A good investment climate — an appropriate policy package of private property rights, sound rule of law and regulatory framework, macroeconomic stability, and access to financial and infrastructure services – is key to providing the environment for growth. Using the new Investment Climate Surveys from over 55 developing countries provides new opportunities to address critical policy questions. These are grouped into three main areas:
1. Impact of investment climate policies on firm growth and performance
How much do difference in policies account for variations in firms’growth, productivity, job creation, investment and innovation? Which are the policy areas that matter most? And what are the likely benefits of reforms and the implications for prioritization among policy areas? This comprises the bulk of the research efforts being undertaken. It covers four main sub-themes:
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entry regulations and competition;
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labor regulations and human capital constraints;
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technology policies;
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governance and rule of law.
Related topics such as access to finance, infrastructure as well as political economy issues overlap with the investment climate work and are discussed more fully on the webpages covering those issues.
2. The distributional impact of investment climate policies across different types of firms.
Of particular interest is how investment climate policies can differentially impact smaller firms. Information on micro and informal firms also allows for the analysis of constraints to joining the formal sector.
3. Evaluating more targeted government initiatives to support markets.
Examples include industrial parks, training initiatives and micro-credit programs.
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