Business Environment and Firm Entry: Evidence from International Data

2004

128 citations recorded by the source corpus.

Using a comprehensive database of firms in Western and Eastern Europe, we study how the business environment in a country drives the creation of new firms. Our focus is on regulations governing entry. We find entry regulations hamper entry, especially in industries that naturally should have high entry. Also, value added per employee in naturally "high entry" industries grows more slowly in countries with onerous regulations on entry. Interestingly, regulatory entry barriers have no adverse effect on entry in corrupt countries, only in less corrupt ones. Taken together, the evidence suggests bureaucratic entry regulations are neither benign nor welfare improving. However, not 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 R&D or industries that need more external finance.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/7c6bfebbbd7a8805977957b5a9a48c3932615eef

Citations in the corpus

• The value of doing what you like: Evidence from the self-employed in 23 countries (2008, unknown): “In a similar vein, it has been documented that the extent of administrative and regulative barriers for entering self-employment negatively affects the creation of new firms (Desai et al., 2003; Klapper et al., 2006).”
• Public Policy and the Creation of Active Venture Capital Markets (2006, unknown): “[55] Klapper, Leora, Luc Laeven, and Raghuram Rajan (2004) ’Business Environment and Firm Entry: Evidence from International Data,’ NBER WP n.”
• Assessing Job Flows Across Countries: The Role of Industry, Firm Size and Regulations (2006, unknown): “Micco and Pages [2004] also make an attempt at controlling for different degrees of enforcement of regulations by using an indicator of rules of laws and government effectiveness (see Kaufmann et al.”
• Entrepreneurship and second-best institutions: going beyond Baumol’s typology (2010, unknown): “Méon and Weill (2008) and Klapper et al. (2006) find that the effect of”
• Greasing the wheels of entrepreneurship (2007, unknown): “6 Moreover, the cross-industry analysis of Klapper et al. (2004) provides preliminary evidence that regulatory barriers to firm entry do not adversely affect entry in corrupt countries, while they do in less corrupt ones.”
• Understanding place-based entrepreneurship in rural Central Europe: A comparative institutional analysis (2014, unknown): “For example, scholars agree that stable political environments, modern business registration systems, reduced bureaucratic requirements and simplified business laws, among other features, tend to support entrepreneurship (Gnyawali and Fogel, 1994; Klapper et al., 2006), even though regulatory effort”
• Entrepreneurship and public policy (2009, unknown): “45 See, e.g., Desai et al. (2003), and Klapper et al. (2004).”
• Product Market Regulation and Macroeconomic Performance: A Review of Cross Country Evidence (2005, unknown): “Klapper et al. (2004) focuses on the interaction effect between regulation and the “normal” rate of entry in an industry, proxied by the corresponding entry or turnover rate for the US.”