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Regular version of the site

Book chapter

Business Environment and Economic Growth: Is There a Link?

P. 329-347.

What role does the business play in economic growth? What circumstances are necessary for the stable business development? Recent literature focuses on the factors of business environment promoting or constraining firm growth. Using the country aggregate values of the firm-level World Bank Enterprise Survey (WBES) data on the subjective estimates of the business obstacles 128 countries are classified into six clusters. Due to the fact that firms report many obstacles to growth the contributions of 13 obstacles to business environment are recalculated for understanding the major business constraints. Lastly, cross tables analysis finds that there is a correlation between the prevalence of the business obstacles and national income growth, export growth, high-technology export. The results have important implications for the priority of reforms. Corruption, electricity and tax rates are the main business constraints in the world. Moreover, access to finance and competition in the informal sector of economy are also the major obstacles for business in the part of the countries.