Entrepreneurship and Economic Development

Transcription

1 Entrepreneurship and Economic Development Adapted from Leora F. Klapper & Juan Manuel Quesada Delgado Development Economics Research Group Finance and Private Sector Development The World Bank

2 Why a study on economics and entrepreneurship? To answer the demand of Governments and Policy Makers: Diagnosis of private sector Monitoring and Evaluation of policies Study the impact of regulatory, political, and macroeconomic institutional changes To better understand what drives entrepreneurs to transition from the informal to the formal sector How can greater formal sector participation / corporate registration be encouraged

3 How? Requirement: To gather comparable data at the international level using a methodology that can be applied across heterogeneous legal, economical and political systems. Then Analysis the data for policy Questions: What do we measure? How do we measure it? Where do we measure? Sources of information

4 Motto To define a lower common denominator

5 What do we measure?: Entrepreneurial Activity The activities of an individual or a group of individuals aimed at initiating economic activities in the formal sector under a legal form of business.

6 How do we measure? Unit: Business Any economic unit of the formal sector incorporated as a legal entity and registered in a public registry, which is capable, in its own right, of incurring liabilities and of engaging in economic activities and transactions with other entities.

7 Where do we count? New Economic Units Formal Sector Informal Sector Self Employment Micro Businesses Civil Law Common Law Sole Proprietorship Companies Companies Partnerships Sole Proprietorship New Businesses

8 Information source The business Registries Reasons: It s the first step to enter the formal sector They tend to be the source of information for other government agencies Challenges: Differences in registration and annual filing requirements; identification of exited firms; re-registrations; paper based registries and decentralized registry systems.

9 Reforms that Affect Business Statistics: The Algerian Case New sectoral requirements/ re-registrations

10 Survey Structure Panel A: Total and new registrations recorded: - Total firms - New firms - Year-end Panel B: Number of corporations, by sector and size: - By sector: Manufacturing, Services, Financial, Wholesale & Retail Trade Panel C: The Role of Corporate Registries:

11 Panel A: Summary statistics, by region Entry rates Business density rates 12% 10.0% 9% 7.6% 6.7% 8.3% 8.7% 6.2% 6% 3% 0% 1.4% Africa and Middle East Asia 0.2% 3.8% Europe and Central Asia 3.1% Latin America and the Caribbean Industrialized Countries

12 Panel A: Summary statistics, by region ü Average entry rate

13 Panel A: Summary statistics, by region Average Business Density

14 Panel B: Summary statistics, by sector Industrialized Countries Developing Countries 50% 40% 30% 20% 10% 0% Wholesale & Retail Trade Finance Insurance & Real Estate Industry Services

15 Panel B: Summary statistics, by sector ü Wholesale & Retail Trade Finance Insurance & Real Estate Industry Services 100% 80% 60% 40% 20% 0% Canada Madagascar

16 Panel C: The Role of Corporate Registries What information are firms required to register? - Is registration compulsory? - Incorporations/ closings/ re-registrations - Is annual financial information compulsory? How do firms register? What information does the Registrar collect? - Corporate registrations, Internet domain names, Patents How is Registrar data distributed? - Accessibility by creditors, suppliers, lenders and private vendors (i.e. D&B) What is the relationship with new and total registrations? What is the relationship with the business environment? Case Studies

17 Panel C: What information does the Registrar collect? real estate registration internet domain names patents 30% 20% 10% 0% Africa and Middle East Europe and Central Asia Latin America and the Caribbean Asia Industrialized countries

18 Panel C: What information are firms required to register? 100% Annual financial statements Firms closures 80% 60% 40% 20% 0% Africa and Middle East Europe and Central Asia Latin America and the Caribbean Asia Industrialized countries

19 Panel C: How do firms register? Can firms registrer electronically? Is e-registration required? 80% 60% 40% 20% 0% Africa and Middle East Europe and Central Asia Latin America and the Caribbean Asia Industrialized countries

20 Panel C: How is Registrar data distributed? Can data be accessed electronically? Is there a fee? 80% 60% 40% 20% 0% Africa and Middle East Europe and Central Asia Latin America and the Caribbean Asia Industrialized countries

21 Panel C: What is the relationship with new and total registrations? ü With e-registration Without e-registration 10% 8% Entry rates 6% 4% 2% 0% Africa and Middle East Asia Industrialized Countries Europe and Central Asia Latin America and the Caribbean 6% With e-registration Without e-registration Business density 5% 4% 3% 2% 1% 0% Africa and Middle East Asia Industrialized Countries Europe and Central Asia Latin America and the Caribbean

22 Panel C: What is the relationship with the business environment? With e-registration Without e-registration ü Average Duration in days Average Number of Procedures 20 Difference between countries with and without e-registration Average Duration in days Average Number of Procedures Average cost of entry

23 Panel C: EBR Country Cases ü Evolution of Firm registration (Guatemala, Sri Lanka and Jordan) Guatemala Sri Lanka Jordan EBR Implementation Stages of the EBR implementation / Evolution of firm registration (Guatemala) EBR implementation Active Modernization plan Inactive Modernization plan

24 Relationship with the Business Environment Scatter-plots / Bivariate tests Multivariate tests

25 Scatter Plots GDP per capita GDP per capita ü Entry rate 20 Density rate GDP per capita b=.891 p=0.00, R^2=0.21, obs= GDP per capita b=1.31, p=0.00, R 2 =0.26, obs=82 Cost of Starting a Business Entry rate (percent) Entry rate (percent) Governance Cost to start a business b=-.087, p=0.00, R 2 =0.17, obs= Governance (Kraay indicators average) b=1.57, p=0.00, R2 =0.23, obs=81

26 Multivariate Test ü Business Density Rates Entry Rates Log of GDP per capita GDP growth Cost to start a business Governance index (Kauffman, et al.) Constant Observations R-squared [0.00]*** [0.32] [0.00]*** [0.05]* [0.01]*** [0.95] [0.06]* [0.07]* [0.41] [0.00]*** [0.04]** [0.22] [0.13] [0.01]*** [0.02]** [0.64] [0.08]* [0.06]*

27 Additional Information IFC Entrepreneurship Data Base Web Page: Data Base Research paper: Entrepreneurship: New Data on Business Creation and How to Promote It Viewpoint: Entrepreneurship and firm formation across countries Contacts: Leora Klapper: Juan Manuel Quesada: