Survey of land and real estate transactions in the Russian Federation : statistical analysis of selected hypotheses

This paper analyzes land transactions between municipalities and private businesses based on official data and business surveys in 15 regions of the Russian Federation. Since the Russian Federation passed the new Land Code in 2001, land privatization has been officially encouraged by the federal government and in particular, land under previously privatized buildings was supposed to be privatized to the owner at a nominal price. The paper shows that many subnational authorities (which own or control the vast majority of land of interest to businesses) appear to use a combination of high statutory land buy-out prices and administrative barriers to deter land privatization and to offer"long-term leases"(which are not fully marketable) instead. On the other hand, regions that have established low buy-out prices and taken steps to remove unnecessary administrative barriers to land privatization appear to have higher rates of land ownership by businesses, and to face lower levels of corruption in the privatization process. The paper concludes that further reductions in the statutory prices for privatization of land under buildings and elimination of unnecessary administrative barriers should help to encourage further land privatization and the development of a competitive, secondary market in commercial land.Municipal Financial Management,Urban Housing,Common Property Resource Development,Municipal Housing and Land,Real Estate Development

Small businesses in south Africa : who outsources tax compliance work and why ?

The authors use firm-level survey data on 998 small and medium enterprises registered for tax in South Africa regarding tax compliance costs to investigate the use of outsourcing to complete tax compliance tasks. Overall, about 43 percent of the enterprises do all their tax compliance work in-house, 11 percent outsource all their tax compliance work, and the remaining 46 percent use a combination of both ("partial outsourcing"). The data display an inverted-U shape for outsourcing of tax compliance tasks: the smallest firms (those under R 300,000 turnover or well under US$50,000) tend not to outsource, due to a combination of relatively higher cost-burden and less complexity. Relatively larger firms (those with more than R 14 million turnover or about US$2 million) report that they have sufficient in-house capacity and therefore do not need to outsource. Those in the middle are most likely to outsource at least some of their tax compliance work, mostly because tax is a specialist field and they presumably lack sufficient capacity in-house. The survey data show that the costs of tax compliance are clearly the highest for those who engage in partial outsourcing, as it appears there is likely duplication of effort. Most such firms could reduce their tax compliance costs (and probably minimize the incidence of post-filing problems) by moving from partial to full outsourcing of all tax compliance work.Taxation&Subsidies,Emerging Markets,Debt Markets,E-Business,Tax Policy and Administration

Estimating the effects of corruption - implications for Bangladesh

Building on the pioneering work of Barro (1991) and Mauro (1995) to include the most recent years for which data are available (for Bangladesh in the 1990s), the authors investigate the relationships between corruption, and growth, and, between corruption and investment, both domestic and foreign, to see whether they have changed from earlier decades. Then they move away from Mauro's implicit assumption that the corruption index value for a relatively short period of time, can be used as a proxy for the long run, and further augment Mauro's model by including significant regional dummy variables, in an attempt to take account of various region-specific effects. The authors also analyze the sensitivity of corruption in the presence, and absence of various policy, geographic, and demographic variables that are widely used in empirical growth, and investment literature. The findings suggest that countries serious about improving governance, and reducing corruption, should redefine the role of government, overhaul the system of incentives, and strengthen domestic institutions, to make sure the necessary checks, and balances are in place. Such an approach to reform would help attract more investment - both domestic and foreign - and would accelerate economic growth, and poverty reduction.Governance Indicators,Economic Theory&Research,National Governance,Legal Products,Environmental Economics&Policies

Institutions in transition : reliability of rules and economic performance in former Socialist countries

Building reliable institutions that support a market system is widely believed to be critical to a successful economic transition. The authors present indicators on the predictability of the institutional framework across twenty transition economies -including indicators of the predictability of rules, political stability, the security of property rights, the reliability of the judiciary, and the lack of corruption. They then investigate whether those indicators can explain differences in economic performance. The results suggest that the predictability of the framework may indeed explain a large part of differences in foreign direct investment and in economic growth among transition economies. Political stability and secure property rights are particularly important to entrepreneurial confidence in the economy.Statistical&Mathematical Sciences,Economic Theory&Research,Economic Conditions and Volatility,Environmental Economics&Policies,International Terrorism&Counterterrorism,Governance Indicators,National Governance,Economic Theory&Research,Environmental Economics&Policies,Statistical&Mathematical Sciences

Credibility of rules and economic growth : evidence from a worldwide survey of the private sector

Economic theory and case study evidence have long suggested that institutional factors, such as well-defined property and contract rights, may be crucial in explaining differences in economic performance across countries. Much of the recent discussion about"governance"has, for example, focused on the role of corruption and its consequences for investment and growth. By comparison, the empirical literature relating institutional factors with growth has been relatively scarce and has mainly concentrated on crude proxies such as'political instability and macroeconomic volatility. The problem of most of these variables in that they inadequately capture the uncertainties that are relevant for entrepreneurs. The authors propose new measure of institutional uncertainty based on the subjunctive evaluations of entrepreneurs. They surveyed the private sector in a broad cross-section of countries. The survey was designed to capture institutional factors such as the predictability of rules, entrepreneurs'fears of policy surprises and reversal, their perception of safety and security of property, the reliability of the judiciary, and their problems with bureaucratic corruption. The authors construct and test a summary indicator of the"credibility of rules,"as well as its components in standard cross-country growth and investment regressions. The main findings: a) the overallindicator of credibility is significantly related with higher rates of investment and growth; b) the credibility indicator calculated for the subsample of small local companies is even more closely related to the growth performance; c) the subindicators"security of persons and property"and"predictability of rule-making"are most closely associated with growth; d) the indicators of"corruption,""perceived political instability,"and"predictability of judiciary enforcement"are most closely associated with investment; and e) preliminary results for an extended sample - including transition economies - indicate that institutional factors may also help to explaining difference in economic performance in these countries.Health Monitoring&Evaluation,Economic Theory&Research,Public Health Promotion,Fiscal&Monetary Policy,Environmental Economics&Policies,Governance Indicators,Economic Theory&Research,Achieving Shared Growth,Inequality,Health Monitoring&Evaluation

Institutional obstacles to doing business : region-by-region results from a worldwide survey of the private sector

Case studies and anecdotal evidence have suggested that uncertainty about policies, laws, and regulations has hampered development of the private sector in many developing countries. The authors present results from a new cross-country survey that provides comparable data on local investors'problem in dealing with the state. The survey was conducted in 69 countries and covers more than 3,600 entrepreneurs. The questionnaire asked 25 questions about investors'perceptions about such issues as the predictability of laws and policies, the reliability of the judiciary, corruption in bureaucracies, and security of property rights. It also asked about general obstacles to doing business and the quality of state-delivered services. The authors discuss their methodology and present many findings. Among them: a) In less developed countries the majority of entrepreneurs constantly fear policy surprises and unexpected changes in rules that can seriously affect their business. Entrepreneurs in Asia have the most trust in government announcements of policy changes and changes in rules; entrepreneurs in the Commonwealth of Independent States are the most cynical about new announcements; and half of businessmen surveyed in Latin America and Central and Eastern Europe do not believe government announcements. b) Entrepreneurs worldwide feel that the cost of doing business is substantially increased by theft and crime and in many developing countries the business community feels that authorities do not adequately guarantee their personal safety and do not reliably enforce their property rights. c) Unreliable judiciaries are perceived as major problems in many developing countries. This applies in particular to the Commonwealth of Independent States and to Latin American countries. d) Entrepreneurs in industrial countries perceived the greatest obstacles to doing business to be tax regulations and high taxes, labor regulations, safety or environmental regulations, financing, regulations for starting new business and operations, and general uncertainty about the costs of regulation. e) Entrepreneurs in South Asia and Southeast Asia ranked the top obstacles to doing business as high taxes and tax regulations, inadequate infrastructure, inflation, labor regulations, and regulations for starting new businesses and operations. f) In the Middle East and North Africa, entrepreneurs considered lack of infrastructure the chief obstacle to doing business, followed by corruption, high taxes and tax regulations, and financing. g) In Central and Eastern Europe, high taxes and tax regulations were the only regulation-related obstacle ranked high, followed by financing, corruption, and inflation. h) The worst obstacles in Latin America were considered to be corruption and inadequate infrastructure, followed by crime and theft, problems with finance, and high taxes and tax regulation. i) In Sub-Saharan Africa the biggest problems were corruption, tax regulations and high taxes, inadequate infrastructure, inflation, crime and theft, and financing.Environmental Economics&Policies,Decentralization,Public Health Promotion,Health Monitoring&Evaluation,Enterprise Development&Reform,National Governance,Environmental Economics&Policies,Health Monitoring&Evaluation,Private Participation in Infrastructure,Small Scale Enterprise

Governors and Governing Institutions: A Comparative Study of State-Business Relations in Russia's Regions

The paper uses the latest 2011 round of Business Environmentand Enterprise Performance Survey for the RussianFederation—for the first time designed to be representativeof Russian regions—to take a closer look at regional-levelfactors influencing the business environment in Russia and,more specifically, conditions that favor the emergence ofsymbiotic relations between regional authorities andregional businesses. Considering the argued significanceof informal rules, norms and agreements for the regionallevel business environment in Russia the paper uses proxyvariables such as tenure and origin of regional governorsto identify how these rules are being institutionalized. Thefindings reveal that, at least in case of Russia, juxtaposingthe state and business actors as separate and opposed toeach other may overstate the distinction between these twogroups of actors and understate the fact that many localitiesin Russia have witnessed the emergence of mutuallybeneficial state-business arrangements. Defining whetherthese arrangements are beneficial or harmful to regionaldevelopment is beyond the scope of this exploratory paper