Productivity and the investment climate : what matters most?
The authors explore the links between the investment climate and firm-level productivity and attempt to identify which dimensions of the investment climate matter most for productivity. Their analysis is based on data collected in a recent investment climate survey of garment and food processing firms in five countries in Eastern Europe and Central Asia. The authors use the first principal components of a series of indicators to summarize broad aspects of the investment climate and identify those most important in determining productivity. Their results indicate that competitive pressure is the most critical factor in the investment climate, accounting for more variation in firm-level productivity than infrastructure provision or issues related to government rent seeking and bureaucratic burden. This suggests that to improve productivity, increase output, and reduce poverty, policymakers should focus reform efforts on removing barriers to entry and creating open, highly competitive markets.
|Date of creation:||01 Jun 2004|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
- Dollar, David & Hallward-Driemeier, Mary & Mengistae, Taye, 2005. "Investment Climate and Firm Performance in Developing Economies," Economic Development and Cultural Change, University of Chicago Press, vol. 54(1), pages 1-31, October.
- Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.