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Firm Size and the Business Environment : Worldwide Survey Results

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  • Mirjam Schiffer
  • Beatrice Weder

Abstract

The development of the small, and medium enterprise sector is believed to be crucial for economic growth, and poverty alleviation. Those who seek to develop the sector, must consent with the general perception that small- and medium-scale enterprises are at a disadvantage, compared with larger firms. In theory, however, smaller firms may also have advantages over larger firms. For instance, they may be less affected by excessive regulations, because they can easily slip into informal arrangements. This paper draws on a new private sector survey covering eighty countries, and one territory to study the question whether business obstacles are related to firm size. The main finding is that there is indeed a bias against small firms. Overall, (that is, for the world sample) small firms report more problems than medium-sized firms, which in turn report more problems than large firms. In particular, smaller firms face significantly more problems than larger firms with financing, taxes and regulations, inflation, corruption and street crime. Thus these impediments should be prime targets for policies directed at leveling the playing field. Some of the most severe perceived impediments to doing business affect firms of all sizes, and consequently call for across-the-board policy improvements. In addition to the worldwide analysis, the paper presents an analysis by region, and by individual country.

Suggested Citation

  • Mirjam Schiffer & Beatrice Weder, 2001. "Firm Size and the Business Environment : Worldwide Survey Results," World Bank Publications, The World Bank, number 13988, January.
  • Handle: RePEc:wbk:wbpubs:13988
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    References listed on IDEAS

    as
    1. Brunetti, Aymo & Kisunko, Gregory & Weder, Beatrice, 1998. "Credibility of Rules and Economic Growth: Evidence from a Worldwide Survey of the Private Sector," World Bank Economic Review, World Bank Group, vol. 12(3), pages 353-384, September.
    2. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
    3. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
    4. Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 1998. "Regulatory Discretion and the Unofficial Economy," American Economic Review, American Economic Association, vol. 88(2), pages 387-392, May.
    5. Hallberg, K., 2000. "A Market-Oriented Strategy for Small and Medium Scale Enterprises," Papers 40, World Bank - International Finance Corporation.
    6. Alesina, Alberto & Özler, Sule & Roubini, Nouriel & Swagel, Phillip, 1996. "Political Instability and Economic Growth," Journal of Economic Growth, Springer, vol. 1(2), pages 189-211, June.
    7. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
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    More about this item

    Keywords

    Finance and Financial Sector Development - Microfinance International Economics and Trade - Foreign Direct Investment Economic Theory and Research Small Scale Enterprise Infrastructure Economics and Finance - Private Participation in Infrastructure;

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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