Administrative barriers to foreign investment in developing countries

Recent international experience has shown that excessively complex administrative procedures, required to establish, and operate a business, discourage inflows of foreign direct investment. The authors present a new database on the administrative costs faced by private investors in 32 developing countries. The database is much more comprehensive than the existing sources, as it contains not only information on general entry procedures, such as business and tax registration, but also captures regulation on land access, site development, import procedures, and inspections, Thedata include measures on the number of procedures, direct monetary costs, and time. The cost of administrative procedures vary significantly across countries. The most important barriers appear to be the delays associated with securing land access, and obtaining building permits, which in several countries, take more than two years. Countries that impose excessive administrative costs on entry, tend to be equally intrusive in firm operations, thereby weakening the argument that barriers to entry, are a substitute for the government's unwillingness, or inability to regulate enterprise operations. The level of administrative costs is positively correlated with corruption incidence, and exhibits a negative correlation with the quality of governance, degree of openness, and public wages. These correlations suggest that administrative reforms, need to be incorporated into the broader agenda for reforms, such as trade and financial liberalization, the fight against corruption, and public sector administration.Economic Theory&Research,Decentralization,Environmental Economics&Policies,Enterprise Development&Reform,International Terrorism&Counterterrorism,Economic Theory&Research,National Governance,Environmental Economics&Policies,International Terrorism&Counterterrorism,Health Monitoring&Evaluation

On"indirect"trade-related research and development spillovers

Influential literature argues that trade promotes knowledge flows and technology transmission between trading partners. This literature focuses on'direct'research and development (R&D) spillovers which are related to the levels of R&D produced by the trading partners. In this paper the authors argue that'indirect'trade-related R&D spillovers also take place between countries, even if they do not trade with each other. These'indirect'spillovers are associated with available rather than with produced levels of R&D. The empirical results suggest that these'indirect'trade-related spillovers are at least as important as the'direct'ones, and strengthen the view that trade does matter for the international transmission of R&D. The empirical results also suggest that, due to the existence of these'indirect'effects, bilateral trade patterns are relatively less important as determinants of the level of foreign R&D spillovers acquired through trade.Economic Theory&Research,Scientific Research&Science Parks,Agricultural Knowledge&Information Systems,Environmental Economics&Policies,Health Economics&Finance,Research and Development,Education and Digital Divide,Agricultural Knowledge&Information Systems,Scientific Research&Science Parks,Science Education

On 'Indirect' Trade-Related R&D Spillovers

An influential literature argues that trade promotes knowledge flows and technology transmission between trading partners. This literature focuses on ‘direct’ R&D spillovers which are related to the levels of R&D produced by the trading partners. In this paper we argue that ‘indirect’ trade-related R&D spillovers also take place between countries, even if they do not trade with each other. These ‘indirect’ spillovers are associated with available rather than with produced levels of R&D. Our empirical results suggest that these ‘indirect’ trade-related spillovers are at least as important as the ‘direct’ ones, and strengthen the view that trade does matter for the international transmission of R&D. They also suggest that, due to the existence of these ‘indirect’ effects, bilateral trade patterns are relatively less important as determinants of the level of foreign R&D spillovers acquired through trade.direct; indirect foreign R&D spillovers

Administrative Barriers To Foreign Investment In Developing Countries

this paper documents that it can take up to two or three years to establish a new business in many developing countries. The associated administrative costs are found to be positively correlated with estimates of the level of corruption, strength of governance, and the degree of protection of the econom