How Business Is Done and the ‘Doing Business’ Indicators : The Investment Climate When Firms Have Climate Control

How Business Is Done and the ‘Doing Business’ Indicators : The Investment Climate When Firms Have Climate Control

This paper examines de jure and de facto measures of regulations, finding the relationship between them is neither one for one, nor linear. "Doing Business" provides indicators of the formal time and costs associated with fully complying...

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Bibliographic Details
Main Authors:	Hallward-Driemeier, Mary, Pritchett, Lant
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	APPARENT RELATIONSHIP BRIBE BRIBES BUSINESS CLIMATE BUSINESS ENVIRONMENT BUSINESS ENVIRONMENTS BUSINESS INDICATOR BUSINESS INDICATORS BUSINESS LICENSES BUSINESS PEOPLE BUSINESS REGISTRATION BUSINESS REGULATIONS BUSINESS TRANSACTIONS CAPABILITIES CLIMATES COMPANY CORRUPTION CUSTOMS DEVELOPMENT ECONOMICS DOMAIN ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH EMPLOYEE EMPLOYMENT ENTERPRISE DEVELOPMENT ENTERPRISE SURVEY ENTERPRISE SURVEYS ENTREPRENEURIAL ACTIVITY ENTREPRENEURSHIP EXTERNAL FINANCE FACILITATION FIRM SIZE GOVERNMENT POLICIES IMPORT TARIFFS IMPORTS INCOME INEQUALITY INFORMAL ECONOMY INNOVATION INTERNATIONAL BANK LAWS LAWYERS LEGISLATION LEVEL PLAYING FIELD LICENSE LICENSES MANUFACTURING MARKET VALUE OPEN ACCESS OPERATING PERMITS PARTY PRIVATE COMPANY PRIVATE CREDIT PRIVATE SECTOR PRIVATE SECTOR DEVELOPMENT PRIVATE SECTOR FIRMS PRODUCTIVITY PROFITABILITY PROPERTY RIGHTS PUBLIC ECONOMICS REGULATORY ENVIRONMENT REGULATORY REFORMS REGULATORY REQUIREMENTS RESULT RESULTS ROLE OF INSTITUTIONS SEARCH SMALL FIRMS STATE OWNED ENTERPRISES STOCK MARKET TAX CODE TAX EXEMPTIONS TAX REVENUES TAXATION TECHNOLOGICAL INNOVATIONS TRANSACTION TRANSPORT USES WAREHOUSE WEB
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110207132555 http://hdl.handle.net/10986/3330

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Summary:	This paper examines de jure and de facto measures of regulations, finding the relationship between them is neither one for one, nor linear. "Doing Business" provides indicators of the formal time and costs associated with fully complying with regulations. Enterprise Surveys report the actual experiences of a wide range of firms. First, there are significant variations in reported times to complete the same transaction by firms facing the same formal policy. Second, regulatory compliance appears "under water" as firms report actual times much less than the Doing Business reported days. Third, the data reveal substantial differences between favored and disfavored firms in the same location. Favored firms show minimal variation, so Doing Business has little predictive power for the times they report. For disfavored firms, the variation is greater, although still not significantly correlated with Doing Business. Fourth, where multiple Enterprise Surveys are available, there is little association over time, with reductions in Doing Business days as likely to be accompanied by increases in Enterprise Surveys days. Comparing these two types of measures suggests very different ways of thinking about policy versus policy implementation, what "a climate" for firms in a country might mean, and what the options for "policy reform" really are.

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