Are Managers’ Perceptions of Constraints to Growth Reliable? Evidence from a Natural Experiment in South Africa
Can surveys of what managers see as the biggest problems that their firm faces provide useful information on the main constraints to private sector and economic development and be used to prioritize reforms in these areas? One of many concerns about doing this is that managers’ responses to questions about specific areas of the investment climate might reflect their assessment of overall investment climate or their overall business confidence rather than their views on that specific area of the investment climate. This paper uses a natural experiment in South Africa to assess whether this is the case. When the World Bank’s 2007-2008 Enterprise Survey was being carried out, a major electricity crisis hit South Africa. The crisis resulted in many more managers saying that power was a serious constraint on enterprise operations—the share rose from about 10 percent of managers before the crisis to close to 50 percent after the crisis. But it also resulted in greater concern about most other areas of the investment climate—including areas such as taxation, regulation, and other areas of infrastructure that were unrelated to the crisis. This suggests that managers do not fully compartmentalize their responses. Moreover, the changes were large enough to suggest that cross-time and cross-country comparisons of perception data will be difficult.
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- George R.G. Clarke & James Habyarimana & Michael Ingram & David Kaplan & Vijaya Ramachandran, 2007. "An Assessment of the Investment Climate in South Africa," World Bank Publications, The World Bank, number 6738.
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- repec:ner:tilbur:urn:nbn:nl:ui:12-3125505 is not listed on IDEAS
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"How Petty is Petty Corruption? Evidence from Firm Surveys in Africa,"
Elsevier, vol. 39(7), pages 1122-1132, July.
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Electronic Working Papers
05-001, University of Maryland, Department of Economics.
- Omar Azfar & Peter Murrell, 2009. "Identifying Reticent Respondents: Assessing the Quality of Survey Data on Corruption and Values," Economic Development and Cultural Change, University of Chicago Press, vol. 57(2), pages 387-411, 01.
- Clarke, George R.G. & Cull, Robert & Martinez Peria, Maria Soledad, 2006. "Foreign bank participation and access to credit across firms in developing countries," Journal of Comparative Economics, Elsevier, vol. 34(4), pages 774-795, December.
- Hallward-Driemeier, Mary & Aterido, Reyes, 2009. "Comparing Apples with....Apples : how to make (more) sense of subjective rankings of constraints to business," Policy Research Working Paper Series 5054, The World Bank.
- Jensen, Nathan M. & Li, Quan & Rahman, Aminur, 2007. "Heard melodies are sweet, but those unheard are sweeter : understanding corruption using cross-national firm-level surveys," Policy Research Working Paper Series 4413, The World Bank.
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