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What Matters to African Firms? The Relevance of Perceptions Data

ACCESS TO CREDIT ACCESS TO FINANCE ACCOUNTING BINDING CONSTRAINT BINDING CONSTRAINTS BRIBE BRIBES BUSINESS CLIMATE BUSINESS CLIMATES BUSINESS ENVIRONMENT BUSINESS OPPORTUNITIES BUSINESS PLANS CALCULATIONS CHECKS CIVIL SOCIETY COLLATERAL COMPETITORS CONSULTATIVE PROCESS CONSUMER CORRUPTION COST OF FINANCE COUNTRY CHARACTERISTICS COUNTRY DUMMIES COUNTRY FIXED EFFECTS COUNTRY-LEVEL INDICATORS CREDIT CONSTRAINTS CREDIT MARKET CREDIT RATINGS CRIME CUSTOMS CLEARANCE CUSTOMS CLEARANCES DEVELOPING COUNTRY DISCRIMINATION DOMESTIC CREDIT EARNINGS ECONOMIC ANALYSIS ECONOMIC COOPERATION ECONOMIC DEVELOPMENT ECONOMIC GROWTH ENTERPRISE SURVEYS ENTREPRENEURS ETHNIC GROUPS EXCHANGE RATES EXPANSION EXPATRIATES EXPENDITURES EXPOSURE FINANCE ACCESS FINANCE CORPORATION FINANCE COST FINANCIAL ACCESS FINANCIAL DEPTH FINANCIAL MARKETS FINANCIAL STATEMENTS FIRM GROWTH FIRM PERFORMANCE FIRM SIZE FIXED INVESTMENT FOREIGN FIRMS GOVERNANCE INDICATOR GOVERNANCE INDICATORS GOVERNMENT EFFECTIVENESS GROWTH RATES HIGH INTEREST RATES IMPEDIMENTS TO BUSINESS INCOME INCOME GROUP INCOME GROUPS INCOME LEVEL INCOME LEVELS INCOME RANGE INDIVIDUAL FIRM INDIVIDUAL FIRMS INDUSTRIAL COUNTRY INSTITUTIONAL ENVIRONMENT INSTITUTIONAL INVESTOR INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL FINANCE INVESTING INVESTMENT CLIMATE INVESTMENT CLIMATES INVESTOR PROTECTION LARGE FIRMS LEVEL OF CONFIDENCE LEVEL OF EDUCATION LICENSING LOAN LOW INCOME LOW-INCOME LOW-INCOME COUNTRIES LOW-INCOME COUNTRY MACROECONOMIC MANAGEMENT MACROECONOMIC STABILITY MEASUREMENT ERROR MEASUREMENT ERRORS MEASURING GOVERNANCE MEDIUM ENTERPRISES MULTINATIONALS NEW BUSINESS OVERDRAFT OVERDRAFTS PER CAPITA INCOME PERSONAL VALUES POLITICAL INSTABILITY POOR GOVERNANCE POWER OUTAGES PRIVATE SECTOR DEVELOPMENT PROBABILITY PRODUCTIVITY REGULATORS REGULATORY CONSTRAINTS REGULATORY REFORMS RENTS REVERSE CAUSALITY SALES SALES GROWTH SERVICE DELIVERY SIZE OF FIRM SKILL SHORTAGES SKILLED WORKER SKILLED WORKERS SKILLS SHORTAGES SMALL BUSINESS SMALL FIRMS SMALLER FIRMS SME STATE CAPTURE SUB-SAHARAN AFRICA SUBJECTIVE DATA SUBJECTIVE RATINGS TAX TAX RATES TAX SYSTEM TAXATION TRADE UNIONS UNION VALUABLE VOLATILITY WAGES WORTH Microdata Set
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World Bank, Washington, DC
Africa
2012-06-08T17:11:15Z | 2012-06-08T17:11:15Z | 2007-12

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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