The Impact of Business Environment Reforms on New Firm Registration
Leora F. Klapper
World Bank; World Bank - Development Research Group (DECRG)
World Bank - Development Economics Data Group (DECDG)
March 15, 2011
This paper uses panel data on the number of new firm registrations in 92 countries to study how the ease of registering a business and the magnitude of registration reforms affect new firm registrations. We find that the costs, days and procedures required for starting a business are important predictors of new firm registration. However, we find that small reforms, in general less than a 40 percent reduction in costs, days, or procedures, do not have a significant effect on new firm creation. We also find important synergies in multiple reforms of two or more business environment indicators. Finally, we show that countries with relatively weaker business environments require relatively larger reforms in order to impact new firm growth. These results can be helpful to motivate policymakers to make larger, broader reforms.
Number of Pages in PDF File: 32
Keywords: Entrepreneurship, Economic Development, Business Environment, Reforms
JEL Classification: G18, G38, L51, M13
Date posted: March 20, 2011
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