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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

Benito Arruñada

Pompeu Fabra University

Multiple version iconThere are 2 versions of this paper

Date Written: August 24, 2007

Abstract

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

Arruñada, Benito, Pitfalls to Avoid when Measuring Institutions: Is 'Doing Business' Damaging Business? (August 24, 2007). Universitat Pompeu Fabra, Economics and Business Working Paper Series 1040. Available at SSRN: https://ssrn.com/abstract=997225

Benito Arruñada (Contact Author)

Pompeu Fabra University ( email )

Ramon Trias Fargas 25-27
Department of Economics and Business
Barcelona, 08005
Spain
+34 93 542 25 72 (Phone)
+34 93 542 17 46 (Fax)

HOME PAGE: http://www.econ.upf.edu/~arrunada

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