EconPapers    
Economics at your fingertips  
 

Business environment and firm entry: Evidence from international data

Leora Klapper (), Luc Laeven () and Raghuram Rajan

No 3232, Policy Research Working Paper Series from The World Bank

Abstract: Using a comprehensive database of firms in Western and Eastern Europe, the authors study how the business environment in a country drives the creation of new firms. They focus on regulations governing entry, although they also examine the effects of a developed financial sector, a well-trained labor force, strong enforcement of intellectual property rights, and strict labor laws. The authors find entry regulations hamper entry, especially in industries that naturally should have high entry. They find that naturally"high entry"industries grow less, have lower profitability, and account for a lower share of the economy in countries with onerous regulations on entry. Also, value added per employee in naturally"high entry"industries grows more slowly in countries with onerous regulations on entry. This suggests entry regulations are neither benign nor welfare improving. The authors also find less entry into labor-intensive industries in countries with labor regulations that restrict the ability to fire workers. They do not imply that all regulations inhibit entry. 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 research and development or industries that need more external finance. Finally, other aspects of the environment also matter: for instance, the general availability of skilled labor enhances entry in industries that require skilled labor.

Keywords: Health Monitoring&Evaluation; Public Health Promotion; Small and Medium Size Enterprises; Small Scale Enterprise; Microfinance; Private Participation in Infrastructure; Small Scale Enterprise; Microfinance; Health Monitoring&Evaluation; Environmental Economics&Policies (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec
Date: 2004-03-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (58) Track citations by RSS feed

Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... /wps3232business.pdf (application/pdf)

Related works:
Working Paper: Business Environment and Firm Entry: Evidence from International Data (2004) Downloads
Working Paper: Business Environment and Firm Entry: Evidence from International Data (2004) Downloads
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:wbk:wbrwps:3232

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().

 
Page updated 2019-05-20
Handle: RePEc:wbk:wbrwps:3232