business dynamics insights from the international business
TRANSCRIPT
Business Dynamics – Insights from the International Business Registers Survey
Christine Zhenwei Qiang Trang Tran
Investment Climate, Trade & Competitiveness Global Practice, World Bank Group
Outline
2
Business Environment at a Glance
Supporting the Collection and Use of Quality Business Data
Results on Business Dynamics
Outline
3
Business Environment at a Glance
Supporting the Collection and Use of Quality Business Data
Results on Business Dynamics
Business Environment at a Glance
4
Business Environment
Reform Agenda
Internationalization
Business Expansion & Diversification Business Operations
Entry & Formalization
5
Pillars of Business Environment
Support to Business Entry Reforms
6
4 Projects
2 Projects
3 Projects
5 Projects
3 Projects 26 Projects
Currently we are working on 100+ projects in over 90 countries, of which over 40 business entry reform projects are active.
WBG and CRF/ECRF Collaboration
7
Sharing good international practice and expertise
Collaboration on technical and policy assistance
Joint data and research agenda
• Partnering with business registries to analyze the impact of reforms on business dynamics.
• Leveraging WBG relationships with business registries in developing countries for CRF survey.
Outline
8
Business Environment at a Glance
Supporting the Collection and Use of Quality Business Data
Results on Business Dynamics
International Business Registers Survey
9
Coverage
• 2007-2015 • 40+ developed & developing countries each year
… Snapshots of
• The working of business registries around the world
• Firm entry and survival dynamics
• How firms entry is related to registration procedures
Business Dynamism Varies Substantially Across Economies
10
0 20 40 60 80Total entry density
Pakistan
Sri Lanka
Canada, federal
Austria
Spain, association
Ireland
Lithuania
Croatia
Macedonia
France
Switzerland
Finland
Romania
Serbia
Norway
Latvia
Sweden
Italy
United Kingdom
Slovenia
Botswana
Singapore
Australia
Malaysia
Denmark
Netherlands
Estonia
Luxembourg
Hong Kong
New Zealand
Isle of Man
Liechtenstein
Gibraltar
Total entry density is defined as number of new company registrations per 1000 inhabitants.Total entry density excludes top and bottom 1%.Included are countries that report at least one value for each period 2007-2008, 2009-2011, 2012-2015.
Total Entry Density2007-2015
And Over Time
11
02
04
06
08
0
Tota
l e
ntr
y d
en
sity
Gib
ralta
r
Isle
of M
an
Luxem
bou
rg
New
Zea
lan
d
Hon
g K
ong
Den
mark
Lie
chte
nst
ein
Neth
erla
nd
s
Ma
laysi
a
Sin
gap
ore
Est
on
ia
Bots
wan
a
Serb
ia
Ita
ly
Austr
alia
Sw
ede
n
Norw
ay
Rom
ania
United
Kin
gdo
m
Fin
land
Ma
cedo
nia
Fra
nce
Latv
ia
Slo
ven
ia
Sw
itze
rla
nd
Cro
atia
Ire
lan
d
Lith
ua
nia
Spa
in, a
ssocia
tion
Austr
ia
Can
ad
a, fe
dera
l
Sri L
anka
Pakis
tan
Total entry density is defined as number of new company registrations per 1000 inhabitants.Total entry density excludes top and bottom 1%.Included are countries that report at least one value for all three sub periods.
Total Entry Density
2007-2008 2009-2011
2012-2015
Large, consistent gaps between entry and exit rates indicates underestimation of business terminations in many countries
12
0 20 40 60
KosovoHong Kong
GibraltarNew Zealand
AlbaniaCook Islands
Sri LankaQatar
BotswanaSingapore
United KingdomMongoliaSlovenia
RussiaSerbia
AustraliaAzerbaijan
EstoniaMauritius
Canada, federalHungary
NetherlandsDenmarkColombiaGuernsey
IndiaMontenegro
IrelandAustria
GeorgiaIsle of Man
CroatiaSwitzerland
LatviaNorwayFranceJersey
LuxembourgItaly
PakistanRomaniaMalaysia
LiechtensteinSweden
MacedoniaBelgiumFinland
LithuaniaLesotho
IsraelGermanyMoldova
Spain, associationCzech Republic
Entry/exit rate is defined as number of new company registrations/terminations over the stock of all business
Entry rate Exit rate
Ease of registration is associated with higher entry
13
Business entry is higher where processing time is faster 1
1.5
22
.53
Tota
l e
ntr
y d
en
sity (
pe
r 1
00
0 in
h.)
0 5 10 15Average time to process application for company formation (in workdays)
Total entry density: exclude top and bottom 1%.Binned scatterplots: average entry by 1st-20th quantiles of processing time.
20th quantile:
Average entry density = 1.3
Average processing time = 13.2
Countries with Longest Processing Time in Sample
14
HRV2014
DNK2009
FIN2010FIN2011
FIN2013FIN2014
FIN2015
NOR2007
SWE2007
SWE2009SWE2010
SWE2011
SWE2012
HRV2014
DNK2009
FIN2010FIN2011 FIN2013 FIN2014 FIN2015MNG2015
NOR2007
SWE2007SWE2009
SWE2010
SWE2011SWE2012
01
23
45
Tota
l entr
y d
en
sity
(p
er
100
0 in
h.)
10 15 20 25Average time to process application for company formation (in workdays)
Sole traders Private LLCs
Ease of registration is associated with higher entry
15
Business entry is higher where fewer documents are required
11
.52
2.5
3
Tota
l entr
y d
en
sity
(p
er
100
0 in
h.)
0 5 10 15Total count of documents required to incorporate a new company
Total entry density: exclude top and bottom 1%.Binned scatterplots: average entry by number of documents.
Ease of registration is associated with higher entry
16
02
46
Tota
l entr
y d
ensity (
per
1000 inh.)
0 500 1000 1500Minimum Share of Capital (as % of GDP per capita)
Total entry density: exclude top and bottom 1%.Excludes Zambia.
01
23
4
Tota
l e
ntr
y d
en
sity (
pe
r 1
00
0 in
h.)
0 .02 .04 .06Incorporation fee (% of GDP per capita)
Total entry density: exclude top and bottom 1%.Excludes top 1% of inforporation fees
Business entry is higher where capital requirements and incorporation fees are lower
Ease of registration is associated with higher entry
17
Business entry is higher where it is possible to register online
0.5
11.5
22.5
Tota
l entr
y d
ensity (
per
1000 inh.)
Not possible to completely register online.Possible to completely register online.Total entry density excludes top and bottom 1%.p-value of mean differences test: .00102239
Interestingly, mandatory e-filing is associated with faster processing time, but lower entry rates
18
0.5
11.5
2
Ave
rage p
rocess
ing
tim
e (
days)
e-filing not mandatory e-filing mandatoryp-value of mean differences test: .16106393
05
10
15
20
Entr
y r
ate
(%
)
E-filing not mandatory. E-filing mandatory.Excludes countries where it is not possible to completely register online.Entry rate excludes top and bottom 1%.p-value of mean differences test: .62905265
Summary
19
We observe very different business entry dynamics across countries and over time but:
• Entry generally increases with ease of business registration, including time, documentary burden, the ability to use online system and cost.
There are trade-offs in using e-registers to reduce registration burdens.
Exits are not accurately captured, implying shortcomings in monitoring business operational status.
Outline
20
Business Environment at a Glance
Supporting the Collection and Use of Quality Business Data
Results on Business Dynamics
Reducing Cost of Establishing a Business Matters, But…
21
Business registries can also support entry through providing valuable market information to improve formalization benefits
Yet, the survey reveals that
• Post-registration data are not always utilized;
• At the same time, the quality of the information on businesses might fall short of providing relevant data for decision making: business information is not always up to date e.g. business termination is not reported systematically, financial information is not always collected.
Questions remain on how to balance the costs and benefits of efforts to improve information quality collected by business registries:
• Regular updates of business status;
• Annual submission of accounts information;
• Sharing information with other agencies & the public.
Pilots to Incentivize Collection/Use of Registration Data
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In Bangladesh:
• Low level of post-registration compliance (20%); • Experiment with mechanisms to incentivize firms to submit
financial statements; • Use information of newly registered firms to promote
business-to-business linkages and open new financing opportunities.
23
… for Evidence-Based Policy Making
Concluding Remarks
24
Ease of entry, including efficiency of business registries, matter for business entry.
Post-registration data on businesses are still not widely captured and utilized.
Promising agenda for collaboration: identify best practice and support developing countries for better collection & use of business registration data.
Thank You