Transcript Entrepreneurship and Economic Development

Leora F. Klapper
Senior Economist DECRG-FPD
[email protected]
1-202-473-8738
Why a database on entrepreneurship?
To answer:
• What drives firm creation and entrepreneurship?
• What policies are needed to create and support
the emergence of new entrepreneurs?
•
Use for Monitoring and Evaluation
• How can greater formal sector participation /
corporate registration be encouraged?
• What are the benefits for firms that join the formal
economic sector?
Using data from the registrar of companies
•
This improves upon previously used datasets in that it
includes a large number of private firms and all industrial
sectors, including a large fraction of new & small
companies.
•
Challenges in comparing data across countries include
differences in registration and annual filing requirements;
the identification of exited firms; re-registrations; and
decentralized registry systems.
•
This data can be used to benchmark changes in the
composition of the private sector over time and study the
impact of regulatory, political, and macroeconomic
institutional changes on entrepreneurship and growth.
Methodology
New Economic Units
Informal Sector
Formal Sector
Self Employment
Civil Law
Sole Proprietorship
Micro Businesses
Common Law
Companies
Companies
New Businesses
Partnerships
Sole Proprietorship
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 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?
M&E: International Reforms
Region
Country
Methodology
Africa
Congo
Legally oblige all new business to
notify the statistical agency when
they start their activity
Europe
Denmark
Creating the first European registry
of “active” entrepreneurs
LAC
El Salvador Using entrepreneurship ratios for
monitoring and evaluation of
economic policies
MENA
Jordan
Introduced e-registration in 2002
Relationship with the Business Environment
• Scatter-plots / Bivariate tests
• Multivariate tests
Conclusions
• Corporate registry data can be an important tool for
researchers and policymakers to study the size and
growth of the private sector.
• Benchmarks can be constructed to study the impact of
reforms: Entry rates can be used to measure the
success of private sector development policies and
regulatory and legal reforms.
• The process of gathering the data becomes a valuable
research tool to diagnose problems related to
entrepreneurship.
• This data can be used to empirically test the many
factors that affect business creation and to support the
findings in other studies (e.g. Doing Business).
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
Panel A: Summary statistics, by region
Entry rates
Business density rates
12%
10.0%
10%
8.7%
8.3%
8%
7.6%
6.7%
6.2%
6%
3.8%
4%
3.1%
2%
1.4%
0.2%
0%
Africa and Middle
East
Asia
Europe and Central
Asia
19
5
20
Latin America and
the Caribbean
10
Industrialized
Countries
29

Panel A: Summary statistics, by region
Average entry rate 2003-2005
Panel A: Summary statistics, by region
49
Average Business Density 2003-2005
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: What information does the Registrar collect?
30%
20%
10%
0%
Africa and Middle
East
Europe and
Central Asia
real estate registration
Latin America
and the
Caribbean
Asia
internet domain names
Industrialized
countries
patents
Panel C: What information are firms required to register?
100%
80%
60%
40%
20%
0%
Africa and
Middle East
Europe and
Central Asia
Latin America
and the
Caribbean
Annual financial statements
Asia
Industrialized
countries
Firms closures
Panel C: How do firms register?
80%
60%
40%
20%
0%
Africa and
Middle East
Europe and
Central Asia
Latin America
and the
Caribbean
Can firms registrer electronically?
Asia
Industrialized
countries
Is e-registration required?
Panel C: How is Registrar data distributed?
80%
60%
40%
20%
0%
Africa and
Middle East
Europe and
Central Asia
Latin America
and the
Caribbean
Can data be accessed electronically?
Asia
Industrialized
countries
Is there a fee?
Panel C: What is the relationship with new and total registrations?
With e-registration
Without e-registration
Entry rates
10%
8%
6%
4%
2%
0%
Africa and Middle East
Asia
Business density
With e-registration
Industrialized Countries
Europe and Central Asia
Latin America and the
Caribbean
Without e-registration
5%
4%
3%
2%
1%
0%
Africa and Middle East
Asia
Industrialized Countries
Europe and Central Asia
Latin America and the Caribbean

Panel C: What is the relationship with the business environment?
With e-registration
50
40
Without e-registration
41
32
30
20
10
7.7
10
0
Average Duration in days
Average Number of Procedures
Difference between countries with and without e-registration
18.9
20
15
10
9.0
5
2.3
0
Average Duration in days
Average Number of Procedures
Average cost of entry


Panel C: EBR Country Cases
Guatemala
Sri Lanka
Jordan
EBR Implementation
40000
9000
8000
7000
35000
30000
6000
5000
4000
3000
25000
20000
15000
10000
2000
1000
0
5000
0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Evolution of Firm registration 1993-2005 (Guatemala, Sri Lanka and Jordan)
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
Stages of the EBR implementation / Evolution of firm registration (Guatemala)
2006

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
Cost to start a
business
Governance index
(Kauffman, et al.)
Constant
Observations
R-squared
1.426
[0.00]***
0.191
[0.32]
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