Transcript Entrepreneurship and Economic Development

Entrepreneurship and Economic
Development
Leora F. Klapper &
Juan Manuel Quesada Delgado
Development Economics Research Group
Finance and Private Sector Development
The World Bank
Why a dataset on 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
How?
Goal:
To gather comparable data at the international
level using a methodology that can be applied
across heterogeneous legal, economical and
political systems.
Questions:
– What do we measure?
– How do we measure it?
– Where do we measure?
– Sources of information
Motto
To define a lower
common denominator
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.
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.
Where do we count?
New Economic Units
Informal Sector
Formal Sector
Self Employment
Civil Law
Sole Proprietorship
Micro Businesses
Common Law
Companies
Companies
New Businesses
Partnerships
Sole Proprietorship
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.
Reforms that Affect Business Statistics: The Algerian Case
New sectoral requirements/ re-registrations
20000
.
18000
16000
14000
12000
10000
8000
6000
4000
2000
1995
1996
1997
1998
1999
2000
2002
2003
Survey Structure
• Panel A: Total and new registrations recorded:
- Total firms
- New firms
- Year-end 2000-05
•
Panel B: Number of corporations, by sector and size:
- By sector: Manufacturing, Services, Financial,
Wholesale & Retail Trade
•
Panel C: The Role of Corporate Registries:
Panel A: Summary statistics, by region
Entry rates
Business density rates
12%
10.0%
8.3%
9%
7.6%
8.7%
6.7%
6.2%
6%
3.8%
3.1%
3%
1.4%
0.2%
0%
Africa and Middle
East
19
Asia
5
Europe and Central
Asia
Latin America and
the Caribbean
Industrialized
Countries
20
10
29
Panel A: Summary statistics, by region

Average entry rate 2003-2005
Panel A: Summary statistics, by region
Average Business Density 2003-2005
49
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
Panel B: Summary statistics, by sector

Wholesale & Retail Trade
Finance Insurance & Real Estate
Industry
100%
80%
60%
40%
20%
0%
Canada
Madagascar
Services
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
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
Panel C: What information are firms required to register?
Annual financial statements
Firms closures
100%
80%
60%
40%
20%
0%
Africa and
Middle East
Europe and
Central Asia
Latin America
and the
Caribbean
Asia
Industrialized
countries
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
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
Panel C: What is the relationship with new and total registrations?

With e-registration
Without e-registration
10%
Entry rates
8%
6%
4%
2%
0%
Africa and Middle
East
Asia
With e-registration
Industrialized
Countries
Europe and Central Latin America and
Asia
the Caribbean
Without e-registration
Business density
6%
5%
4%
3%
2%
1%
0%
Africa and Middle
East
Asia
Industrialized
Countries
Europe and Central Latin America and the
Asia
Caribbean
Panel C: What is the relationship with the business environment?
With e-registration

Without e-registration
50
41
40
32
30
20
7.7
10
10
0
Average Duration in days
Average Number of Procedures
Difference between countries with and without e-registration
18.9
20
15
9.0
10
2.3
5
0
Average Duration in days
Average Number of Procedures
Average cost of entry
Panel C: EBR Country Cases

Evolution of Firm registration 1993-2005 (Guatemala, Sri Lanka and Jordan)
Guatemala
Sri Lanka
Jordan
EBR Implementation
40000
10000
8000
30000
6000
20000
4000
10000
2000
0
0
1993 1994 1995
1996 1997
1998 1999 2000
2001 2002
2003 2004 2005
Stages of the EBR implementation / Evolution of firm registration (Guatemala)
40000
EBR implementation
30000
20000
Active Modernization plan
Inactive Modernization plan
10000
0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Relationship with the Business Environment
• Scatter-plots / Bivariate tests
• Multivariate tests
Scatter Plots

GDP per capita
GDP per capita
Entry rate
Density rate
20
25
15
20
15
10
10
5
5
0
0
10000
20000
30000
40000
50000
0
0
GDP per capita
b=.891 p=0.00, R^2=0.21, obs=80
10000
20000
30000
40000
50000
GDP per capita
b=1.31, p=0.00, R2 =0.26, obs=82
Cost of Starting a Business
Entry rate (percent)
20
Governance
Entry rate (percent)
20
15
15
10
10
5
5
0
0
0
20
40
Cost to start a business
60
-2
-1
0
1
Governance (Kraay indicators average)
2
b=-.087, p=0.00, R =0.17, obs=63
b=1.57, p=0.00, R2 =0.23, obs=81
2
Multivariate Test

Business Density Rates
Log of GDP per
capita
GDP growth
1.426
[0.00]***
0.191
[0.32]
Cost to start a
business
Governance index
(Kauffman, et al.)
Constant
Observations
R-squared
0.614
[0.05]*
Entry Rates
0.681
[0.06]*
1.093
[0.00]***
0.286
[0.04]**
-0.069
[0.01]***
-8.930
[0.00]***
80
0.26
-0.176
[0.95]
64
0.25
0.410
[0.13]
0.192
[0.64]
-0.064
[0.01]***
1.204
[0.07]*
-2.215
[0.41]
82
0.28
-2.212
[0.22]
78
0.23
6.062
[0.02]**
62
0.2
1.331
[0.08]*
6.030
[0.06]*
80
0.24
Additional Information
IFC Entrepreneurship Data Base Web Page:
http://www.ifc.org/ifcext/sme.nsf/Content/Entrepreneurship+Database
• 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: [email protected]
•Juan Manuel Quesada: [email protected]