Enterprise Notes

Total factor productivity (TFP) is a crucial measure of efficiency and thus an important indicator for policymakers. Using micro level data from manufacturing industries in 80 developing countries, this note analyzes TFP performance at the firm-level. This note also estimates TFP values obtained at the industry level.

This note compares business environment perceptions using a unique panel data set of Afghani and Pakistani firms interviewed between 2007 and 2010. Survey results show that firm perceptions of the severity and priority of certain business environment elementshave changed over time.

This note highlights differences between informal businesses in two regions of Argentina—Buenos Aires and Chaco. Labor productivity is much higher in Buenos Aires than Chaco. This difference is partly due to higher sales and partly due to lower employment in firms in Buenos Aires. Relative to Buenos Aires, firms in the Chaco region are more likely to use machinery and vehicles in the production process and they also face larger seasonal fluctuations in sales.

A recent survey of unregistered or informal firms in Argentina and Peru shows that about 74 percent of the owners have a secondary or higher education. This note compares firms by the education level of the owners to assess how education affects the structure, conduct and performance of informal firms.

Recently collected data on informal or unregistered firms in Argentina and Peru show significant differences between male- and female-owned firms.

A commonly held view is that female-owned businesses suffer from many disadvantages compared to male-owned businesses. These disadvantages lead, in turn, to relatively lower levels of efficiency and smaller firm-size among female-owned businesses—the female-owned firms under performance hypothesis.

Recent empirical work finds that Research and Developmnet (R&D) expenditures, particularly from the business sector, tend to move in parallel with gross domestic product (GDP).

Using Enterprise Surveys data on 1,948 retail stores in India, this note highlights the key problems and challenges faced by retailers in 41 large cities of India. Inadequate power supply, access to finance, corruption, tax rates, and land-related problems are the most important obstacles to further growth.

From a sample of informal firms in Burkina Faso, Cameroon, Cape Verde, Côte d’Ivoire, Madagascar and Mauritius, this note compares male- and female-owned businesses. We test a number of hypotheses discussed in the literature and find the following results. First, the female-owned business under-performance hypothesis is confirmed, but only for firm-size.

Evidence from aggregate and micro-level data shows that globally engaged firms are better than firms serving only domestic markets in various performance measures. However, inefficiencies in the business environment can affect firms’ exposure to foreign markets. This note focuses on a particular aspect of business environment, namely, labor regulations, and analyzes their relationship with the decision to export.

From a sample of informal firms in Burkina Faso, Cameroon, Cape Verde, Côte d’Ivoire, Madagascar and Mauritius, this note compares male- and female-owned businesses. We test a number of hypotheses discussed in the literature and find the following results. First, the female-owned business under-performance hypothesis is confirmed, but only for firm-size.

A comparison of service and manufacturing firms in the informal or unregistered sector in Côte d’Ivoire, Madagascar and Mauritius shows that service firms are larger in terms of total sales and also generate more output per worker. They rely less on physical infrastructure and machines but more on human capital.

Some informal or unregistered businesses are established to take advantage of business opportunities (opportunity firms) while others are established because the owner cannot find a satisfactory job (necessity firms). Comparing opportunity vs. necessity informal firms in Africa, this note finds that opportunity firms are more efficient and larger.

This note uses the standardized Enterprise Survey datasets to systematically study the use of different financing sources for young firms. We find that in all countries, younger firms rely less on bank financing and more on informal financing.

Some informal or unregistered businesses are established to take advantage of business opportunities (opportunity firms) while others are established because the owner cannot find a satisfactory job (necessity firms). Comparing opportunity vs. necessity informal firms in Africa, this note finds that opportunity firms are more efficient and larger.

Trade credit is an important source of financing for firms in emerging markets. In this note, we identify the firm and market characteristics associated with the extension of supplier financing. We find that firms that operate in more competitive markets and that are less credit constrained are more likely to offer trade credit to their customers.

Data from the World Bank’s Financial Crisis Survey show that despite the magnitude of the credit crunch, the majority of firms considered the contraction in demand to be the most important effect of the crisis on their business. In June/July 2009, the corporate sector’s debt-to-sales ratio was moderate. The share of debt in foreign currency was about 26 percent on average, with almost one-fourth of firms reporting a foreign debt ratio higher than 60 percent.

In the Eastern Europe and Central Asia region, countries show great variations in their levels of openness and how intensively they trade. There is a strong and positive correlation in export and import market participation rates and a similar relationship between how intensively firms trade in each market.

This note argues that consumer behavior may be as important as firm behavior for the level of competition in consumer industries such as retailing. Using data on 1,948 retail stores in India, the note highlights three important findings. First, the number of nonworkers in the household, a proxy for the time costs of shopping, has a large effect on competition.

Existing studies show that crime is more rampant in the larger cities and that wealthier individuals are more often targeted. Using Enterprise Surveys data for 14 Latin American countries, we find that one- third of the firms surveyed suffer from one or more incident of crime annually, which is roughly similar to the percentage of households affected.

This note identifies the quality of democracy and the amount of natural resources as important determinants of Doing Business reforms. Reforms are more likely in countries with better democracy and less reliance on natural resources. Differences across countries in overall development as measured by income per capita; initial quality of business environment; and ethnic, linguistic, and religious fractionalization within a country have little to do with the proclivity to reform.

Does the regulation of entry cause informality in the manufacturing sector of developing countries? This note presents evidence from India that suggests that a policy reform that lifted barriers to entry lessened informality. This reduction in informality was accompanied by gains in average labor productivity in the informal sector.

In our highly globalized world, it is crucial for governments to monitor the flow of goods and services across their borders and to attract foreign investment. To be able to implement the most efficient trade policies, policy makers must understand the evolution of firms with foreign exposure.

This note uses unique data from enterprise surveys in three African countries to examine the characteristics of informal and formal microenterprises. Entrepreneurs in the informal sector have different motivations for starting a business from their formal sector counterparts, with about twice as many informal entrepreneurs citing lack of alternative employment opportunities as their main motivation.

Since late 2008, countries around the world have been affected by the global economic slowdown. The Financial Crisis Survey measures the effects of this crisis on 1,686 firms in six countries in Eastern Europe and Central Asia: Bulgaria, Hungary, Latvia, Lithuania, Romania, and Turkey. Survey data show that in these countries, the major effect of the crisis is a drop in demand. It is not a financial crisis - it is a demand crisis.

Rigid regulations may prevent labor markets from being efficient. We quantify, for 14 Latin American countries, the extent to which rigid labor regulations affect both the hiring and dismissal decisions of firms. Making regulations more flexible would lead to an average net increase of 2.1 percent of total employment.

The latest data of the Financial Crisis Survey show continued negative sales performance, on average, but the general rate of decline seems to have slowed. Permanent employment remained somewhat depressed, with no country having regained its pre-crisis employment level.