The Impact of the Business Environment on the Business Creation Process
COLLECTION OF DATA
PRIVATE SECTOR DEVELOPMENT
FOREIGN DIRECT INVESTMENT
CHAMBERS OF COMMERCE
RULE OF LAW
AUTOMATION OF BUSINESS
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AbstractNew data from the 2008 World Bank Group Entrepreneurship Survey indicates a very strong and statistically significant relationship between entrepreneurship and a better business environment. Data for 100 countries on the number of total and newly registered corporations over an eight-year period (2000-2007) were collected directly from registrars of companies around the world. Data were also collected on the functioning and structure of business registries. Empirical evidence suggests that greater ease in starting a business and better governance are associated with increased entrepreneurial activity. After controlling for economic development (gross domestic product per capita), higher entrepreneurial activity is significantly associated with cheaper, more efficient business registration procedures and better governance. Although the degree of progress in the modernization of business registries varies greatly, countries usually have a common goal to evolve from a paper-based business registry to a one-stop, automated, web-enabled registry capable of delivering products and services online via transactions involving authenticated users and documents. Tests show that business registry modernization (often a component of broader private sector reforms) has a positive impact not only on the ease of creating a business, but also on new business registration. Overall, the data show that a quick, efficient, and cost-effective business registration process is critical for fostering formal sector entrepreneurship.
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Growth without GovernanceKraay, Aart; Kaufmann, Daniel (World Bank, Washington, DC, 2014-08-01)It is well known that there is a strong positive correlation between per capita incomes and the quality of governance across countries. the authors propose an empirical strategy that allows separation of this correlation into (1) a strong positive causal effect running from better governance to higher per capita incomes, and, perhaps surprisingly at first, (2) a weak and even negative causal effect running in the opposite direction from per capita incomes to governance. The first result confirms existing evidence on the importance of good governance for economic development. The second result is new and suggests the absence of a "virtuous circle" in which higher incomes lead to further improvements in governance. This motivates the authors' choice of title, "Growth Without Governance." They document this evidence using a newly updated set of worldwide governance-indicators covering 175 countries for the period 2000-01, and use the results to interpret the relationship between incomes and governance focusing on the Latin America and Caribbean region-within a worldwide empirical context. Finally, the authors speculate about the potential importance of elite influence and state capture in accounting for the surprising negative effects of per capita incomes on governance, present some evidence on such capture in some Latin American countries, and suggest priorities for actions to improve governance when such pernicious elite influence shapes public policy.
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Government of Indonesia as it considers if and how to
introduce more robust local government performance
incentives into the intergovernmental fiscal framework. The
next section briefly examines the forces that have driven
the recent national wave of interest in improving local
government performance. This is followed by a review of the
relatively limited set of local government performance
incentives currently in force in Indonesia. The fourth
section provides a conceptual overview of how to think about
the possible expansion of local government incentive
programs, outlining the potential role(s) of such programs
in general and the key issues involved in designing and
implementing them. The fifth section tentatively considers a
number of options for additional local government incentives
in Indonesia that the central government may wish to
consider pursuing. The paper concludes with an outline of
next steps for moving forward with the possible development
of more purposeful and meaningful performance incentives in
Indonesia's intergovernmental fiscal framework.