Pitfalls to Avoid when Measuring Institutions: Is 'Doing Business' Damaging Business?
Universitat Pompeu Fabra, Economics and Business Working Paper Series 1040
Journal of Comparative Economics, Vol. 35, No. 4, pp. 729-47, 2007
24 Pages Posted: 29 Jun 2007 Last revised: 20 Sep 2010
Date Written: August 24, 2007
Over recent years, both governments and international aid organizations have been devoting large amounts of resources to 'simplifying' the procedures for setting up and formalizing firms. Many of these actions have focused on reducing the initial costs of setting up the firm, disregarding the more important role of business registers as a source of reliable information for judges, government departments and, above all, other firms. This reliable information is essential for reducing transaction costs in future dealings with all sorts of economic agents, both public and private. The priorities of reform policies should therefore be thoroughly reviewed, stressing the value of the legal institutions rather than trivializing them as is often the case.
Keywords: starting business, doing business, informal economy, company registers
JEL Classification: K22, K23, L59, O17
Suggested Citation: Suggested Citation