Greasing the wheels? The impact of regulations and corruption on firm entry
Axel Dreher,Martin Gassebner +1 more
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In this article, the authors investigate whether and to what extent the impact of regulations on entrepreneurship is dependent on corruption and show that corruption facilitates firm entry in highly regulated economies. But they do not investigate whether corruption reduces the negative impact on entrepreneurship.Abstract:
This paper investigates the question of whether corruption might ‘grease the wheels’ of an economy. We investigate whether and to what extent the impact of regulations on entrepreneurship is dependent on corruption. We first test whether regulations robustly deter firm entry into markets. Our results show that the existence of a larger number of procedures required to start a business, as well as larger minimum capital requirements are detrimental to entrepreneurship. Second, we test whether corruption reduces the negative impact of regulations on entrepreneurship in highly regulated economies. Our empirical analysis, covering a maximum of 43 countries over the 2003–2005 period, shows that corruption facilitates firm entry in highly regulated economies. For example, the ‘greasing’ effect of corruption kicks in at around 50 days required to start a new business. Our results thus provide support for the ‘grease the wheels’ hypothesis.read more
Citations
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Institutional factors, opportunity entrepreneurship and economic growth: Panel data evidence
TL;DR: In this paper, the authors explore the institutional factors that encourage opportunity entrepreneurship in order to achieve higher rates of economic growth and suggest that institutions may not have an automatic effect, as is typically assumed in growth models.
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Institutions, Entrepreneurship, and Economic Growth: What Do We Know and What Do We Still Need to Know?
TL;DR: The authors review the literature that links institutions, entrepreneurship, and economic growth outcomes, focusing in particular on empirical research, and argue that theories in management research, such as the resource-based view, transaction cost economics and strategic entrepreneurship theory, can fill some of the conceptual and theoretical gaps.
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Institutions and Entrepreneurship Quality
TL;DR: In this paper, the authors used a sample of 70 countries over the period of 2005-2015 to examine how formal and informal institutional dimensions (availability of debt and venture capital, regulatory business environment, entrepreneurial cognition and human capital, corruption, government size, government support) affect the quality and quantity of entrepreneurship between developed and developing countries.
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Does corruption ever help entrepreneurship
Nabamita Dutta,Russell S. Sobel +1 more
TL;DR: In this article, the authors examined a much larger set of countries and time periods to examine the impact of corruption on entrepreneurship and economic growth and found that corruption never improves entrepreneurship; it simply hurts less when business climates are not conducive to growth.
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Do Entry Regulations Deter Entrepreneurship and Job Creation? Evidence from Recent Reforms in Portugal
TL;DR: In this paper, the authors evaluate the consequences of a recent regulatory reform in Portugal, which substantially reduced the cost of firm entry, and find that the short-term consequences of the reform were as one would predict with a standard economic model of entrepreneurship.
References
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Book
The Theory of Economic Regulation
TL;DR: In this article, the authors argue that regulation is acquired by the industry and is designed and operated primarily for its benefit, and that the state has one basic resource which in pure principle is not shared with even the mightiest of its citizens.
Book
Political Order in Changing Societies
TL;DR: This now-classic examination of the development of viable political institutions in emerging nations is a major and enduring contribution to modern political analysis as mentioned in this paper, and its Foreword, Francis Fukuyama assesses Huntington's achievement, examining the context of the original publication as well as its lasting importance.
Journal ArticleDOI
What to do (and not to do) with time-series cross-section data
Nathaniel Beck,Jonathan N. Katz +1 more
TL;DR: The generalized least squares approach of Parks produces standard errors that lead to extreme overconfidence, often underestimating variability by 50% or more, and a new method is offered that is both easier to implement and produces accurate standard errors.
Posted Content
A sensitivity analysis of cross-country growth regressions
Robert A. Levine,David Renelt +1 more
TL;DR: In this article, the authors study whether the conclusions from existing studies are robust or fragile when small changes in the list of independent variables occur, and they find that although "policy"appears to be importantly related to growth, there is no strong independent relationship between growth and almost every existing policy indicator.
Posted Content
A sensitivity analysis of cross-country growth regressions
Robert A. Levine,David Renelt +1 more
TL;DR: The authors examined whether the conclusions from existing studies are robust or fragile to small changes in the conditioning information set and found a positive, robust correlation between growth and the share of investment in GDP and between investment share and the ratio of international trade to GDP.