We know that developing countries need entrepreneurship — especially formal entrepreneurship — in order to drive growth, expand access to opportunity, and address youth unemployment. Yet only 4,000 to 5,000 new firms register each year in places like Belarus, Guatemala, and Tunisia. Can business environment reforms, as prescribed by Hernando de Soto and spotlighted by the World Bank’s Doing Business project, make the difference?
Searching the World Bank’s Entrepreneurship Database for business registry data, Leora Klapper and Douglas Randall analyze what business environment reforms mean in practice. The upshot: big reforms can boost private sector activity but token reforms do not. Their important research is summarized in the “Impact of Business Environment Reforms on New Firm Creation,” the latest release from CIPE’s Economic Reform Feature Service.
This article is excerpted from the forthcoming thought leader report on “Creating the Environment for Entrepreneurial Success.”
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