NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Business Environment and Firm Entry: Evidence from International Data

Leora Klapper, Luc Laeven, Raghuram Rajan

NBER Working Paper No. 10380
Issued in March 2004
NBER Program(s):   CF

Using a comprehensive database of firms in Western and Eastern Europe, we study how the business environment in a country drives the creation of new firms. Our focus is on regulations governing entry. We find entry regulations hamper entry, especially in industries that naturally should have high entry. Also, value added per employee in naturally "high entry" industries grows more slowly in countries with onerous regulations on entry. Interestingly, regulatory entry barriers have no adverse effect on entry in corrupt countries, only in less corrupt ones. Taken together, the evidence suggests bureaucratic entry regulations are neither benign nor welfare improving. However, not all regulations inhibit entry. In particular, regulations that enhance the enforcement of intellectual property rights or those that lead to a better developed financial sector do lead to greater entry in industries that do more R&D or industries that need more external finance.

download in pdf format
   (503 K)

email paper

This paper is available as PDF (503 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w10380

Users who downloaded this paper also downloaded these:
Desai, Gompers, and Lerner w10165 Institutions, Capital Constraints and Entrepreneurial Firm Dynamics: Evidence from Europe
Kumar, Rajan, and Zingales w7208 What Determines Firm Size?
Almeida, Campello, and Weisbach w12773 Corporate Financial and Investment Policies when Future Financing is not Frictionless
Klapper, Amit, and Guillen Entrepreneurship and Firm Formation across Countries
Fan and White w9340 Personal Bankruptcy and the Level of Entrepreneurial Activity
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us