Administrative Barriers to Foreign Investment in Developing Countries
Recent international experience has shown that excessively complex administrative procedures, required to establish, and operate a business, discourage inflows of foreign direct investment. The authors present a new database on the administrative c...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2002/05/1801618/administrative-barriers-foreign-investment-developing-countries http://hdl.handle.net/10986/14794 |
| Summary: | Recent international experience has
shown that excessively complex administrative procedures,
required to establish, and operate a business, discourage
inflows of foreign direct investment. The authors present a
new database on the administrative costs faced by private
investors in 32 developing countries. The database is much
more comprehensive than the existing sources, as it contains
not only information on general entry procedures, such as
business and tax registration, but also captures regulation
on land access, site development, import procedures, and
inspections, The data include measures on the number of
procedures, direct monetary costs, and time. The cost of
administrative procedures vary significantly across
countries. The most important barriers appear to be the
delays associated with securing land access, and obtaining
building permits, which in several countries, take more than
two years. Countries that impose excessive administrative
costs on entry, tend to be equally intrusive in firm
operations, thereby weakening the argument that barriers to
entry, are a substitute for the government's
unwillingness, or inability to regulate enterprise
operations. The level of administrative costs is positively
correlated with corruption incidence, and exhibits a
negative correlation with the quality of governance, degree
of openness, and public wages. These correlations suggest
that administrative reforms, need to be incorporated into
the broader agenda for reforms, such as trade and financial
liberalization, the fight against corruption, and public
sector administration. |
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