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The Firms Speak: What the World Business Environment Survey Tells Us about Constraints on Private Sector Development

Author

Listed:
  • Geeta Batra

    (World Bank)

  • Daniel Kaufmann

    (World Bank)

  • Andrew H. W. Stone

    (World Bank)

Abstract

This paper, a synthesis of salient findings of the authors’ book entitled “Investment Climate Around the World: Voices of the Firms from the World Business Environment Survey”, and based on a chapter in “Pathways Out of Poverty: Private Firms and Economic Mobility in Developing Countries”, by G. Fields and G. Pfeffermann, summarizes the salient features of the World Business Environment Survey (WBES). It shows that important dimensions for the climate of business operation and investment can be measured, analyzed, and compared across countries, and that governance is key to the business environment and investment climate. The survey findings suggest that key policy, institutional and governance indicators affect the growth of a firm’s sale and investment and the extent to which firms operate in the unofficial economy. Further, the paper provides empirical support for some commonly held notions, while challenging others. It suggests a link between taxation, financing, and corruption on the one hand, and growth and investment on the other, and it highlights the costs to economies where the state is captured by a narrow set of private interests.

Suggested Citation

  • Geeta Batra & Daniel Kaufmann & Andrew H. W. Stone, 2004. "The Firms Speak: What the World Business Environment Survey Tells Us about Constraints on Private Sector Development," Microeconomics 0405004, EconWPA.
  • Handle: RePEc:wpa:wuwpmi:0405004 Note: Type of Document - pdf
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    References listed on IDEAS

    as
    1. Simon Johnson & Daniel Kaufman & Andrei Shleifer, 1997. "The Unofficial Economy in Transition," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 159-240.
    2. Mirjam Schiffer & Beatrice Weder, 2001. "Firm Size and the Business Environment : Worldwide Survey Results," World Bank Publications, The World Bank, number 13988.
    3. Edgardo Campos, J. & Lien, Donald & Pradhan, Sanjay, 1999. "The Impact of Corruption on Investment: Predictability Matters," World Development, Elsevier, vol. 27(6), pages 1059-1067, June.
    4. Friedman, Eric & Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 2000. "Dodging the grabbing hand: the determinants of unofficial activity in 69 countries," Journal of Public Economics, Elsevier, vol. 76(3), pages 459-493, June.
    5. Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 995-1025.
    6. Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 1999. "Corruption, public finances, and the unofficial economy," Policy Research Working Paper Series 2169, The World Bank.
    7. repec:hrv:faseco:30728045 is not listed on IDEAS
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    Citations

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    Cited by:

    1. Weill, Laurent, 2011. "How corruption affects bank lending in Russia," Economic Systems, Elsevier, vol. 35(2), pages 230-243, June.
    2. Bah, El-hadj & Cooper, Geo, 2012. "Constraints to the growth of small firms in Northern Myanmar," CIS Discussion paper series 577, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    3. Beck, Thorsten & Demirguc-Kunt, Asli & Martinez Peria, Maria Soledad, 2007. "Reaching out: Access to and use of banking services across countries," Journal of Financial Economics, Elsevier, vol. 85(1), pages 234-266, July.
    4. Meghana Ayyagari & Asli Demirgüç-Kunt & Vojislav Maksimovic, 2008. "How Important Are Financing Constraints? The Role of Finance in the Business Environment," World Bank Economic Review, World Bank Group, vol. 22(3), pages 483-516, November.
    5. Susanna Thede & Nils-Åke Gustafson, 2012. "The Multifaceted Impact of Corruption on International Trade," The World Economy, Wiley Blackwell, vol. 35(5), pages 651-666, May.
    6. Bah, El-hadj M. & Cooper, Geoff, 2015. "Constraints to the growth of small firms in Northwest Myanmar," Journal of Asian Economics, Elsevier, vol. 39(C), pages 108-125.
    7. Capasso, Salvatore & Jappelli, Tullio, 2013. "Financial development and the underground economy," Journal of Development Economics, Elsevier, vol. 101(C), pages 167-178.
    8. Laurent Weill, 2011. "Does corruption hamper bank lending? Macro and micro evidence," Empirical Economics, Springer, vol. 41(1), pages 25-42, August.
    9. Ahmad Fawad, 2013. "Corruption and Information Sharing as Determinants of Non-Performing Loans," Business Systems Research, De Gruyter Open, vol. 4(1), pages 87-98, March.
    10. Meghana Ayyagari & Asli Demirgüc-Kunt & Vojislav Maksimovic, 2008. "How Well Do Institutional Theories Explain Firms' Perceptions of Property Rights?," Review of Financial Studies, Society for Financial Studies, vol. 21(4), pages 1833-1871, July.
    11. Chen, Minghua & Jeon, Bang Nam & Wang, Rui & Wu, Ji, 2015. "Corruption and bank risk-taking: Evidence from emerging economies," Emerging Markets Review, Elsevier, vol. 24(C), pages 122-148.
    12. Anna D’Souza & Daniel Kaufmann, 2013. "Who bribes in public contracting and why: worldwide evidence from firms," Economics of Governance, Springer, vol. 14(4), pages 333-367, November.
    13. repec:eee:jaecon:v:63:y:2017:i:2:p:454-478 is not listed on IDEAS
    14. Joseph LiPuma & Scott Newbert & Jonathan Doh, 2013. "The effect of institutional quality on firm export performance in emerging economies: a contingency model of firm age and size," Small Business Economics, Springer, vol. 40(4), pages 817-841, May.
    15. Houston, Joel F. & Lin, Chen & Ma, Yue, 2011. "Media ownership, concentration and corruption in bank lending," Journal of Financial Economics, Elsevier, vol. 100(2), pages 326-350, May.
    16. Oludele Akinboade & Emilie Kinfack, 2014. "An Econometric Analysis of the Relationship Between Millennium Development Goals, Economic Growth and Financial Development in South Africa," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 118(2), pages 775-795, September.
    17. Stijn Claessens & Erik Feijen, 2006. "Financial Sector Development and the Millennium Development Goals," World Bank Publications, The World Bank, number 7145.
    18. KOUADIO, Hugues, 2015. "Constraints of SME in West Africa: the case of Côte d'Ivoire after the crisis," MPRA Paper 79055, University Library of Munich, Germany.
    19. D'Souza, Anna, 2012. "The OECD Anti-Bribery Convention: Changing the currents of trade," Journal of Development Economics, Elsevier, vol. 97(1), pages 73-87.

    More about this item

    Keywords

    Business Environment; Survey; Business Constraints; Private Sector Development; Investment Climate; Governance; Corruption; Capture;

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • P10 - Economic Systems - - Capitalist Systems - - - General

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