Business Environment and Firm            Entry : Evidence from International Data

Laeven, Luc; Klapper, Leora; Rajan, Raghuram

Business Environment and Firm Entry : Evidence from International Data

Autores

Laeven, Luc

Klapper, Leora

Rajan, Raghuram

Editor

World Bank, Washington, D.C.

Descripción

Using a comprehensive database of firms in Western and Eastern Europe, the authors study how the business environment in a country drives the creation of new firms. They focus on regulations governing entry, although they also examine the effects of a developed financial sector, a well-trained labor force, strong enforcement of intellectual property rights, and strict labor laws. The authors find entry regulations hamper entry, especially in industries that naturally should have high entry. They find that naturally "high entry" industries grow less, have lower profitability, and account for a lower share of the economy in countries with onerous regulations on entry. Also, value added per employee in naturally "high entry" industries grows more slowly in countries with onerous regulations on entry. This suggests entry regulations are neither benign nor welfare improving. The authors also find less entry into labor-intensive industries in countries with labor regulations that restrict the ability to fire workers. They do not imply that all regulations inhibit entry. In particular, regulations that enhance the enforcement of intellectual property rights or those that lead to a better developed financial sector do lead to greater entry in industries that do more research and development or industries that need more external finance. Finally, other aspects of the environment also matter: for instance, the general availability of skilled labor enhances entry in industries that require skilled labor.

Palabras clave

BUSINESS ENVIRONMENT, ENTERPRISES, BUSINESS MANAGEMENT, TRADE REGULATION, LABOR FORCE, FINANCIAL SECTOR, INTELLECTUAL PROPERTY RIGHTS, LABOR LAWS, SKILLED WORKERS, INDUSTRIAL RESEARCH CENTERS ANNUAL OBSERVATIONS, BARRIERS TO ENTRY, BUSINESS ENVIRONMENT, COMPANY, CORPORATION, CORPORATIONS, DEBT, DEVELOPED COUNTRIES, ECONOMIC ANALYSIS, ECONOMIC GROWTH, ECONOMIES OF SCALE, EMPLOYMENT, ENTREPRENEURS, EXPANSION, FINANCIAL INSTITUTIONS, FIRM SIZE, FIRMS, FISH, FISHING, FORESTRY, GNP, HUMAN CAPITAL, INCOME, INTELLECTUAL PROPERTY RIGHTS, INTERMEDIARIES, LABOR FORCE, MINES, PARTNERSHIP, PATENTS, PRIVATE SECTOR, PUBLIC SECTOR, QUALITY CONTROL, RECYCLING, SCREENING, SIZE OF FIRMS, SMALL BUSINESSES, SMALL FIRMS, TAXATION, USE VALUE, VENDORS, VENTURE CAPITAL