Business Environment and Firm Entry: Evidence from International Data

Raghuram Rajan, Luc Laeven and Leora Klapper

No 4366, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Using a comprehensive database of firms in Western and Eastern Europe, we study how the business environment in a country drives the creation of new firms. Our focus is on regulations governing entry. We find entry regulations hamper entry, especially in industries that naturally should have high entry. Also, value-added per employee in naturally ?high entry? industries grows more slowly in countries with onerous regulations on entry. Interestingly, regulatory entry barriers have no adverse effect on entry in corrupt countries, only in less corrupt ones. Taken together, the evidence suggests bureaucratic entry regulations are neither benign nor welfare improving. Not all regulations inhibit entry, however. In particular, regulations that enhance the enforcement of intellectual property rights or those that lead to a better developed financial sector do lead to greater entry in industries that do more R&D or industries that need more external finance.

Keywords: Business entry; Regulation (search for similar items in EconPapers)
JEL-codes: G38 K20 L50 M13 (search for similar items in EconPapers)
Date: 2004-04
References: Add references at CitEc
Citations: View citations in EconPapers (99)

Downloads: (external link)
https://cepr.org/publications/DP4366 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:4366

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP4366

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().