Corruption, the Rusiness Environment, and Small Business Growth in India
This paper estimates a dynamic business growth equation on a sample of small-scale manufacturers. The results suggest that excessive labor regulation, power shortages, and problems of access to finance are significant influences on industrial growt...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2007/08/8196063/corruption-business-environment-small-business-growth-india http://hdl.handle.net/10986/7288 |
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okr-10986-72882021-04-23T14:02:34Z Corruption, the Rusiness Environment, and Small Business Growth in India Honorati, Maddalena Mengistae, Taye ABSOLUTE VALUE ACCESS TO FINANCE ACCESS TO SERVICES ACCOUNTING ACTUAL GROWTH ANNUAL GROWTH RATE AVERAGE ANNUAL GROWTH AVERAGE GROWTH AVERAGE GROWTH RATE BANK LENDING BORROWING BRIBES CAPITA INCOME CAPITA INCOMES CASH FLOW COLLATERAL COLLATERAL REQUIREMENTS CONTRACT ENFORCEMENT CORRUPTION CREDIT RATIONING DEPENDENT VARIABLE DESCRIPTIVE STATISTICS DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DEVELOPMENT RESEARCH DISCRIMINATION DISMISSAL DYNAMIC PANEL EARNINGS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC STUDIES EMPLOYMENT EMPLOYMENT EQUATIONS ENDOGENOUS VARIABLES ENFORCEMENT MECHANISMS ERROR TERM ESTIMATION RESULTS EXTERNAL FINANCE FINANCIAL INSTITUTIONS FINANCIAL POLICY FINANCIAL SYSTEM FIRM GROWTH FIRM PERFORMANCE FIRM SIZE FISCAL DEFICITS FIXED ASSETS FOOD PROCESSING GROUP OF FIRMS GROWTH EFFECT GROWTH EQUATION GROWTH IMPACT GROWTH PERFORMANCE GROWTH RATE GROWTH REGRESSION HIGH GROWTH HIGH TAXES HUMAN RESOURCES INCOME INDEBTEDNESS INDUSTRIAL DEVELOPMENT INEQUALITY INSTITUTIONAL ENVIRONMENT INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL MARKETS INVESTMENT CLIMATE LABOR LAWS LABOR MARKET LABOR MARKETS LABOR REGULATION LAGGED DEPENDENT LAGGED VALUES LOAN LOAN PROCESSING LONG RUN LOW INTEREST RATES MANUFACTURING INDUSTRIES MARGINAL EFFECT NEGATIVE IMPACT OVERDRAFT PER CAPITA INCOME PER CAPITA INCOMES PERFORMANCE INDICATOR PERFORMANCE INDICATORS POLICY RESEARCH POLITICAL ECONOMY POOR ACCESS PRIVATE SECTOR PRODUCTIVITY PRODUCTIVITY GROWTH PRODUCTIVITY GROWTH RATES PROFITABILITY PROPERTY RIGHTS RAPID GROWTH RATE OF RETURN REGIONAL INEQUALITY RELATIVE IMPORTANCE RELATIVE POSITION SALES GROWTH SAVINGS SECTOR REFORMS SMALL BUSINESS SMALL BUSINESS FINANCING STOCK MARKET TEMPORARY WORKERS TFP WAGE DIFFERENTIALS WAGE RATES WORKER This paper estimates a dynamic business growth equation on a sample of small-scale manufacturers. The results suggest that excessive labor regulation, power shortages, and problems of access to finance are significant influences on industrial growth in India. The expected annual sales growth rate of an enterprise is lower where labor regulation is greater, power shortages are more severe, and cash flow constraints are stronger. The effects of each of the three factors on business growth seem also to depend on a fourth element, namely, corruption. Specifically, labor regulation affects the growth only of enterprises for which corruption is not a factor in business decisions. By contrast, power shortages seem to be a drag on the growth only of enterprises self-reportedly held back by corruption. Lastly, sales growth is constrained by cash flow only in businesses that are not affected by labor regulation, power shortages, or corruption. The analysis uses corruption as a proxy for the quality of "property rights institutions" and considers labor regulation and small business financing as instances of "contracting institutions." The findings on the interaction between corruption and other aspects of business environment then seems to indicate that the quality of property rights institutions exerts more abiding influence on economic outcomes than the quality of contracting institutions. Moreover, there might also be a hierarchy among contracting institutions in their effect on manufacturing growth. 2012-06-06T18:06:19Z 2012-06-06T18:06:19Z 2007-08 http://documents.worldbank.org/curated/en/2007/08/8196063/corruption-business-environment-small-business-growth-india http://hdl.handle.net/10986/7288 English Policy Research Working Paper; No. 4338 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research South Asia India |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ABSOLUTE VALUE ACCESS TO FINANCE ACCESS TO SERVICES ACCOUNTING ACTUAL GROWTH ANNUAL GROWTH RATE AVERAGE ANNUAL GROWTH AVERAGE GROWTH AVERAGE GROWTH RATE BANK LENDING BORROWING BRIBES CAPITA INCOME CAPITA INCOMES CASH FLOW COLLATERAL COLLATERAL REQUIREMENTS CONTRACT ENFORCEMENT CORRUPTION CREDIT RATIONING DEPENDENT VARIABLE DESCRIPTIVE STATISTICS DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DEVELOPMENT RESEARCH DISCRIMINATION DISMISSAL DYNAMIC PANEL EARNINGS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC STUDIES EMPLOYMENT EMPLOYMENT EQUATIONS ENDOGENOUS VARIABLES ENFORCEMENT MECHANISMS ERROR TERM ESTIMATION RESULTS EXTERNAL FINANCE FINANCIAL INSTITUTIONS FINANCIAL POLICY FINANCIAL SYSTEM FIRM GROWTH FIRM PERFORMANCE FIRM SIZE FISCAL DEFICITS FIXED ASSETS FOOD PROCESSING GROUP OF FIRMS GROWTH EFFECT GROWTH EQUATION GROWTH IMPACT GROWTH PERFORMANCE GROWTH RATE GROWTH REGRESSION HIGH GROWTH HIGH TAXES HUMAN RESOURCES INCOME INDEBTEDNESS INDUSTRIAL DEVELOPMENT INEQUALITY INSTITUTIONAL ENVIRONMENT INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL MARKETS INVESTMENT CLIMATE LABOR LAWS LABOR MARKET LABOR MARKETS LABOR REGULATION LAGGED DEPENDENT LAGGED VALUES LOAN LOAN PROCESSING LONG RUN LOW INTEREST RATES MANUFACTURING INDUSTRIES MARGINAL EFFECT NEGATIVE IMPACT OVERDRAFT PER CAPITA INCOME PER CAPITA INCOMES PERFORMANCE INDICATOR PERFORMANCE INDICATORS POLICY RESEARCH POLITICAL ECONOMY POOR ACCESS PRIVATE SECTOR PRODUCTIVITY PRODUCTIVITY GROWTH PRODUCTIVITY GROWTH RATES PROFITABILITY PROPERTY RIGHTS RAPID GROWTH RATE OF RETURN REGIONAL INEQUALITY RELATIVE IMPORTANCE RELATIVE POSITION SALES GROWTH SAVINGS SECTOR REFORMS SMALL BUSINESS SMALL BUSINESS FINANCING STOCK MARKET TEMPORARY WORKERS TFP WAGE DIFFERENTIALS WAGE RATES WORKER |
| spellingShingle |
ABSOLUTE VALUE ACCESS TO FINANCE ACCESS TO SERVICES ACCOUNTING ACTUAL GROWTH ANNUAL GROWTH RATE AVERAGE ANNUAL GROWTH AVERAGE GROWTH AVERAGE GROWTH RATE BANK LENDING BORROWING BRIBES CAPITA INCOME CAPITA INCOMES CASH FLOW COLLATERAL COLLATERAL REQUIREMENTS CONTRACT ENFORCEMENT CORRUPTION CREDIT RATIONING DEPENDENT VARIABLE DESCRIPTIVE STATISTICS DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DEVELOPMENT RESEARCH DISCRIMINATION DISMISSAL DYNAMIC PANEL EARNINGS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC STUDIES EMPLOYMENT EMPLOYMENT EQUATIONS ENDOGENOUS VARIABLES ENFORCEMENT MECHANISMS ERROR TERM ESTIMATION RESULTS EXTERNAL FINANCE FINANCIAL INSTITUTIONS FINANCIAL POLICY FINANCIAL SYSTEM FIRM GROWTH FIRM PERFORMANCE FIRM SIZE FISCAL DEFICITS FIXED ASSETS FOOD PROCESSING GROUP OF FIRMS GROWTH EFFECT GROWTH EQUATION GROWTH IMPACT GROWTH PERFORMANCE GROWTH RATE GROWTH REGRESSION HIGH GROWTH HIGH TAXES HUMAN RESOURCES INCOME INDEBTEDNESS INDUSTRIAL DEVELOPMENT INEQUALITY INSTITUTIONAL ENVIRONMENT INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL MARKETS INVESTMENT CLIMATE LABOR LAWS LABOR MARKET LABOR MARKETS LABOR REGULATION LAGGED DEPENDENT LAGGED VALUES LOAN LOAN PROCESSING LONG RUN LOW INTEREST RATES MANUFACTURING INDUSTRIES MARGINAL EFFECT NEGATIVE IMPACT OVERDRAFT PER CAPITA INCOME PER CAPITA INCOMES PERFORMANCE INDICATOR PERFORMANCE INDICATORS POLICY RESEARCH POLITICAL ECONOMY POOR ACCESS PRIVATE SECTOR PRODUCTIVITY PRODUCTIVITY GROWTH PRODUCTIVITY GROWTH RATES PROFITABILITY PROPERTY RIGHTS RAPID GROWTH RATE OF RETURN REGIONAL INEQUALITY RELATIVE IMPORTANCE RELATIVE POSITION SALES GROWTH SAVINGS SECTOR REFORMS SMALL BUSINESS SMALL BUSINESS FINANCING STOCK MARKET TEMPORARY WORKERS TFP WAGE DIFFERENTIALS WAGE RATES WORKER Honorati, Maddalena Mengistae, Taye Corruption, the Rusiness Environment, and Small Business Growth in India |
| geographic_facet |
South Asia India |
| relation |
Policy Research Working Paper; No. 4338 |
| description |
This paper estimates a dynamic business
growth equation on a sample of small-scale manufacturers.
The results suggest that excessive labor regulation, power
shortages, and problems of access to finance are significant
influences on industrial growth in India. The expected
annual sales growth rate of an enterprise is lower where
labor regulation is greater, power shortages are more
severe, and cash flow constraints are stronger. The effects
of each of the three factors on business growth seem also to
depend on a fourth element, namely, corruption.
Specifically, labor regulation affects the growth only of
enterprises for which corruption is not a factor in business
decisions. By contrast, power shortages seem to be a drag on
the growth only of enterprises self-reportedly held back by
corruption. Lastly, sales growth is constrained by cash flow
only in businesses that are not affected by labor
regulation, power shortages, or corruption. The analysis
uses corruption as a proxy for the quality of "property
rights institutions" and considers labor regulation and
small business financing as instances of "contracting
institutions." The findings on the interaction between
corruption and other aspects of business environment then
seems to indicate that the quality of property rights
institutions exerts more abiding influence on economic
outcomes than the quality of contracting institutions.
Moreover, there might also be a hierarchy among contracting
institutions in their effect on manufacturing growth. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Honorati, Maddalena Mengistae, Taye |
| author_facet |
Honorati, Maddalena Mengistae, Taye |
| author_sort |
Honorati, Maddalena |
| title |
Corruption, the Rusiness Environment, and Small Business Growth in India |
| title_short |
Corruption, the Rusiness Environment, and Small Business Growth in India |
| title_full |
Corruption, the Rusiness Environment, and Small Business Growth in India |
| title_fullStr |
Corruption, the Rusiness Environment, and Small Business Growth in India |
| title_full_unstemmed |
Corruption, the Rusiness Environment, and Small Business Growth in India |
| title_sort |
corruption, the rusiness environment, and small business growth in india |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2007/08/8196063/corruption-business-environment-small-business-growth-india http://hdl.handle.net/10986/7288 |
| _version_ |
1764402286279262208 |