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

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  • 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:

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    2. Shuichiro Nishioka & Sumi Sharma & Tuan Le, 2023. "Political Regimes and Firms' Decisions to Pay Bribes: Theory and Evidence from Firm-level Surveys," Working Papers 23-04, Department of Economics, West Virginia University.
    3. 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.
    4. Tamanna Adhikari & Karl Whelan, 2019. "Do Business-Friendly Reforms Boost GDP?," Working Papers 201930, School of Economics, University College Dublin.
    5. 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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