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Red tape and delayed entry

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Abstract

Does cutting red tape foster entrepreneurship in industries with the potential to expand? We address this question by combining the time needed to comply with government entry procedures in 45 countries with industry-level data on employment growth and growth in the number of establishments during the 1980s. Our main empirical finding is that countries where it takes less time to register new businesses have seen more entry in industries that experienced expansionary global demand and technology shifts. Our estimates take into account that proxying global industry shifts using data from only one country–or group of countries with similar entry regulations–will in general yield biased results.

Suggested Citation

  • Antonio Ciccone & Elias Papaioannou, 2006. "Red tape and delayed entry," Economics Working Papers 985, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:985
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    1. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2002. "The Regulation of Entry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 1-37.
    2. Raymond Fisman & Virginia Sarria Allende, 2010. "Regulation of Entry and the Distortion of Industrial Organization," Journal of Applied Economics, Taylor & Francis Journals, vol. 13(1), pages 91-111, May.
    3. Andrei Shleifer, 2005. "Understanding Regulation," European Financial Management, European Financial Management Association, vol. 11(4), pages 439-451, September.
    4. Djankov, Simeon & McLiesh, Caralee & Shleifer, Andrei, 2007. "Private credit in 129 countries," Journal of Financial Economics, Elsevier, vol. 84(2), pages 299-329, May.
    5. World Bank, 2005. "World Development Indicators 2005," World Bank Publications - Books, The World Bank Group, number 12426.
    6. repec:wbk:wbpubs:12425 is not listed on IDEAS
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    More about this item

    Keywords

    Entry regulation; entry; globally expanding industries;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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