Entrepreneurship and Economic
Development
Leora F. Klapper &
Juan Manuel Quesada Delgado
Development Economics Research Group
Finance and Private Sector Development
The World Bank
Why a dataset on entrepreneurship?
To answer the demand of Governments and
Policy Makers:
Diagnosis of private sector
Monitoring and Evaluation of policies
Study the impact of regulatory, political, and
macroeconomic institutional changes
To better understand what drives
entrepreneurs to transition from the informal
to the formal sector
How can greater formal sector participation /
corporate registration be encouraged
How?
Goal:
To gather comparable data at the international level
using a methodology that can be applied across
heterogeneous legal, economical and political
systems.
Questions:
What do we measure?
How do we measure it?
Where do we measure?
Sources of information
Motto
To define a lower
common denominator
What do we measure?:
Entrepreneurial Activity
The activities of an individual or a
group of individuals aimed at
initiating economic activities in the
formal sector under a legal form
of business.
How do we measure?
Unit: Business
Any economic unit of the formal sector
incorporated as a legal entity and
registered in a public registry, which is
capable, in its own right, of incurring
liabilities and of engaging in economic
activities and transactions with other
entities.
Where do we count?
New Economic Units
Informal Sector
Formal Sector
Self Employment
Civil Law
Sole Proprietorship
Micro Businesses
Common Law
Companies
Companies
New Businesses
Partnerships
Sole Proprietorship
Information source
The business Registries
Reasons:
Its the first step to enter the formal sector
They tend to be the source of information for other
government agencies
Challenges:
Differences in registration and annual filing requirements;
identification of exited firms; re-registrations; paper based
registries and decentralized registry systems.
Reforms that Affect Business Statistics: The Algerian Case
New sectoral requirements/ re-registrations
20000
18000
16000
14000
12000
10000
8000
6000
4000
2000
1995
1996
1997
1998
1999
2000
2002
2003
Survey Structure
Panel A: Total and new registrations recorded:
- Total firms
- New firms
- Year-end 2000-05
Panel B: Number of corporations, by sector and size:
- By sector: Manufacturing, Services, Financial,
Wholesale & Retail Trade
Panel C: The Role of Corporate Registries:
Panel A: Summary statistics, by region
19
20
10
29
Panel A: Summary statistics, by region
Average entry rate 2003-2005
Panel A: Summary statistics, by region
Average Business Density 2003-2005
49
Panel B: Summary statistics, by sector
Panel B: Summary statistics, by sector
Panel C: The Role of Corporate Registries
What information are firms required to register?
- Is registration compulsory?
- Incorporations/ closings/ re-registrations
- Is annual financial information compulsory?
How do firms register?
What information does the Registrar collect?
- Corporate registrations, Internet domain names, Patents
How is Registrar data distributed?
- Accessibility by creditors, suppliers, lenders and private vendors
(i.e. D&B)
What is the relationship with new and total registrations?
What is the relationship with the business environment?
Case Studies
Panel C: What information does the Registrar collect?
Panel C: What information are firms required to register?
Panel C: How do firms register?
Panel C: How is Registrar data distributed?
Panel C: What is the relationship with new and total registrations?
Panel C: What is the relationship with the business environment?
Panel C: EBR Country Cases
Evolution of Firm registration 1993-2005 (Guatemala, Sri Lanka and Jordan)
EBR Implementation
Stages of the EBR implementation / Evolution of firm registration (Guatemala)
EBR implementation
Active Modernization plan
Inactive Modernization plan
Relationship with the Business Environment
Scatter-plots / Bivariate tests
Multivariate tests
Scatter Plots
GDP per capita
GDP per capita
Cost of Starting a Business
Entry rate (percent)
20
Governance
Entry rate (percent)
20
15
15
10
10
0
0
20
40
Cost to start a business
60
-2
-1
0
1
Governance (Kraay indicators average)
b=-.087, p=0.00, R =0.17, obs=63
b=1.57, p=0.00, R2 =0.23, obs=81
Multivariate Test
Additional Information
IFC Entrepreneurship Data Base Web Page:
http://www.ifc.org/ifcext/sme.nsf/Content/Entrepreneurship+Databas
e
Data Base
Research paper: Entrepreneurship: New Data on
Business Creation and How to Promote It
Viewpoint: Entrepreneurship and firm
formation across countries
Contacts:
Leora Klapper: [email protected]
Juan Manuel Quesada: [email protected]
