2007. "Investment Climate and Employment Growth: The Impact of Access to Finance, Corruption and Regulations Across Firms," IZA Discussion Papers 3138, Institute for the Study of Labor (IZA).
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