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Pathways Out of Poverty: Private Firms and Economic Mobility in Developing Countries

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"The Firms Speak: What the World Business Environment Survey Tells Us about Constraints on Private Sector Development'" by G. Batra, D. Kaufmann and A.H.W. Stone (2003), Chapter 9 in Pathways Out of Poverty: Private Firms and Economic Mobility in Developing Countries, eds. G. Fields and G. Pfefferman, Kluwer Academic Publishers


This chapter summarizes the salient results of the World Business Environment Survey (WBES), which show that important dimensions of the climate for business operation and investment can be measured, analyzed, and compared across countries, and that important aspects of governance are central related to the business environment and investment climate. The survey findings suggest that key policy, institutional, and governance indicators are connected to the growth of a firm's sales and investment, and the extent to which firms operate in the unofficial economy. Further, the paper provides empirical confirmation for some commonly held truths, while challenging others. For example, it provides a clear connection between taxation, financing, and corruption on the one hand, and growth and investment on the other. Conversely, it highlights the costs to economies where the state is captured by a narrow set of private interests.


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This chapter is part of the book Pathways Out of Poverty, which can be purchased online through the World Bank Bookstore.

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