Investment Climate Reforms and Job Creation in Developing Countries : What Do We Know and What Should We Do?

This paper reviews the literature on the role of the investment climate reforms in job creation. It finds that the current landscape of employment and private sector activity in developing countries indicates a number of potential channels through...

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Bibliographic Details
Main Author:	Rahman, Aminur
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank Group, Washington, DC 2014
Subjects:	ABATEMENT ACCESS TO CREDIT ACCESS TO FINANCE ACCESS TO FORMAL FINANCE ACCESS TO INFORMATION ADVERSE EFFECT AGGREGATE PRODUCTIVITY APPROVAL RATE BANKRUPTCY BARRIERS TO ENTRY BUSINESS ENTRY BUSINESS ENVIRONMENT BUSINESS ENVIRONMENTS BUSINESS LIFE BUSINESS OWNERS BUSINESS REGULATIONS CAPITAL INVESTMENT CHAMBERS OF COMMERCE CLIENT COUNTRY COMMUNICATION TECHNOLOGIES CONFIDENTIALITY CONGLOMERATE CONTRACT ENFORCEMENT CORPORATION CORRUPTION COUNTRY DEVELOPMENT CREATIVE DESTRUCTION CREDIT FACILITIES DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING ECONOMIES DOUBLE TAXATION EARNINGS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH EDUCATED ENTREPRENEURS EFFECTIVE USE EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL STUDIES EMPLOYEE EMPLOYERS EMPLOYMENT EFFECT EMPLOYMENT EFFECTS EMPLOYMENT GROWTH EMPLOYMENT OPPORTUNITIES EMPLOYMENT SHARE EMPLOYMENT STATUS ENTERPRISE ZONE ENTREPRENEUR ENTREPRENEURIAL ACTIVITY ENTREPRENEURS ENTREPRENEURSHIP ENTRY BARRIER ENVIRONMENTS EXCLUSION RESTRICTION EXPANSION EXPENDITURES EXPOSURE EXPOSURES EXTREME POVERTY FEDERAL TAXES FINANCE CORPORATION FINANCIAL CRISIS FINANCIAL SERVICES FIRM DYNAMICS FIRM GROWTH FIRM LEVEL FIRM PERFORMANCE FIRM PRODUCTIVITY FIRM SIZE FIXED ASSETS FIXED COSTS FOREIGN DIRECT INVESTMENTS FOREIGN OWNERSHIP FOREIGN-OWNED FIRMS FUTURE PROSPECTS GAINFUL EMPLOYMENT GENDER HIGH-ENTRY INDUSTRIES HOUSEHOLD INCOME HOUSEHOLD SURVEY HUMAN CAPITAL HUMAN RESOURCES INCORPORATED COMPANIES INFORMAL ECONOMY INFORMAL EMPLOYMENT INFORMAL SECTOR INFORMATION ASYMMETRIES INSTITUTIONAL REFORMS INTANGIBLE INTERNATIONAL BANK INTERNATIONAL BUSINESS INTERNATIONAL FINANCE INVESTMENT CLIMATE INVESTMENT CLIMATE REFORM INVESTMENT CLIMATE REFORMS INVESTMENT DECISION INVESTMENT POLICY JOB CREATION JOB CREATION RATES JOB LOSSES JOB OPPORTUNITIES JOBS JURISDICTION JURISDICTIONS LABOR COSTS LABOR ECONOMICS LABOR FORCE LABOR MARKET LABOR MARKET POLICIES LABOR MARKET REGULATIONS LABOR MARKETS LABOR ORGANIZATION LABOR PRODUCTIVITY LABOR PRODUCTIVITY GROWTH LABOR REGULATION LABOR REGULATIONS LABOR SUPPLY LACK OF ACCESS LIBERALIZATION LICENSING LOCAL BUSINESS LOCAL BUSINESSES LOCAL LABOR MARKET LOCAL LABOR MARKETS LOW-INCOME COUNTRIES MACROECONOMIC POLICIES MARKET DISTORTIONS MARKET ENTRY MARKET FAILURES MEDIUM ENTERPRISE MEDIUM ENTERPRISES MICRO-ENTERPRISE MICROENTERPRISES MINIMUM WAGE MNE MULTINATIONAL MULTINATIONAL ENTERPRISES NET EMPLOYMENT NET JOB CREATION NET JOB LOSSES NEW BUSINESS NEW BUSINESSES OCCUPATIONS PARTY PLANT SIZE POLICY MAKERS POLITICAL ECONOMY POWER OUTAGE PREVIOUS SECTION PREVIOUS STUDIES PREVIOUS WORK PRIVATE SECTOR PRIVATE SECTOR ACTIVITY PRIVATE SECTOR DEVELOPMENT PRIVATE SECTOR FIRMS PRIVATE SECTOR JOBS PRODUCTION TECHNOLOGY PRODUCTIVE FIRMS PRODUCTIVITY GAP PRODUCTIVITY GROWTH PRODUCTIVITY LEVELS PROFITABILITY PROMOTION ACTIVITIES PROMOTION ACTIVITY PROPERTY OWNERSHIP PROPERTY RIGHTS PUBLIC FINANCE PUBLIC SERVICE REAL ESTATE RED TAPE REFORM PROGRAM REGIONAL INTEGRATION REGULATORS REGULATORY CONDITION REGULATORY CONSTRAINTS REGULATORY ENVIRONMENT REGULATORY ENVIRONMENTS REGULATORY REFORM REGULATORY REGIME RESEARCH AGENDA RETAIL TRADE SERVICE SECTORS SMALL FIRM SMALL FIRMS SME SOCIAL SECURITY SOURCE OF INCOME STORE STORES TAX TAX BURDEN TAX BURDENS TAX CREDIT TAX RATE TAX RATES TAX REDUCTION TAX REFORMS TAX SYSTEM TAXATION TECHNOLOGY TRANSFER TOTAL EMPLOYMENT TOTAL FACTOR PRODUCTIVITY TRANSACTION COSTS UNEMPLOYED UNEMPLOYMENT UNEMPLOYMENT INSURANCE UNINTENDED CONSEQUENCES UNSKILLED LABOR WAGE EARNER WAGES WITHHOLDING TAX WORKERS WORKING CAPITAL WORKING POOR
Online Access:	http://documents.worldbank.org/curated/en/2014/09/20177747/investment-climate-reforms-job-creation-developing-countries-know http://hdl.handle.net/10986/20335

Description
Summary:	This paper reviews the literature on the role of the investment climate reforms in job creation. It finds that the current landscape of employment and private sector activity in developing countries indicates a number of potential channels through which investment climate reforms can positively affect job creation. However, rigorous empirical evidence is scarce and most of the relevant studies focus on business entry reforms with a few focusing on business taxation and investment promotion activities. Overall, there is evidence of job creation through business entry, tax reforms, and investment promotion activity in developing countries. Almost all of these evidences are from quasi-experimental studies that are significant improvements over conventional cross-country or cross-section panel data analysis. Still, various endogeneity concerns in these studies cannot be ruled out completely. In assessing job effects, future research should provide deeper insights on the gross versus net and short-run versus long-run job effects and general equilibrium effects of various investment climate reforms related to jobs, productivity, competition, and other developmental outcomes. Another critical agenda for future research is to shed light on which investment climate reforms matter most for spurring the employment and productivity growth of firms in developing countries. The World Bank Group, in partnership with development partners and client government countries, can play a significant role in bridging the current knowledge gap by integrating rigorous evaluation as an integral part of project design and implementation, and improving data quality, particularly through its information and communication technologies-led private sector development reform initiatives.

Investment Climate Reforms and Job Creation in Developing Countries : What Do We Know and What Should We Do?

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