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:
Last month Jaana Remes, a senior fellow at the McKinsey Global Institute, came to the World Bank to discuss the findings of a new report called How to Compete and Grow: A Sector Guide to Policy. Remes spoke on a topic that has not been a traditional strong suit of the Bank, viz. competitiveness policies for particular sectors of the economy.
Considerable effort and attention has been devoted to market-oriented reforms in the manufacturing and financial sectors and in physical infrastructure. While these are undoubtedly important sectors, there is very little by way of research on agricultural market reforms—loosely defined as deregulation of agricultural markets.