Conventional wisdom holds that bribery is the preferred means of influencing government policy in less developed countries, while lobbying is more common in developed countries. Perhaps due to this perceived compartmentalization of lobbying and bribery, very little is known about the relationship between lobbying and bribery, the extent and effectiveness of lobbying vs. bribery in less developed countries, and how this relationship changes as countries move up the development ladder.
Buying and selling a product or service involves a number of costs, including time spent searching for the best prices, negotiating for good discounts, researching product quality and writing contracts where applicable. Broadly, these are called the transaction costs of economic exchange, and part of the reason firms exist is to keep transaction costs at a minimum.
In a series of earlier posts, I discussed a number of findings about informal (unregistered) firms in 6 African countries, including Burkina Faso, Cote d’Ivoire, Cape Verde, Cameroon, Madagascar and Mauritius. These findings were based on Informality Surveys collected by the Enterprise Analysis Unit to better understand the functioning of the informal sector—a large sector for which we have virtually no systematic data.
One can reasonably expect that frequent and unpredictable changes in economic policy might adversely affect investment by the private sector and the overall growth of the economy. For all practical purposes, uncertainty about future economic policies is a step towards economic anarchy. But precisely what causes firms in some countries to have higher uncertainty about future economic policies than others? Does the underlying political structure matter? What elements of the political structure, if any, matter for the level of policy uncertainty as perceived by private agents?
The government of Madagascar had asked for assistance in boosting economic activity, creating jobs, and reducing poverty in three key regional centers: Antananarivo-Antsirabe; Nosy Be; and Taolagnaro (Fort Dauphin).
Is it the effect of the increasingly globalised football (soccer) industry? Or simply the guilty pleasure of winning prizes for daydreaming?
Over the last decade or so, the World Bank has made considerable investments in carrying out firm-level surveys that can be compared across countries and over time. What have we learned from all of this? Most obviously, we confirmed our suspicions that reforming the business environment, e.g. by reducing the barriers to entry, can boost productivity.
A new note in the Viewpoint series provides a handy summary of much of the recent research on the impact of business entry reforms. Unsurprisingly, cutting the costs and number of procedures to start a business results in more firms entering the formal market. To give one example, the creation of a one-stop shop in Mexico resulted in a 5% increase in new firms.
A new World Bank working paper finds that the answer, counterintuitively, is 'yes'. De Rosa et al. look at a large sample of firm-level surveys completed in 2009 and find that: