Productivity and the Investment Climate: What Matters Most?

The authors explore the links between the investment climate and firm-level productivity and attempt to identify which dimensions of the investment climate matter most for productivity. Their analysis is based on data collected in a recent investment climate survey of garment and food processing firms in five countries in Eastern Europe and Central Asia. The authors use the first principal components of a series of indicators to summarize broad aspects of the investment climate and identify those most important in determining productivity. Their results indicate that competitive pressure is the most critical factor in the investment climate, accounting for more variation in firm-level productivity than infrastructure provision or issues related to government rent seeking and bureaucratic burden. This suggests that to improve productivity, increase output, and reduce poverty, policymakers should focus reform efforts on removing barriers to entry and creating open, highly competitive markets.

Bibliographic Details

Main Authors:	Bastos, Fabiano, Nasir, John
Language:	English en_US
Published:	World Bank, Washington, D.C. 2004-06
Subjects:	BARRIERS TO ENTRY, BRIBERY, BUREAUCRACY, BUSINESS CLIMATE, BUSINESS ENVIRONMENT, CAPACITY UTILIZATION, CENTRALLY PLANNED ECONOMIES, CLOSED ECONOMIES, COMMODITIES, COMPETITIVE MARKETS, COMPETITIVE PRESSURE, COMPETITIVENESS, CORRUPTION, CRIME, CUSTOMS, DIRECT INVESTMENT, DOMESTIC COMPETITION, DOMESTIC COMPETITORS, ECONOMIC GROWTH, ECONOMIC RESEARCH, ECONOMIC RESOURCES, ELASTICITIES, EMPIRICAL ANALYSIS, EXCHANGE RATE, EXCHANGE RATES, EXPORTS, FOREIGN COMPETITION, FOREIGN DIRECT INVESTMENT, FOREIGN INVESTMENT, FOREIGN INVESTORS, FOREIGN OWNERSHIP, FOREIGN TRADE, GDP, GLOBAL ECONOMY, GOOD INVESTMENT CLIMATE, GOVERNANCE ISSUES, GOVERNMENT REGULATIONS, INFLATION, INTEREST RATES, INTERNATIONAL COMPETITION, INVESTMENT CLIMATE, INVESTMENT EXPENDITURES, LABOR INPUTS, LABOR REGULATIONS, LIBERALIZATION EFFORTS, MARKET COMPETITION, MARKET POWER, MEASUREMENT ERROR, NET INFLOWS, OIL, OPEN ECONOMIES, POLICY ENVIRONMENT, POLICY REFORMS, POVERTY ALLEVIATION, PRICE TAKERS, PRIVATE SECTOR, PRODUCERS, PRODUCTION FUNCTION, PRODUCTIVE ASSETS, PRODUCTIVITY, PRODUCTIVITY GROWTH, PROPERTY RIGHTS, PUBLIC OFFICIALS, PUBLIC SERVICES, REAL EXCHANGE RATES, REGULATORY POLICY, REGULATORY REGIME, REMOVING BARRIERS, RENT SEEKING, TAX RATES, TELECOMMUNICATIONS, TOTAL FACTOR PRODUCTIVITY, TRADABLE GOODS, TRANSITION COUNTRIES, TRANSITION ECONOMIES, TRANSITION ECONOMY, VALUE OF OUTPUT, WAGE RATES, WORLD ECONOMY, WORLD MARKET, WORLD PRICES INVESTMENT ENVIRONMENT, INDUSTRIAL PRODUCTIVITY, GARMENT INDUSTRY, FOOD PROCESSING INDUSTRY, INFRASTRUCTURAL INVESTMENTS, GOVERNMENT SUBSIDIES, OPEN MARKET OPERATIONS,
Online Access:	http://documents.worldbank.org/curated/en/2004/06/4991083/productivity-investment-climate-matters-most https://hdl.handle.net/10986/14174
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