Not another reference to recession-hit corporate behemoths, but more on how to jump start even small businesses in the toughest environments. Somalia and Zimbabwe top the list in the latest Failed States Index from the Fund for Peace and Foreign Policy magazine. The problems facing those attempting to do business there are well documented.
What are the sorts of firms that are most prone to crime? The question is important to properly understand how crime affects economic activity and how to direct crime prevention efforts across different target groups. I use firm-level data from twenty nine countries in the East Europe and Central Asia region (Business Environment and Enterprise Performance Survey (BEEPS), 2009) to explore the question.
At first you might guess that it’s the big firms that make an easy target. But we need to do more than guess—the policy implications are quite different if the answer is “big” or “small.” If large firms are more efficient and do more R&D and export to other countries, then crime can be more harmful to the economy when directed against such firms. However, compared with large firms, wages and profits may be lower in the smaller firms. Crime directed against small firms can therefore be regressive (causing more harm to the relatively worse-off).
If you wanted to start a business in India, what city would you pick? The just-released report Doing Business in India 2009 has an answer: Ludhiana. Hyderabad and Bhubaneshwar would also be good choices. Why? These were ranked as the top three cities in India (out of 17 included in the ranking) in the overall ease of doing business.
Editor's Note: Jennifer Yip is a consultant for the World Bank Group's Doing Business team.
At an age when mothers admonish their children to finish their brussels sprouts, my mother issued warnings about the importance of getting a PhD if I wanted to gain the respect of my future husband. Those warnings were followed by the oft-repeated reminder that I should "marry well, so you don’t have to work if you don’t want to."
Oscar Calvo is an economist who works on economic policy for the Latin American and Caribbean region here at the World Bank. He shared with me some interesting research on the determinants of informality in Peru. Oscar and his team conducted a survey of 802 micro and small firms, both informal and formal, and came up with the following chart (below the jump) on the benefits of being registered to pay taxes. (The RUC number is the firm’s tax ID).
Suppose a firm thinks it is not worthwhile to register formally. But this firm would register if the registration costs were a bit lower. Let’s call this firm a "marginal firm."