What Matters to African Firms? The Relevance of Perceptions Data
Can perceptions data help us understand investment climate constraints facing the private sector? Or do firms simply complain about everything? In this paper, the authors provide a picture of how firms' views on constraints differ across count...
| Main Authors: | , , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2007/12/8884382/matters-african-firms-relevance-perceptions-data http://hdl.handle.net/10986/7542 |
| Summary: | Can perceptions data help us understand
investment climate constraints facing the private sector?
Or do firms simply complain about everything? In this paper,
the authors provide a picture of how firms' views on
constraints differ across countries in Sub-Saharan Africa.
Using the World Bank's Enterprise Surveys database,
they find that reported constraints reflect country
characteristics and vary systematically by level of
income-the most elemental constraints to doing business
(power, access to finance, ability to plan ahead) appear to
be most binding at low levels of income. As countries
develop and these elemental constraints are relaxed,
governance-related constraints become more problematic. As
countries move further up the income scale and the state
becomes more capable, labor regulation is perceived to be
more of a problem-business is just one among several
important constituencies. The authors also consider whether
firm-level characteristics-such as size, ownership, exporter
status, and firms' own experience-affect firms'
views on the severity of constraints. They find that, net of
country and sector fixed effects and firm characteristics,
firms' views do reflect their experience as evidenced
by responses to other questions in surveys. The results
suggest that there are both country-level and firm-level
variations in the investment climate. Turning to the concept
of "binding constraints," the Enterprise Surveys
do not generally suggest one single binding constraint
facing firms in difficult business climates. However, there
do appear to be groups of constraints that matter more at
different income levels, with a few elemental constraints
being especially important at low levels and a few
regulatory constraints at high levels, but a difficult range
of governance-related constraints at intermediate levels.
Adjusting to a constraint does not mean that firms then do
not recognize it-for example, generator-owning firms are not
distinguishable from other firms when ranking electricity as
a constraint. Overall, firms do appear to discriminate
between constraints in a reasonable way. Their views can
provide a useful first step in the business-government
consultative process and help in prioritizing more specific
behavioral analysis and policy reforms. |
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