Pitfalls to avoid when measuring institutions: Is Doing Business damaging business?

Abstract

Over recent years, both governments and international aid organizations have been devoting large amounts of resources to "simplifying" the procedures for setting up and formalizing firms. Many of these actions have focused on reducing the initial costs of setting up the firm, disregarding the more important role of business registers as a source of reliable information for judges, government departments and, above all, other firms. This reliable information is essential for reducing transaction costs in future dealings with all sorts of economic agents, both public and private. The priorities of reform policies should therefore be thoroughly reviewed, stressing the value of the legal institutions rather than trivializing them as is often the case. JEL Classification: K22, K23, L59, O17.

Taxing the Informal Economy: The Current State of Knowledge and Agendas for Future Research

“…On the other hand, even extreme reductions in costs fail to encourage compliance among the majority of informal firms, owing to low benefits, limited ambitions, mistrust of governments, and the possibility of high recurrent costs of formalisation (Zinnes, 2009). This is consistent with arguments that the focus on registration costs emphasised historically by many donors is inadequate, as it neglects the need for proactive support for small firms (Altenburg & von Drachenfels, 2006;Arruñada, 2007).…”

Mandatory Accounting Disclosure by Small Private Companies

“…As we will see, however, mandatory publication of accounts is not only an issue of reducing the costs of operating businesses but also of easing businesses' access to credit. The discussion therefore fits in with the argument given by Arruñada (2007Arruñada ( , 2008) that simplification policies that narrowly focus on reducing the cost of institutional arrangements are counterproductive when they disregard the value of the services being provided (compare, however, Djankov et al, 2002, andDjankov, 2008).…”

Impact of E-Government on Transaction Cost and FDI Inflows: A Proposed Conceptual Framework

“…In order to clearly elaborate the expected relationship based on the theoretical stance, the propositions are formulated based on two arguments as indicated below. 2.2.1.1 Information Cost Argument Governments have increasingly been implementing e-government as a tool to reduce both informational and entry costs to foreign investors (Arrunada, 2007;Awan, 2008;Azubuike, 2006;Cho, 2003;Eggers, 2004aEggers, , 2004b. There may be two reasons why these countries are increasingly implementing e-government.…”