Deals versus Rules : Policy Implementation Uncertainty and Why Firms Hate It
Firms in Africa report "regulatory and economic policy uncertainty" as a top constraint to their growth. This paper argues that often firms in Africa do not cope with policy rules, rather they face deals: firm-specific policy actions that...
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| Format: | Policy Research Working Paper |
| Language: | English |
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2012
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| 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_20100526160752 http://hdl.handle.net/10986/3806 |
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okr-10986-38062021-04-23T14:02:12Z Deals versus Rules : Policy Implementation Uncertainty and Why Firms Hate It Hallward-Driemeier, Mary Khun-Jush, Gita Pritchett, Lant ASSETS BRANCH BRIBE BRIBERY BRIBES BUSINESS COMMUNITY BUSINESS ENTERPRISE BUSINESSMAN CAPITAL FORMATION CIVIL LAW CLIMATE COLLUSION COMPETITORS COMPLAINTS CONGLOMERATES CORRUPTION CRIME DEBT DOMINANT FIRMS ECONOMIC CONDITIONS ECONOMIC GROWTH ECONOMIC GROWTH RATES ECONOMIC POLICY ECONOMISTS EMPLOYMENT ENTREPRENEUR ENTREPRENEURS ENVIRONMENTAL ENVIRONMENTAL REGULATION ENVIRONMENTS EQUILIBRIUM EXCHANGE RATE EXPANSION EXTERNALITIES EXTORTION FINANCIAL CRISIS FINANCIAL SECTOR FIRMS FOREIGN DIRECT INVESTMENT GOVERNANCE INDICATORS GOVERNMENT EFFECTIVENESS GOVERNMENT OFFICIALS GOVERNMENT POLICY HUMAN CAPITAL IMPORTS INCOME INDUSTRIAL ENTERPRISES INVESTIGATIONS IRREVERSIBILITY JOB GROWTH JUDICIAL SYSTEM JUSTICE LAND USE LAWS LAWYER LAWYERS LICENSING LOAN LOBBYING LOCAL GOVERNMENT MARGINAL BENEFITS MARGINAL COSTS MARKET COMPETITION MARKET FAILURES MICRO-CREDIT MULTI-NATIONAL COMPANIES PARTY PENALTIES POLICE POLICY ACTION POLICY ACTIONS POLICY DOMAIN POLICY DOMAINS POLICY ENVIRONMENT POLICY FORMULATION POLICY FRAMEWORK POLICY GOALS POLICY IMPLEMENTATION POLICY MAKING POLICY OBSTACLES POLICY OUTCOMES POLICY PROCESS POLICY REFORM POLICY RESEARCH POLITICAL ECONOMY POLITICIAN POLITICIANS PREFERENTIAL PREFERENTIAL ACCESS PRIVATE COMPANY PROBABILITY DISTRIBUTIONS PROPERTY RIGHTS PUBLIC POLICY REGULATORY BURDEN REGULATORY BURDENS REGULATORY ENVIRONMENT REGULATORY REQUIREMENTS RULE OF LAW SMALL BUSINESS SMALL FIRMS SME SME FINANCING STORE TAX RATES TAX REVENUE WILLINGNESS TO PAY Firms in Africa report "regulatory and economic policy uncertainty" as a top constraint to their growth. This paper argues that often firms in Africa do not cope with policy rules, rather they face deals: firm-specific policy actions that can be influenced by firm actions (such as bribes) and characteristics (such as political connections). Using Enterprise Survey data, the paper demonstrates huge variability in reported policy actions across firms notionally facing the same policy. The within-country dispersion in firm-specific policy actions is larger than the cross-national differences in average policy. The analysis shows that variability in this policy implementation uncertainty within location-sector-size cells is correlated with firm growth rates. These measures of implementation variability are more strongly related to lower firm employment growth than are measures of "average" policy action. The paper shows that the de jure measures such as Doing Business indicators are virtually uncorrelated with ex-post firm-level responses, further evidence that deals rather than rules prevail in Africa. Strikingly, the gap between de jure and de facto conditions grows with the formal regulatory burden. The evidence also shows more burdensome processes open up more space for making deals; firms may not incur the official costs of compliance, but they still pay to avoid them. Finally, measures of institutional capacity and better governance are closely associated with perceived consistency in implementation. 2012-03-19T18:40:10Z 2012-03-19T18:40:10Z 2010-05-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100526160752 http://hdl.handle.net/10986/3806 English Policy Research working paper ; no. WPS 5321 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper The World Region The World Region |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ASSETS BRANCH BRIBE BRIBERY BRIBES BUSINESS COMMUNITY BUSINESS ENTERPRISE BUSINESSMAN CAPITAL FORMATION CIVIL LAW CLIMATE COLLUSION COMPETITORS COMPLAINTS CONGLOMERATES CORRUPTION CRIME DEBT DOMINANT FIRMS ECONOMIC CONDITIONS ECONOMIC GROWTH ECONOMIC GROWTH RATES ECONOMIC POLICY ECONOMISTS EMPLOYMENT ENTREPRENEUR ENTREPRENEURS ENVIRONMENTAL ENVIRONMENTAL REGULATION ENVIRONMENTS EQUILIBRIUM EXCHANGE RATE EXPANSION EXTERNALITIES EXTORTION FINANCIAL CRISIS FINANCIAL SECTOR FIRMS FOREIGN DIRECT INVESTMENT GOVERNANCE INDICATORS GOVERNMENT EFFECTIVENESS GOVERNMENT OFFICIALS GOVERNMENT POLICY HUMAN CAPITAL IMPORTS INCOME INDUSTRIAL ENTERPRISES INVESTIGATIONS IRREVERSIBILITY JOB GROWTH JUDICIAL SYSTEM JUSTICE LAND USE LAWS LAWYER LAWYERS LICENSING LOAN LOBBYING LOCAL GOVERNMENT MARGINAL BENEFITS MARGINAL COSTS MARKET COMPETITION MARKET FAILURES MICRO-CREDIT MULTI-NATIONAL COMPANIES PARTY PENALTIES POLICE POLICY ACTION POLICY ACTIONS POLICY DOMAIN POLICY DOMAINS POLICY ENVIRONMENT POLICY FORMULATION POLICY FRAMEWORK POLICY GOALS POLICY IMPLEMENTATION POLICY MAKING POLICY OBSTACLES POLICY OUTCOMES POLICY PROCESS POLICY REFORM POLICY RESEARCH POLITICAL ECONOMY POLITICIAN POLITICIANS PREFERENTIAL PREFERENTIAL ACCESS PRIVATE COMPANY PROBABILITY DISTRIBUTIONS PROPERTY RIGHTS PUBLIC POLICY REGULATORY BURDEN REGULATORY BURDENS REGULATORY ENVIRONMENT REGULATORY REQUIREMENTS RULE OF LAW SMALL BUSINESS SMALL FIRMS SME SME FINANCING STORE TAX RATES TAX REVENUE WILLINGNESS TO PAY |
| spellingShingle |
ASSETS BRANCH BRIBE BRIBERY BRIBES BUSINESS COMMUNITY BUSINESS ENTERPRISE BUSINESSMAN CAPITAL FORMATION CIVIL LAW CLIMATE COLLUSION COMPETITORS COMPLAINTS CONGLOMERATES CORRUPTION CRIME DEBT DOMINANT FIRMS ECONOMIC CONDITIONS ECONOMIC GROWTH ECONOMIC GROWTH RATES ECONOMIC POLICY ECONOMISTS EMPLOYMENT ENTREPRENEUR ENTREPRENEURS ENVIRONMENTAL ENVIRONMENTAL REGULATION ENVIRONMENTS EQUILIBRIUM EXCHANGE RATE EXPANSION EXTERNALITIES EXTORTION FINANCIAL CRISIS FINANCIAL SECTOR FIRMS FOREIGN DIRECT INVESTMENT GOVERNANCE INDICATORS GOVERNMENT EFFECTIVENESS GOVERNMENT OFFICIALS GOVERNMENT POLICY HUMAN CAPITAL IMPORTS INCOME INDUSTRIAL ENTERPRISES INVESTIGATIONS IRREVERSIBILITY JOB GROWTH JUDICIAL SYSTEM JUSTICE LAND USE LAWS LAWYER LAWYERS LICENSING LOAN LOBBYING LOCAL GOVERNMENT MARGINAL BENEFITS MARGINAL COSTS MARKET COMPETITION MARKET FAILURES MICRO-CREDIT MULTI-NATIONAL COMPANIES PARTY PENALTIES POLICE POLICY ACTION POLICY ACTIONS POLICY DOMAIN POLICY DOMAINS POLICY ENVIRONMENT POLICY FORMULATION POLICY FRAMEWORK POLICY GOALS POLICY IMPLEMENTATION POLICY MAKING POLICY OBSTACLES POLICY OUTCOMES POLICY PROCESS POLICY REFORM POLICY RESEARCH POLITICAL ECONOMY POLITICIAN POLITICIANS PREFERENTIAL PREFERENTIAL ACCESS PRIVATE COMPANY PROBABILITY DISTRIBUTIONS PROPERTY RIGHTS PUBLIC POLICY REGULATORY BURDEN REGULATORY BURDENS REGULATORY ENVIRONMENT REGULATORY REQUIREMENTS RULE OF LAW SMALL BUSINESS SMALL FIRMS SME SME FINANCING STORE TAX RATES TAX REVENUE WILLINGNESS TO PAY Hallward-Driemeier, Mary Khun-Jush, Gita Pritchett, Lant Deals versus Rules : Policy Implementation Uncertainty and Why Firms Hate It |
| geographic_facet |
The World Region The World Region |
| relation |
Policy Research working paper ; no. WPS 5321 |
| description |
Firms in Africa report "regulatory
and economic policy uncertainty" as a top constraint to
their growth. This paper argues that often firms in Africa
do not cope with policy rules, rather they face deals:
firm-specific policy actions that can be influenced by firm
actions (such as bribes) and characteristics (such as
political connections). Using Enterprise Survey data, the
paper demonstrates huge variability in reported policy
actions across firms notionally facing the same policy. The
within-country dispersion in firm-specific policy actions is
larger than the cross-national differences in average
policy. The analysis shows that variability in this policy
implementation uncertainty within location-sector-size cells
is correlated with firm growth rates. These measures of
implementation variability are more strongly related to
lower firm employment growth than are measures of
"average" policy action. The paper shows that the
de jure measures such as Doing Business indicators are
virtually uncorrelated with ex-post firm-level responses,
further evidence that deals rather than rules prevail in
Africa. Strikingly, the gap between de jure and de facto
conditions grows with the formal regulatory burden. The
evidence also shows more burdensome processes open up more
space for making deals; firms may not incur the official
costs of compliance, but they still pay to avoid them.
Finally, measures of institutional capacity and better
governance are closely associated with perceived consistency
in implementation. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Hallward-Driemeier, Mary Khun-Jush, Gita Pritchett, Lant |
| author_facet |
Hallward-Driemeier, Mary Khun-Jush, Gita Pritchett, Lant |
| author_sort |
Hallward-Driemeier, Mary |
| title |
Deals versus Rules : Policy Implementation Uncertainty and Why Firms Hate It |
| title_short |
Deals versus Rules : Policy Implementation Uncertainty and Why Firms Hate It |
| title_full |
Deals versus Rules : Policy Implementation Uncertainty and Why Firms Hate It |
| title_fullStr |
Deals versus Rules : Policy Implementation Uncertainty and Why Firms Hate It |
| title_full_unstemmed |
Deals versus Rules : Policy Implementation Uncertainty and Why Firms Hate It |
| title_sort |
deals versus rules : policy implementation uncertainty and why firms hate it |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100526160752 http://hdl.handle.net/10986/3806 |
| _version_ |
1764388444167995392 |