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.
In a previous post, I highlighted the importance of focusing on the informal sector in developing countries. Most obviously, the informal sector in many developing countries is large.
Anecdotal evidence suggests that working from home makes it easier to balance work and family life. Women may be particularly likely to work from home since they are often viewed as the primary caregivers in the family in most developing countries. However, there is some concern in the literature that family responsibility may limit women’s ability to run a business, leading to fewer hours of operation and lower efficiency for home-based businesses run by women.
A recent study by La Porta and Shleifer (2008) estimates that for the world as a whole, between 23 and 35 percent of all economic activity occurs in the informal or the unregistered sector; for the poorest countries the figure is even higher—estimates range between 29 and 57 percent. We also have anecdotal evidence that women entrepreneurs and workers constitute a much higher proportion of the informal than the formal sector.