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Doing business in a deals world: the doubly false premise of rules reform

Author

Listed:
  • Sabyasachi Kar
  • Lant Pritchett
  • Spandan Roy
  • Kunal Sen

Abstract

The Doing Business reports have evoked an intense policy debate about whether countries should simplify regulatory rules or make them more stringent. We argue that doing business in developing countries is based on deals struck between firms and the state, rather than rules. We show that there is a weak relationship between rules and deals, and at low levels of state capability, more stringent rules leading to less compliance, rather than more. We provide a diagnostic approach to rules reform where the appropriate reform depend on the level of stringency of the rules, and the level of its state capability.

Suggested Citation

  • Sabyasachi Kar & Lant Pritchett & Spandan Roy & Kunal Sen, 2022. "Doing business in a deals world: the doubly false premise of rules reform," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 25(4), pages 361-387, October.
    • Handle: RePEc:taf:jpolrf:v:25:y:2022:i:4:p:361-387
    DOI: 10.1080/17487870.2022.2125391
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    Cited by:

    1. Weiwei Chen, 2021. "The dynamics of state-business relations between the Ethiopian state and Chinese private firms: A case study of the Eastern Industry Park," WIDER Working Paper Series wp-2021-122, World Institute for Development Economic Research (UNU-WIDER).
    2. Christina Wolf, 2024. "Construction as a Springboard for Industrialisation: Chinese Overseas Construction Projects and Structural Transformation in Angola, Ethiopia and Nigeria," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(3), pages 639-667, June.
    3. Selam Robi, 2024. "Addis deals: reckoning with the informal governance of urban structural transformation," WIDER Working Paper Series wp-2024-40, World Institute for Development Economic Research (UNU-WIDER).
    4. Nishioka, Shuichiro & Sharma, Sumi & Le, Tuan Viet, 2023. "Political regimes and firms' decisions to pay bribes: theory and evidence from firm-level surveys," Journal of Institutional Economics, Cambridge University Press, vol. 19(6), pages 764-786, December.
    5. Joanna Próchniak & Renata Płoska & Anna Zamojska & Błażej Lepczyński & Giuseppe T. Cirella, 2023. "Maturity Analysis of Stock Exchanges in Africa: Prepandemic Sustainability Perspective," Sustainability, MDPI, vol. 15(8), pages 1-18, April.
    6. Tamanna Adhikari & Karl Whelan, 2019. "Do Business-Friendly Reforms Boost GDP?," Working Papers 201930, School of Economics, University College Dublin.
    7. Adhikari, Tamanna & Whelan, Karl, 2023. "Did raising doing business scores boost GDP?," Journal of Comparative Economics, Elsevier, vol. 51(3), pages 1011-1030.

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