Understanding the Business Environment in South Asia: Evidence from Firm-Level Surveys

88 Pages Posted: 20 Apr 2016

See all articles by Wendy Carlin

Wendy Carlin

University College London - Department of Economics; Centre for Economic Policy Research (CEPR)

Mark E. Schaffer

Heriot-Watt University - Centre for Economic Reform and Transformation; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Date Written: August 1, 2012

Abstract

This paper examines the relationship between firm performance and growth and the business environment in the countries of the South Asia Region -- Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka -- using firm-level data from the World Bank's Enterprise Surveys. The analysis uses an approach in which the responses of firms to questions about the quality of the business environment can be interpreted as shadow prices: estimations by managers of the cost imposed on the firm by inadequacies of an aspect of the business environment -- public inputs such as regulation, physical infrastructure, availability of skilled labor, macroeconomic conditions, rule of law, etc. -- for the growth of their firm. The analysis finds, in line with this approach, that higher-productivity and better-performing firms in the region, and in particular firms that recently expanded their employment and created jobs, report significantly higher constraints in terms of the supply of public inputs. The authors discuss the differences across countries in the importance of various industries, how they relate to various firm characteristics, how informal and rural sector firms are constrained by public inputs, and how firms in the South Asia Region countries compare with firms in the rest of the world.

Keywords: Environmental Economics & Policies, Microfinance, E-Business, Private Participation in Infrastructure, Small Scale Enterprise

Suggested Citation

Carlin, Wendy and Schaffer, Mark E., Understanding the Business Environment in South Asia: Evidence from Firm-Level Surveys (August 1, 2012). World Bank Policy Research Working Paper No. 6160, Available at SSRN: https://ssrn.com/abstract=2127060

Wendy Carlin (Contact Author)

University College London - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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Mark E. Schaffer

Heriot-Watt University - Centre for Economic Reform and Transformation ( email )

School of Management - Department of Economics
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United Kingdom
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Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

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Germany

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