TY  - JOUR
AU  - Klapper,Leora
AU  - Laeven,Luc
AU  - Rajan,Raghuram
TI  - Business Environment and Firm Entry: Evidence from International Data
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10380
PY  - 2004
Y2  - March 2004
UR  - http://www.nber.org/papers/w10380
L1  - http://www.nber.org/papers/w10380.pdf
N1  - Author contact info:
Leora F. Klapper
The World Bank
1818 H Street, NW
Washington, DC 20433
Tel: 202/473-8738
E-Mail: lklapper@worldbank.org

Luc Laeven
Deputy Division Chief
International Monetary Fund
700 19th Avenue, NW
Washington, DC 20431
Tel: 202/623-9020
Fax: 202/623-4740
E-Mail: Llaeven@imf.org

Raghuram Rajan
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-4437
Fax: 773/702-0458
E-Mail: raghuram.rajan@ChicagoBooth.edu
AB  - 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.
ER  -