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The Small Entrepreneur in Fragile and Conflict-Affected Situations
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D I R E C T I O N S I N D E V E L O P M E N TPrivate Sector Development
The Small Entrepreneur in Fragile and Conflict-Affected Situations
John Speakman and Annoula Rysova
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The Small Entrepreneur in Fragile and Conflict-Affected Situationshttp://dx.doi.org/10.1596/978-1-4648-0018-4
© 2014 International Bank for Reconstruction and Development / The World Bank1818 H Street NW, Washington DC 20433Telephone: 202-473-1000; Internet: www.worldbank.org
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This work is a product of the staff of The World Bank with external contributions. The findings, interpreta-tions, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries.
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Attribution—Please cite the work as follows: Speakman, John and Annoula Rysova. 2014. The Small Entrepreneur in Fragile and Conflict-Affected Situations. Directions in Development. Washington, DC: World Bank. doi:10.1596/978-1-4648-0018-4. License: Creative Commons Attribution CC BY 3.0 IGO
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ISBN (paper): 978-1-4648-0018-4ISBN (electronic): DOI: 10.1596/978-1-4648-0018-4
Cover photo: Cover design: Debra Naylor, Naylor Design
Library of Congress Cataloging-in-Publication Data[[CIP data]]
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v The Small Entrepreneur in Fragile and Conflict-Affected Situationshttp://dx.doi.org/10.1596/978-1-4648-0018-4
Acknowledgments ixAbout the Editors xiAbbreviations xiii
Introduction 1Observations of FCS Firms, Sectors, and Business
Environments 1Implications of Findings and Recommendations 2Notes 4Reference 4
Chapter 1 Overview of the Entrepreneur’s Challenges in FCS 5Overview 5Notes 7Reference 7
Chapter 2 Observations of FCS Firms, Sectors, and Business Environments 9FCS Firm-Level Characteristics 9FCS Sector-Level Characteristics 15FCS General Business Environment 21Notes 32References 33
Chapter 3 Implications of Findings 35Program Design 35World Bank Group Interventions 47Note 49References 49
Chapter 4 Conclusions and Recommendations 51Conclusions 51Recommendations 51References 54
Contents
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Appendix A User’s Guide to Data 55Eastern Europe and Central Asia (ECA) Region 55Sub-Saharan Africa 56South Asia and East Asia and the Pacific 56Issues and Constraints to Data Analysis 56Reference 57
Appendix B Additional World Bank Studies and Field Observations 59References 63
Appendix C Innovation (Correlation Tables) 65
Appendix D Survey Sample Statistics, ECA Region 67
Appendix E Survey Sample Statistics, Sub-Saharan Africa Region 71
Appendix F Basic Quantitative Indicators, ECA Region 73
Appendix G STATA Output Underlying Graphical Presentation 77
Boxes2.1 Trading in Niger 172.2 Challenge of Rebuilding a Sector: Carpet Weaving
in Afghanistan 203.1 Afghanistan Road Map for Improving the Business Enabling
Environment 363.2 Public-Private Dialogue in Investment Climate Interventions 373.3 Bulldozer Initiative in Bosnia and Herzegovina 383.4 Reforming Rwanda’s Tea Sector 393.5 West Bank and Gaza Facility for New Market Development
and Gaza Back-to-Work Programs 403.6 Lebanon Innovation and SME Growth Project 413.7 ILO’s TREE Program 423.8 Public-Private Partnerships in Somalia 433.9 Supporting Predictability: Examples from World Bank Projects 443.10 EU’s Trade Preferences to Western Balkans 453.11 Guinea-Bissau Cashew Nuts 453.12 Capacity Building for Employment in the Construction Sector 473.13 Timor-Leste: A Reflection 494.1 How Much Growth Does It Take to Generate Jobs? 52B.1 Hayel Saeed Anam Group: First Commercial Group
in the Republic of Yemen 59B.2 Success Story of Entrepreneurship in Republic of South Sudan:
Importance of Business Competition 59
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B.3 Cisco and the Importance of Corporate Social Responsibility in the Palestinian Territories 61
B.4 Importance of Household Enterprises (HE) in Rwanda 61B.5 Egypt’s First Revolution: A Cold for Large Businesses and
Pneumonia for SMEs (Importance of Clear Strategy Reform) 62
Figures1.1 Universe of Private Enterprises in FCS Countries in Which
Size of Shadow Economy Reaches 50 Percent of GDP 62.1 Appetite for Risk and Willingness to Innovate in FCS, 2011 102.2 Enterprise Capacity Utilization Lower in FCS Countries than
in Non-FCS Countries 122.3 Willingness to Take up Risk Less in FCS than in
Non-FCS Countries 132.4 Introduction of New Products Hindered by Long Power
Outages in ECA FCS 142.5 FCS Enterprises Start Smaller, Grow More Slowly, or Shrink
over Time Compared to Non-FCS Enterprises 142.6 Annual Export Revenue of FCS Firms in Sub-Saharan Africa
Trade Primarily with Neighboring Countries 162.7 Conflicts in Sub-Saharan Africa Result in Sudden Drops in
Manufactures’ Exports 182.8 Mobile Telecommunications Thrive in Even the Most
Difficult FCS Environments 202.9 Unpredictability in Private Markets and Public Governance
Commonplace in FCS Countries 222.10 Rent-Seeking More Common in FCS Countries than
in Non-FCS Countries 232.11 Biggest Obstacle to Business Environment by Fragility 242.12 Access to Formal Financial Services Appear More Limited
in FCS Countries 252.13 Why FCS Firms Should Not Apply for Loans 272.14 Credit Transactions Less Common in FCS Countries than
in Non-FCS Countries in Sub-Saharan Africa 282.15 Longer or More Frequent Power/Water Shortages Common
in FCS Countries (% of Firms that Experienced Power/Water Shortage the Past Year) 28
2.16 Power Supply Lacking or Very Expensive in FCS Countries 292.17 Access to General Purpose Technology Worse in FCS than
in Non-FCS Countries 292.18 FCS Enterprises in SSA and ECA Face High Losses due
to Crime, Theft, and Disorder 302.19 FCS Firms in Four Countries Experience Disruptions
in Their Product Markets with Uneven Recoveries 30
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2.20 31BB.5.1 Firm Sales Experience and Expectation, Weighted by Sales Value 63
TablesR2.1 Probability to Innovate in FCS Lower than
in Non-FCS Countries 112.1 Total Formal Trade as a Percentage of GDP (“Openness”)
Notably Lower for FCS Countries than for Non-FCS Countries 15
2.2 Weak Regulatory Systems in FCS Countries 22R2.2 Temporary Disruptions in Sales in Sub-Saharan Africa
due to Fragility 264.1 Strategy Matrix for Analysis and Intervention in FCS Areas 52
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Acknowledgments
This knowledge report was prepared by John Speakman (Lead Private Sector Development Specialist) and Annoula Rysova (Consultant, Finance and Private Sector Development). However, without the contribution of several colleagues, the report would not have reached its final form. Therefore, we are grateful for the help of Nabila Assaf, Michael Engman, Andres Garcia, Alan Gelb, Peter Mousley, and Vijaya Ramachandran (Center for Global Development). We also express our appreciation to our World Bank colleagues, Alvaro Gonzales, Benjamin Herzberg, Arvind Jain, Bertine Kamphuis, Suhail Kassim, Austin Kilroy, Jana Malinska, Alan Moody, Khadija Shaikh, and Andrew Stone.
The report uses data from the European Bank for Reconstruction and Development-World Bank Business Environment and Enterprise Performance Surveys (BEEPS). We wish to acknowledge the enterprise managers who have given their time to the Enterprise Survey effort over years. Alicia Hetzner edited the volume.
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About the Editors
John Speakman is a Lead Private Sector Specialist in the World Bank’s Africa Region. He has worked on Fragile and Conflict States (FCS) since joining the Bank in 1995. Initially, John worked in the Republic of Yemen, later in Iraq, Afghanistan, and the Khyber Pashtoonkhwa Province of Pakistan. Presently, he works on a number of FCS in Africa. He is academically qualified in Law, Finance, and Economics.
Annoula Rysova is a Consultant in Finance and Private Sector Development at the World Bank, Washington, DC. Before joining the World Bank, Annoula worked in the financial sector in Greece and the United States. She holds an MPA/International Development from Harvard University and an MSc in Economics from the Athens University of Economics and Business. Currently she works on a number of projects in Sub-Saharan Africa, the Middle East, and South Asia.
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ADR Alternative Dispute Resolution
BEEPS Business Environment and Enterprise Performance Survey
CCSD Center on Conflict, Security and Development
CPIA Country Policy and Institutional Assessment
CSO civil society organization
DFID Department for International Development (UK)
ECA Eastern Europe and Central Asia
ES Enterprise Survey (World Bank)
EU European Union
FAO Food and Agriculture Organization of the United Nations
FATA Federally Administered Tribal Areas
FCS Fragile and Conflict States
FDI foreign direct investment
FNMD fund for new market development
FPD finance and private sector development
GDP gross domestic product
ha hectare
HE household enterprise
ICR implementation completion report
ICT information and communication technologies
IDA International Development Agency
IEG Independent Evaluation Group (World Bank)
ILO International Labour Organization (UN)
kg kilogram
M&E monitoring and evaluation
MCII Ministry of Commerce, Industry, and Investment (Republic of South Sudan)
MDTF Multi-Donor Trust Fund
NAEB National Agricultural Export Development Board (Rwanda)
Abbreviations
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xiv Abbreviations
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NBF Nepal Business Forum Phase I
NGO nongovernmental organization
OECD Organisation for Economic Co-operation and Development
OLS ordinary least square
PCNA post-crisis needs assessment
PPD public-private dialogue
PPP public-private partnership
PSD private sector development
SDG South Sudanese Pound
SEED Sustainable Employment and Economic Development (UKAID)
SEZ special economic zone
SME small and medium-size enterprise
TREE Training for Rural Economic Empowerment (ILO)
UN United Nations
UNDP United Nations Development Programme
VC venture capitalist
WBG World Bank Group, West Bank Gaza
WDR World Development Report
WDI World Development Indicators
WTO World Trade Organization
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1 The Small Entrepreneur in Fragile and Conflict-Affected Situationshttp://dx.doi.org/10.1596/978-1-4648-0018-4
Introduction
This report is part of a broader effort by the World Bank Group to understand the motives and challenges of small entrepreneurs in fragile and conflict-affected situations (FCS).1 The report’s key finding is that, compared to entrepreneurs elsewhere, entrepreneurs in FCS have different characteristics, face significantly different challenges, and thus may be subject to different incentives and have different motives. Therefore, it is recommended that both the current analytical approach and the operational strategy of the World Bank be informed by the findings that follow.
Observations of FCS Firms, Sectors, and Business Environments
FCS Firm CharacteristicsThe report summarizes findings of recent World Bank Enterprise Surveys (ES) conducted across Sub-Saharan Africa (SSA), Asia, and the Eastern Europe and Central Asia (ECA) Region as well as Doing Business indicators and additional World Bank Group studies and field observations. The report finds that the majority of entrepreneurs in FCS countries are small, informal, and concentrated in the trade/services sectors. According to the ES, and after controlling for the level of development (that is, GDP per capita),
1. The average FCS firm in SSA and the ECA Region2 produces less output than non-FCS firms.
2. The average FCS firm in ECA is by 20 percent less likely to innovate (that is, to introduce/upgrade new products and services) than its non-FCS counterpart.
3. FCS firms start smaller and grow significantly more slowly, or even shrink (in the number of employees) over time, compared to non-FCS firms in the Regions analyzed.
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2 Introduction
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FCS Sector CharacteristicsThe report also highlights the differences in sector characteristics between FCS and non-FCS business environments. Entrepreneurs in FCS are concentrated in the trade/services sector (and not manufacturing). However, the average FCS country is less open to formal trade across all the three Regions analyzed and trades mainly with its neighboring countries. Compared to the average non-FCS countries in the Region, the average FCS country also is subject to severe and immediate sales (exports) and production factor disruptions with uneven recov-ery. Despite these obstacles, new entrepreneurial opportunities can arise even in the most difficult FCS environments, such as mobile telephony industry that has been thriving in Afghanistan, Guinea-Bissau, Iraq, and Somalia.
FCS Business Environment CharacteristicsIn the majority of the FCS environments, to start a business is very difficult. The regulatory systems (particularly regarding construction permits, property registration, investors’ protection, and contracts enforcement) are very weak. Furthermore, the key trust-based relationships for public-private dialogue (PPD) and commerce may have broken down or even dissipated owing to heavy and widespread rent-seeking, severe political instability, inefficient courts, and lack of state-provided security. Moreover, the general business envi-ronment is suffering from political instability and very poor access to formal finance (Asia and Sub-Saharan Africa), as well as burdensome tax rates (ECA). In particular, formal financial services, such as the provision of loans or lines of credit, are very limited for FCS firms in ECA and SSA. Part of the reason is the high collateral requirements or complex loan application procedures. As a con-sequence, credit transactions are very limited. Last, serious basic infrastructure shortages (such as of power or water supply) elevate costs of doing business in FCS countries (especially in Kosovo, in which 97 percent of the respondent firms lack quality access to electricity). In addition, poor access to general pur-pose technology (that is, high-speed internet) makes business facilitation slower and even more costly.
Implications of Findings and Recommendations
Analytics
• Invest in data to be able to constantly evaluate FCS business environments. Enhance existing sources such as the ES in terms of data availability (make more frequent in all Regions), and data consistency (inflate all the relevant questionnaires with questions focused on the uniqueness of the FCS business environment and questions related to innovative activity). Improve local capacity in data analysis.
• Encourage information sharing and flows. Encourage (public-private) dialogues, ensure information sharing through internet wherever possible, and improve local capacity in knowledge management.
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Introduction 3
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Program DesignA typical private sector development (PSD) program in FCS countries would involve interventions aimed at encouraging investment and getting markets to work better and more competitively. Typical interventions would:
• Address public-private coordination failures. Launch effective PPDs at the overall economy level and at the sector level. Formal PPDs can help improve coordination and lead to encouragement of competitive industries, develop-ment corridors or economic zones, as well as local economic development. Furthermore, specific to FCS, PPDs can be particularly useful in building trust in such low-trust fragile environments and can avoid policy capture by estab-lished businesses with close political ties.
• Encourage innovation and entrepreneurship. Support business development services (professional training, high quality standards, or sound market con-nectivity); provide key factor markets such as access to finance; and target key groups including women, youth, and excombatants.
• Resolve market failures in the provision of public goods. Enhance regulatory sys-tems that support rather than obstruct markets, provide critical public goods (infrastructure, security), and ensure availability of serviced industrial land for purchase or lease.
• Provide a generally predictable business environment. Manage perceptions of political uncertainty, limit corruption, and ensure reliable judicial systems.
• Encourage demand and investment. Allow for trade preferences, encourage competitive industries, develop linkages with commodities and local sourcing of aid (construction, logistics, facilities management), and encourage and support remittance flows. In addition to the traditional foreign direct invest-ment (FDI), allow for measures that can support diaspora-based and collective investment.
Bank Group InterventionsAny FCS government is unlikely to have the capacity to manage and resource a program of this complexity and magnitude. Therefore, focus is required on:
• Ways that programs should be designed. Based on an assessment of past World Bank projects, the key success factors aligned with the Bank interventions are to (a) address the most severe growth constraints identified by businesses, (b) match the constraints with government priorities, and (c) target areas that have proven track records of the Bank’s success (based on IDA rating) (Leo, Ramachandran, and Thuotte 2012). In addition, review past projects to acquire additional sets of lessons in project design.
• Close coordination throughout the World Bank Group. Ensure small, on-the-ground presence; and deliver services through a joint strategy, leveraging one another’s comparative advantage (that is, make the Bank’s execution more flexible through partnering with IFC’s on-the-ground presence).
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• Design flexibility. To take into account the highly uneven recovery pattern and possible cycles of recurrent violence in FCS areas, at the beginning, start small; assess the response to the package; extend it in case of success; cut it otherwise.
• Rapid tactical intervention at moments of reduced violence and heightened political commitment to reform. At such moments, the Bank Group should be ready to immediately introduce a PSD response package. This package could include (a) a small matching grant component with a very flexible operational menu, (b) a challenge fund that can harness the delivery capabilities of nongovern-mental organizations (NGOs), and (c) immediate institutional support for regulatory reform and developing a coordinating capability. The package would be executed by a pre-procured firm.
Notes
1. This report is part of a series on finance and private sector development (PSD) in fragile and conflict-affected situations (FCS) prepared in a partnership of the World Bank Finance and Private Sector Development (FPD) Network, the International Finance Corporation, and the Center on Conflict, Security and Development (CCSD). The series comes under the auspices of the Bank’s Knowledge Project, “Private Sector Development (PSD) in FCS” (P125752), managed and facilitated by CCSD. The project’s objectives are, first, to examine the World Bank Group’s PSD practice in FCS in light of World Development Report 2011: Conflict, Security and Development. Second, the project will explore implications for future operations, analytics, and research with a focus on the process of inquiry, dialogue, and discussion to promote a community of practice around this nexus of FCS. The report’s primary aim is Bank Group learning; however, the report also is available for the benefit of development partners and clients. Other topics explored in the series include how firms cope with crime and violence, foreign direct investment (FDI), and investment climate reforms in FCS, as well as the potential contribution of financial institutions to resilience against violence and conflict.
2. Asia is not included in this finding because the surveys in these Regions either do not contain the same questions regarding innovation, or the number of firms that actually replied to the question was not enough to draw a general conclusion.
Reference
Leo, B., V. Ramachandran, and R. Thuotte. 2012. “Supporting Private Business Growth in African Fragile States.” Center for Global Development, Washington, DC. http://www.cgdev.org/files/1426061_file_Leo_Ramachandran_Thuotte_fragile_states _ FINAL.pdf.
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Overview of the Entrepreneur’s Challenges in FCS
Overview
This investigation explores enterprises’ willingness to invest in fragile and conflict-affected situations (FCS), and how this investment can help economic recovery and employment creation. There is a specific focus on enterprises that have limited mobility and choices, that is, those that do not have the opportunity to operate and invest in other countries.1 In most cases, enterprises in FCS have lived through violent conflicts. Typically, these enterprises are small, not part of established business elites, more often than not informal, and sector biased. These businesses can range from household enterprises to small and medium-size enterprises (SMEs). They are the vast majority of enterprises in FCS—they are the “99 percent.”
Not only do FCS enterprises tend to be small. They also tend to be informal and engaged in sectors that are trade and service oriented with high returns on investment (figure 1.1). In addition to being small and informal, FCS enterprises tend to be dominated by household enterprises, especially in SSA. The average size of the shadow economy relative to gross domestic product (GDP) in the FCS states included in our analysis is 46 percent, with some over 60 percent.2 This size can be contrasted with the non-FCS states included in our analysis whose shadow economies relative to GDP average 36 percent.3 What also is typi-cal for the informal (and, to a lesser degree, the formal) FCS enterprises are the kinds of businesses. There are many trading/service enterprises, and any large manufacturing tends to be agribusiness related.4 In most FCS, the kind of insti-tutional framework that would allow for large-scale, job-intensive manufacturing simply does not exist.
These entrepreneurs face very specific challenges that are different and more extreme than challenges in non-FCS countries. To determine these challenges, the on-the-ground observations of finance and private sector devel-opment (FPD) experts working in FCS were collected.5 These observations include comments on the types of enterprises that are found, the sectors in
C H A P T E R 1
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6 Overview of the Entrepreneur’s Challenges in FCS
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which they are engaged, the challenges that they face, and the opportunities from which they can benefit. The data (appendix A, User’s Guide to Data) and evidence from the projects that support these more anecdotal observations are presented in our analysis.6
What can then be done by policymakers with the support of donors to help? The implications of these findings are reviewed using three lenses: (a) how can countries develop effective private sector development programs? (b) under cur-rent operating guidelines, how can the Bank Group best support private sector development? and (c) are there opportunities to improve operational processes and collaboration among the agencies across the Bank Group? A menu of typical program responses that could help FCS countries is discussed.
F inally, a consideration of what these challenges means for the overall recovery prospects of FCS is discussed. It is clear that generation of good jobs through the private sector is a key element of any recovery strategy. It is less clear that these jobs can be generated at the pace necessary. Therefore, it often is necessary to dovetail the private sector strategy with additional measures such as a public works program and agricultural revitalization.
Section II explores (a) the key characteristics of the FCS firms; (b) the FCS sector characteristics; and (c) the contrast between the FCS and non-FCS general business environment. Section III focuses on the findings of the analysis and their implications for program design and WBG interventions. Section IV draws concludes and makes recommendations.
100
80
20
0
20
98 100
Large Medium Small Micro
Share of formal firms
Share of informal firms
Manufacturing Retail/services
Perc
ent
Figure 1.1 Universe of Private Enterprises in FCS Countries in Which Size of Shadow Economy Reaches 50 Percent of GDP
Source: Data from Schneider 2007.
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Notes
1. A parallel investigation looks at investors who have choices—typically, the foreign investors.
2. Authors’ calculations based on Schneider 2007. Schneider defines a shadow economy as that which that “includes all market-based legal production of goods and services that are deliberately concealed from public authorities for the following reasons: (a) to avoid payment of income, value added or other taxes, (b) to avoid payment of social security contributions, (c) to avoid having to meet certain legal labor market standards, such as minimum wages, maximum working hours, safety standards, etc., and (d) to avoid complying with certain administrative procedures, such as completing statistical questionnaires or other forms.” Schneider excludes the informal household economies from his calculation and does not focus on tax evasion or tax compliance.
3. According to Schneider, for OECD countries, the average size of the shadow economy relative to GDP is 15 percent.
4. According to the World Development Indicators (WDI) 2012, the average share of manufacturing in GDP of FCS states is 12 percent, whereas for the non-FCS states, the share reaches almost 17 percent.
5. As a knowledge product, surveys were conducted informally, and FCS practitioners (approximately 40 staff) in the FPD Network reported their core observations regard-ing FCS.
6. As with most areas of FCS, data describing initial conditions are hard to come by. It is only after some time that a reliable data set emerges. The main data sources are the World Bank’s Enterprise Surveys (appendix A).
Reference
Schneider, F. 2007. “Shadow Economies and Corruption All over the World: New Estimates for 145 Countries.” Economics e-journal 2007–9. http://www.economics-ejournal.org/.
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Observations of FCS Firms, Sectors, and Business Environments
Through a consultative process with World Bank Finance and Private Sector Development (FPD) experts engaged in FCS, a number of common themes emerged. These features exist in most FCS countries to varying degrees depend-ing on endowments, demographics, and governance. In all cases, there is some degree of resilience of entrepreneurship in FCS environments, and observations in this regard conclude this section. These observations have been tested primar-ily by reviewing the World Bank’s Enterprise Survey for three Regions: Sub-Saharan Africa, Europe and Central Asia (ECA), and Asia (see appendix A for guide to data).1 Consequently, unless stated otherwise, the primary sources of data presented in this report are the World Bank’s Enterprise Surveys, which compare FCS with non-FCS countries within each of these three Regions.
FCS Firm-Level Characteristics
Entrepreneurship itself—enterprises’ appetite for risk and willingness to innovate—often is suppressed (figure 2.1). An average FCS firm in the ECA Region is 20 percent less likely to innovate, either by introducing new products or by upgrading existing product lines (regression table 2.1), than an average non-FCS firm in the same Region. The appetite for taking risk to expand opera-tions is suppressed in more fragile countries (figure 2.1a). However, once FCS firms decide to spend on new equipment, they tend to spend, on average, slightly more as a proportion of their sales compared to firms in less fragile countries (figure 2.1b).
Operating in an FCS country of the ECA Region results in an average of 21 percent less innovative activity than operating in a non-FCS ECA country.
Furthermore, the production capacity of the firms operating in the FCS coun-tries of Asia, the ECA Region, and Sub-Saharan Africa (SSA) is slightly more underutilized that those of non-FCS countries. In other words, firms operating in FCS countries seem to produce, on average, less of their potential output compared to non-FCS firms (figure 2.2). Therefore, not surprisingly, there is less
C H A P T E R 2
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investment in production capacity and innovation in FCS countries than in non-FCS countries (figure 2.3).
Moreover, FCS countries evidence very low levels of information and com-munication technologies (ICT) penetration, notably high-speed Internet (subsec-tion C), and poor access to basic production inputs such as electricity. The lack of new technologies and poor access to electric power that would enhance pro-ductivity suppresses the willingness to innovate (figure 2.4).
FCS enterprises tend to be small. The average size (in number of full-time permanent employees) of an enterprise in an FCS country is half the average size
[[AU: Was there footnote here? Please check.]]
Figure 2.1 Appetite for Risk and Willingness to Innovate in FCS, 2011
Source: World Bank Enterprise Surveys 2009–11, http://datacatalog.worldbank.org/datacatalog-offline.aspx.Note: CPIA (Country Policy and Institutional Assessment) = diagnostic tool that focuses on the key elements that are within the country’s control. CPIA measures the extent to which a country’s policy and institutional framework supports sustainable growth and poverty reduction, and consequently the effective use of development assistance. http://web.worldbank.org / WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,contentMDK:21378540~menuPK:2626968~pagePK:51236175~piPK:437394~theSitePK:73154,00.html.
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Regression Table 2.1 Probability to Innovate in FCS Lower than in Non-FCS Countries
Clustered at country levelDependent variable (= 1 if “yes”; = 0 if otherwise)
(1)Introduced
new products
(2)Upgraded existing
product line
(3)Introduced new
products(marginal effects)
(4)Upgraded existing
product line(marginal effects)
Being fragile (d) −0.5324***(0.089)
−0.5131***(0.165)
−0.2073***(0.033)
−0.1868***(0.062)
Industry (c) −0.0046(0.004)
−0.0015(0.002)
−0.0018(0.099)
−0.0005(0.006)
Country (c) −0.0123(0.011)
0.0014(0.009)
−0.0049(0.004)
0.0005(0.003)
Micro-size (d) 0.0846(0.115)
−0.1463(0.148)
0.0338(0.046)
−0.0528(0.055)
Having more than 50% domestic ownership (d)
−0.1505 (0.133)
(0.107)0.1241
−0.0599(0.053)
0.0445(0.038)
Size of locality – city (250,000–1mil population) (d)
−0.2666**(0.128)
−0.1834(0.203)
−0.1052**(0.049)
−0.0658(0.076)
Total annual sales (ln) −0.3075***(0.012)
−0.0238**(0.015)
−0.0123***(0.005)
−0.0111**(0.005)
Having spent on R&D (d) 1.0931***(0.129)
1.1427***(0.170)
0.3964***(0.035)
0.3002***(0.022)
Having received government subsidy (d) 0.12866(0.2198)
0.1051(0.233)
0.0513(0.087)
0.0358(0.076)
Using own website to communicate with clients/suppliers (d)
0.4002***(0.096)
0.2336*(0.133)
0.1586***(0.038)
0.0799*(0.046)
Having paid for security (d) 0.2445***(0.066)
0.1894***(0.064)
0.0972***(0.026)
0.0662***(0.0206)
Dispose checking/savings account (d) 0.1866**(0.082)
0.2984*(0.182)
0.0737**(0.032)
0.1101*(0.069)
Dispose line of credit/loan (d) 0.1624(0.123)
0.0835(0.070)
0.0647(0.049)
0.0290(0.024)
Dispose internationally recognized quality certification (d)
0.0065(0.078)
0.0543(0.115)
0.0026(0.031)
0.0188(0.039)
Compulsory to have certification to produce/sell (d)
0.0955(0.070)
0.1367*(0.077)
0.0380(0.028)
0.0476*(0.027)
% of senior management’s time spent on gov. regulations
−0.0012(0.0017)
−0.0017(0.004)
−0.0005(0.001)
−0.0006(0.001)
Years of experience in the sector of Top Manager
0.0015(0.005)
0.0020(0.006)
0.0006(0.002)
0.0007(0.002)
table continues next page
of an enterprise in a non-FCS country of SSA or the ECA Region. Even more dramatically, in the ECA Region, the average size of an FCS enterprise shrinks over time (figure 2.5). Therefore, FCS enterprises tend to be small, either by choice or as a result of the main characteristics of the usual FCS business environ-ment. It is characterized by poor access to finance and infrastructure; and direct or indirect government-imposed barriers in the form of corruption, weak security, and/or policy biases toward large and politically connected firms (subsection C).
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Regression Table 2.1 Probability to Innovate in FCS Lower than in Non-FCS Countries (continued)
Clustered at country levelDependent variable (= 1 if “yes”; = 0 if otherwise)
(1)Introduced
new products
(2)Upgraded existing
product line
(3)Introduced new
products(marginal effects)
(4)Upgraded existing
product line(marginal effects)
Constant 0.9613*(0.547)
0.3227(0.556)
Pseudo R-squared 0.1709 0.1317Number of observations 3,321 3,301 3,321 3,301
Source: World Bank Enterprise Surveys 2009–11, http://datacatalog.worldbank.org/datacatalog-offline.aspx.Note: 1. Standard errors in parentheses. 2. The regression table outlines results of two probit regressions based on the WB’s Enterprise Surveys for the ECA Region (BEEPS). (A probit is a type of regression estimation with a binary outcome.) The svyset command was used in STATA to ensure that standard errors are calculated correctly. The dependent variable for models (1) and (3) is a binary variable equal to 1 if the establishment (explained farther down) introduced new products in the last three years. The dependent variable for models (2) and (4) is a binary variable equal to 1 if the establishment upgraded an existing line of products. The explanatory variables are sociodemographic characteristics of the establishments (country, industry, size, size of location, ownership, experience of top manager), economic indicators (total annual sales, government subsidy, security costs), indicators of innovative activity (expenditure on R&D), infrastructure indicators (access to finance, access to ICT), and regulatory indicators (time spent on dealing with regulations, compulsory certificates, quality certifications). For models (3) and (4), only marginal effects are shown. To control for possible income differences, the average gross domestic product (GDP) per capita (in 2000 constant US$ prices, per World Development Indicators 2012) of the group of fragile states included in the analysis (that is, US$1,523) is similar to the average GDP per capita of the group of non-fragile states included in the analysis (that is, US$1,505).Standard errors in parentheses: *** p<<0.01, ** p<<0.05, * p<<0.1.
Figure 2.2 Enterprise Capacity Utilization Lower in FCS Countries than in Non-FCS CountriesPercent
Source: World Bank Enterprise Surveys 2009–11, http://datacatalog.worldbank.org/datacatalog-offline.aspx.Note: Capacity utilization is defined as the ratio of output produced to maximum output. Results controlled for GDP per capita levels; p-value (ECA) = 0.558; p-value (SS Africa) = 0.947; p-value (Asia) = 0.001 (appendix G).
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Figure 2.3 Willingness to Take up Risk Less in FCS than in Non-FCS Countries
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a. Comparison of firms’ purchases of fixed assets in FCS and non-FCS countries
Asia
Source: World Bank Enterprise Surveys 2009–11, http://datacatalog.worldbank.org/datacatalog-offline.aspx.Note: Results controlled for GDP per capita levels, p-value (ECA) = 0.176, p-value (SS Africa) = 0.282, p-value (Asia) = 0.755 (appendix G).
Source: World Bank Enterprise Surveys 2009–11, http://datacatalog.worldbank.org/datacatalog-offline.aspx.Note: Results controlled for GDP per capita levels (appendix G). p-value (new products) = 0.041, p-value (R&D) = 0.404, p-value (upgrade) = 0.275 (appendix G).
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Figure 2.4 Introduction of New Products Hindered by Long Power Outages in ECA FCS
Source: World Bank Enterprise Surveys 2009–11, http://datacatalog.worldbank.org/datacatalog-offline.aspx.Note: Other Regions are not included in figure 2.4 due to the lack of specific questions on innovative activity in their questionnaires. Y-axis represents the correlation coefficient based on a correlation table (appendix C). Graph depicts top four aspects significantly (at 10% significance level) correlated with introduction of new products.
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Figure 2.5 FCS Enterprises Start Smaller, Grow More Slowly, or Shrink over Time Compared to Non-FCS Enterprises
Source: World Bank Enterprise Surveys 2009–11, http://datacatalog.worldbank.org/datacatalog-offline.aspx.Note: Growth in employment = (no. of current employees – no. of employees at start-up)/firm age. Results controlled for GDP per capita levels. p-value (ECA) = 0.178, p-value (SS Africa) = 0.153, p-value (Asia) = 0.465 (appendix G).
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FCS enterprises tend to be informal. Work done as part of the Post-Crisis Needs Assessment (PCNA) for Federally Administered Tribal Areas (FATA) and crisis-affected areas of Khyber Pashtunkhwa (12 million people) found that only 1 firm with more than 200 employees was formally registered. All of the other firms (especially smaller ones) were informal. Khyber Pashtunkhwa is an extreme case because no large urban areas were included in the area under investigation. Nevertheless, the story of a few large and medium-size registered firms and many very small unregistered firms is repeated across almost all FCS areas.
FCS Sector-Level Characteristics
FCS enterprises specialize primarily in regional retail and services, rather than in manufacturing. In most FCS, the kind of institutional framework that would enable large-scale, job-intensive manufacturing simply does not exist. Any large manufacturing tends to be agribusiness related. Indeed, one often finds derelict factories that are the direct results of misguided industrial policies of prior years. According to the World Development Indicators (WDI) 2012, the average share of manufacturing in GDP (including commodities) is 17 percent for non-FCS countries, compared to 12 percent for FCS countries. The extreme contrasts are Mauritius with almost 21 percent compared to Angola with 5 percent in Sub-Saharan Africa; and Belarus with over 33 percent compared to Georgia with 11 percent in ECA.2
In addition, compared to non-FCS countries, FCS countries overall remain less open to international trade. In other words, the average net exports share of GDP is significantly smaller for FCS countries, compared to non-FCS countries (table 2.1), and formal trade is facilitated primarily among neighbors (figure 2.6).
Table 2.1 Total Formal Trade as a Percentage of GDP (“Openness”) Notably Lower for FCS Countries than for Non-FCS CountriesPercent
Year Region
Openness* (2005–09)
Current prices Constant prices
Fragile Non-fragile Fragile Non-fragile
2005 Sub-Saharan Africa 64 79 65 83ECA 99 105 93 102
2006 Sub-Saharan Africa 61 78 63 82ECA 105 111 103 109
2007 Sub-Saharan Africa 69 78 61 84ECA 106 112 108 114
2008 Sub-Saharan Africa 72 78 61 84ECA 100 112 99 115
2009 Sub-Saharan Africa 64 74 59 83ECA 75 97 96 100
Source: Heston, Summers, and Aten 2011, Penn World Table.*Openness = Total trade as % of GDP, i.e. Openness = (Exports+Imports)/real GDP per capita; for constant prices at 2005; simple average.
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Thus, for international markets to function in FCS, trade relationships with neighbors play an important role (box 2.1). However, since conflicts or violent events often cause relationships with neighbors to deteriorate, FCS countries often reach the point at which trading becomes difficult and international mar-kets disappear (figure 2.7).3
The following sector motivations can be identified for FCS entrepreneurs:
• The opportunity to make high returns on investment through trading and provision of needed services. For example, working in a low-investment, high-return sector, telecommunications providers have succeeded in even the most difficult environments (figure 2.8). According to the Enterprise Surveys, 93 percent of FCS entrepreneurs in Sub-Saharan Africa use mainly mobile phones for their operations, compared to only 12 percent of the non-FCS entrepreneurs in the Region. In addition, entrepreneurs often emerge to take advantage of new opportunities (boxes B.1 and B.2, examples of Republic of South Sudan and the Republic of Yemen). Last, trading, easily transportable extractive industries, and basic food/agroindustry (such as soft drink manu-factures) are typical sectors that thrive. Corporate social responsibility invest-ments, although rarely significant, also can help. For example, Cisco’s investments in West Bank and Gaza began as part of its corporate social responsibility activities, but evolved on a low-key basis to a self-sustaining
Figure 2.6 Annual Export Revenue of FCS Firms in Sub-Saharan Africa Trade Primarily with Neighboring CountriesPercent
Source: World Bank Enterprise Surveys 2009–11, http://datacatalog.worldbank.org/datacatalog-offline.aspx.Note: Results controlled for GDP per capita levels (appendix G). p-value (neighbors) = 0.237, p-value (developed) = 0.129, p-value (other) = 0.217 (appendix G).
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Box 2.1 Trading in Niger
Maradi is the trading and agricultural hub of Niger’s Hausa region. This large Sahelian country is one of the poorest in the world, and Maradi is home to a large malnourished population. Maradi also is a major livestock center and hosts 1 of the 4 abattoirs in the country. Breeding in Maradi generates 20 percent of the wealth of the local population.
Hassane Bola is a butcher who operates on the outskirts of Maradi. His business is twofold. Primarily, he sells meat, offal, and hides to local consumers and businesses. Occasionally, he also sells live animals to a nearby border market. These animals then make their way to Nigeria, which does not import cut meat from Niger. Hassane is justifiably proud of the quality of his meat. “Our [Niger’s] meat is famous in the region,” he says. “Everyone who tastes it says it is excellent.” Hassane, who operates a midsize business by Nigerian standards and employs two other men, is considered a reasonably successful butcher. “In a good month, I earn enough to support my wife and daughter,” he says. Zeinab is his only daughter, and he is proud of her: she goes to school and can read. In a country in which the value of meat often is measured in bags of cereal grains, Hassane says, “I am not rich but, compared to my friends, fate has been kind to me. We have enough millet to eat.”
Hassane is a member of a butchers’ association that works with Maradi’s abattoir. The association recently submitted a petition to the government requesting support for transporting their cattle across the border to Nigeria. “Right now, it takes so long, and the animals get tired. We use carts when we can, but the roads are not paved. Sometimes the authorities at the border also create problems,” explains Hassane. What is the solution? “Better roads, less red tape at the border. A nicer abattoir will also help convince Nigeria to buy our delicious cut meat. If we have proper veterinary services, our animals will be fatter and fall sick less often.”
Do local conflict and violence affect his business? By good fortune, not yet. “We are peace-loving people,” Hassane says, indicating his fellow butchers. “We ignore all the fighting that goes on. But one never knows when the tide will turn.” This uncertainty does not make him lose focus on what really matters to him: his livelihood. “My animals are my life. All I ask is a fair chance to keep my business running.”
Source: Author interview.
mainstream business (box 2.2). NGOs such as Fair Trade or Peace Dividend Trust support market connections.
• The vast majority of entrepreneurs stay in business because of a lack of alter-natives. Business people often have no choice. At the household enterprise level, enterprises have little capital at risk and, at the same time, have kept their know-how, which easily can be re-established (box B.4 on Rwanda). Thus, there is simply no other way to earn a living. These circumstances often are reinforced by tradition—in which a particular tribe or caste has engaged in a particular trade for many generations (common in many agricultural value chains). In several war-affected countries, the role of household survival imperatives,
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Figure 2.7 Conflicts in Sub-Saharan Africa Result in Sudden Drops in Manufactures’ Exports
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Source: World Development Indicators, 1990–2010, World Bank.Note: Blue = left-hand side axis; Orange = right-hand side axis.
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Figure 2.7 Conflicts in Sub-Saharan Africa Result in Sudden Drops in Manufactures’ Exports (continued)
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Figure 2.8 Mobile Telecommunications Thrive in Even the Most Difficult FCS Environments
Source: ITU Development Index.
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Box 2.2 Challenge of Rebuilding a Sector: Carpet Weaving in Afghanistan
The Afghan name is synonymous with hand-woven carpets. The tradition of carpet weaving dates back millennia. It is in part a function of the country’s location on one of the main “Silk Road” routes from China to the West (demand side). The tradition also is due to agricultural conditions well suited to the production of good-quality animal fibers and unique dyes from the orchard industry (supply side). At its peak, this industry employed as many as 6 million people. The carpets typically are woven at home, and 1 carpet trader could have as many as 10,000 “part-time” household-level suppliers.
Afghanistan’s sustained fragility and many events over many decades have severely disrupted its connection with markets for inputs and supplies. The result has been that some Afghan manufacturers have relocated to Pakistan, and some Pakistan entrepreneurs have established “Afghan” manufacturing businesses in Pakistan. This relocation has led to a breakdown in the Afghan brand. There are now three types of carpets on the market: Afghan carpets manufactured in Afghanistan (with Afghan and non-Afghan fibers), Afghan carpets manufactured in Pakistan using Afghan-sourced fibers, and Afghan carpets manufactured in Pakistan (and the Islamic Republic of) using non-Afghan fibers. The Afghan carpets manufactured in Afghanistan often are traded by Pakistanis. To add “salt to the wound,” in Afghanistan itself, less expensive Iranian machine-made carpets are displacing hand-woven carpets. Therefore, it is estimated that today only 1 million Afghans work in the carpet-weaving industry.
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Not surprisingly, within Afghanistan, there have been strong calls to reestablish the Afghan brand and thereby retain the significant value added being lost ($200–300 million per annum). However, these are not easy tasks. Key aspects of the technology (such as know-how and designs), manufacturing capabilities (washing and scissoring), and connections to the market no longer are in Afghanistan, and there is little incentive for them to return.
Rebuilding these capabilities will require sustained coordination between the public and private sectors and significant investment to rebuild the brand. Despite many good intentions, these actions have not yet been taken.
Source: World Bank.
[[AU for John Speakman: Please provide the precise source. If this text is original with this book, then no source line is needed.]]
Box 2.2 Challenge of Rebuilding a Sector: Carpet Weaving in Afghanistan (continued)
financial constraints, remittances (and their possible “disincentive effects”), and informal and criminal economies have been identified as important factors in determining entrepreneurship. However, exactly how these factors influence entrepreneurs remains inconclusive. For example, silk weavers or furniture manufacturers in the Swat Valley in Pakistan will continue to try to work in their profession no matter what happens (KP-FATA and others 2010).
FCS General Business Environment
The weakness of the institutional environment for enterprises in FCS has a major impact on the predictability of interactions with the government and other firms. Because their regulatory systems may have dissipated, FCS countries are charac-terized by having no effective regulatory systems. The Doing Business indicators show FCS countries scoring poorly on almost all the regulatory measure rankings (table 2.2).
Key “trust”-based relationships essential for public private dialogue and commerce may have broken down. In general, social arrangements in FCS countries such as such as trust and clean government are absent. If a firm chose to move its operations from a non-FCS to an FCS area of Sub-Saharan Africa, corruption and/or political instability would become among its most severe obstacles (figure 2.9). By the same token, if a firm decided to start operations in an FCS country in Asia, informal competition would be a major obstacle to business. Finally extortive rent-seeking is the norm in FCS countries generally (figure 2.10). Informal payments/gifts frequently are required by officials for citizens to access basic infrastructure or to acquire essential business permits and licensing.
Despite widespread rent-seeking, entrepreneurs in FCS countries in SSA still do not perceive corruption as a primary obstacle to the general business envi-ronment. Instead, the primary obstacle reported is poor access to finance (figures 2.11 and 2.12). Specifically, formal financial services (such as the provi-sion of loans or lines of credit, figure 2.11 and figure 2.12) may have become limited or even ceased; and strong informal systems (such as the Hawala system)
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Table 2.2 Weak Regulatory Systems in FCS Countries
Fragile states Ease of doing
businessStarting a business
Dealing with construction permits
Registering property
Protecting investors
Enforcing contracts
Afghanistan 160 30 162 172 183 161Angola 172 167 115 129 65 181Bosnia and Herzegovina 125 162 163 100 97 125Congo, Rep. 181 175 103 156 155 159Eritrea 180 182 183 178 111 47Kosovo 117 168 171 73 174 157Sierra Leone 141 72 167 169 29 141Timor-Leste 168 157 114 183 133 183
Non-fragile states Armenia 55 10 57 5 97 91Belarus 69 9 44 4 79 14Botswana 54 90 132 50 46 65Estonia 24 44 89 13 65 29Macedonia, FYR 22 6 61 49 17 60Mauritius 23 15 53 67 13 61Kyrgyz Republic 70 17 62 17 13 48Mongolia 86 97 119 26 29 33
Source: World Bank Doing Business, http://www.doingbusiness.org/reports/global-reports/doing-business-2014 (accessed in April 2012).Note: Rankings of 183 economies (1=most business-friendly regulation).
<100 100–150 >150
Figure 2.9 Unpredictability in Private Markets and Public Governance Commonplace in FCS Countries
Source: World Bank Enterprise Surveys 2009–11.Note: See appendix G for technical details. Percentage of firms reporting “yes” on the biggest obstacle to business. Aspects in the figures (political instability, informal competition, corruption, and crime) used as proxies to unpredictability.
ECA Sub-Saharan Africa Asia
a. Non-FCS countries (percent) b. FCS countries (percent)
010203040506070
Crime, Theft, anddisorder
Corruption
CourtsInformalcompetitors
Political instability
010203040506070
Crime, Theft, anddisorder
Corruption
CourtsInformal competitors
Political instability
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may have been established or become the only systems available (Wikipedia). Enterprise Surveys show that complex application procedures and high collat-eral requirements share the responsibility for the inability of small entrepre-neurs to acquire formal financing in the FCS countries of Sub-Saharan Africa and the ECA Region (figures 2.13 and 2.14). The cost of finance also can increase. The Arab Republic of provides a dramatic example: 50 percent of firms report increased financial costs after the revolution (World Bank 2011). Some sectors, such as tourism, can be hit particularly hard by violent conflict. For example, in Egypt, Pakistan, and Sri Lanka, the number of tourist arrivals declined substantially after conflict (UNWTO 2011).
Poor infrastructure elevates the cost of doing business in FCS countries. Frequent and/or long power outages and shortages in water supply are more common in FCS countries than in non-FCS countries (figure 2.15). Power ser-vices provided by the state prior to a violent conflict may have been destroyed and are no longer available. Kosovo is an extreme example in which a remarkable 97 percent of firms report experiencing power outages (figure 2.16). Moreover, 49 percent of FCS firms in Sub-Saharan Africa must rely on private, thus more
Figure 2.10 Rent-Seeking More Common in FCS Countries than in Non-FCS CountriesPercent
Source: World Bank Enterprise Surveys 2009–11.Note: SS Africa: p-value (electrical connection) = 0.587; p-value (water connection) = 0.871, p-value (phone connection) = 0.000; p-value (construction permit) = 0.039, p-value (tax officials) = 0.023, p-value (import license) = 0.037; p-value (business license) = 0.091. ECA: p-value (electrical connection) = 0.748, p-value (phone connection) = 0.617, p-value (water connection) = 0.498, p-value (construction permit) = 0.755, p-value (tax officials) = 0.015, p-value (import license) = 0.569, p-value (operating license) = 0.053. Asia: p-value (business license) = 0.752, p-value (import license) = 0.916, p-value (tax officials) = 0.397, p-value (construction permit) = 0.000, p-value (phone connection) = 0.214, p-value (water connection) = 0.045, p-value (electrical connection) = 0.319 (appendix G).
0
5
10
15
20
25
30
35
40
45
Business
license
Constructi
on permits
Electrical c
onnection
Inspecti
ons by t
ax officials
Import
license
Water connectio
n
Phone connection
Asia non-fragile Asia fragile ECA non-fragile ECA fragile Africa non-fragile Africa fragile
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expensive, power supply (figure 2.16). Finally, access to general-purpose technol-ogy, such as high-speed internet connection, own website, or email, remains very limited in FCS countries. This fact also can explain the limited innovative activity and elevated costs of doing business in these countries (figure 2.17).
Security in FCS countries often has deteriorated to the point that, although enterprises survive, they must take extraordinary and sometimes informal measures. Losses in annual sales due to crime, theft, and disorder are com-monplace in the FCS countries of Sub-Saharan Africa and the ECA Region (figure 2.18). Moreover, the state cannot uphold security; thus, every second entrepreneur must self-provide security.
Figure 2.11 Biggest Obstacle to Business Environment by Fragility
Source: World Bank Enterprise Surveys 2009–11.
0%
10%
20%
30%
40%
50%Access to finance
a. Biggest obstacle to non-FCS firms
Access to land
Business licensing and permits
Corruption
Courts
Crime, theft and disorder
Customs and trade regulations
ElectricityInadequately educated workforce
Labor regulations
Political instability
Practices ofcompetitors in the
informal sector
Tax administration
Tax rates
Transport
b. Biggest obstacle to FCS firms
Asia ECA Sub-Saharan Africa
0%
10%
20%
30%
40%Access to finance
Access to land
Business licensing and permits
Corruption
Courts
Crime, theft and disorder
Customs and trade regulations
ElectricityInadequately educated labor
Labor regulations
Political instability
Informal competitors
Tax administration
Tax rates
Transport
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FCS enterprises face disruptions (permanent or temporary) in their product and factor markets. Demand in internal markets may have collapsed as a result of an abrupt disruption. In Sub-Saharan Africa, being fragile has had no statisti-cally significant impact on sales either last year or three years ago (regression table 2.2). Nevertheless, firms in Egypt, especially small and medium size, reported significant temporary setbacks in sales and exports due to the recent revolution, which initially imposed a substantial shock to the economy (box B.2).
Figure 2.19 shows 4 different scenarios of GDP growth recovery in FCS coun-tries: before, during, and after a violent event (dashed line).
• During the Rwandan genocide in 1994, the country’s GDP growth collapsed by 32 percent but bounced back to higher than pre-conflict levels and has remained (on average) positive ever since (trend line).
• In Iraq, after the 2003 combat, GDP growth collapsed by 34 percent, bounced back to higher than pre-conflict levels, but then dropped again to even lower than pre-conflict levels. Since 2012, Iraq has not been able to reach its pre-invasion GDP growth levels.
• Similarly, the 2008 military conflict in Georgia sharply decreased the country’s GDP growth (by 10 percent), and the country has never regained its pre-conflict GDP growth levels. Instead, it has been steadily declining.
• Eritrea’s GDP growth simply oscillates due to repeated cycles of violence. On average, Eritrea’s GDP growth is steady over time (note the almost horizontal dashed trend line in figure 2.19).
Figure 2.12 Access to Formal Financial Services Appear More Limited in FCS CountriesPercent
Source: World Bank Enterprise Surveys 2009–11.Note: Results controlled for GDP per capita levels (for technical details, see appendix G). p-value (ECA) = 0.439, p-value (SS Africa) = 0.006 (for technical details, see appendix G).
0 10 20 30 40 50 60
ECA
Sub-Saharan Africa
Fragile Non-fragile
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Overall, disruptions in product markets caused by violent events may be either temporary or more permanent, depending on a country’s ability to recover. Across all FCS countries, recovery is uneven. Similarly, disruptions in factor mar-kets in which workers or firms have been displaced are commonplace in FCS Regions (box 2.2).
Existing biases toward disadvantaged groups are exacerbated; as a result, these groups are affected disproportionately. Groups who already are struggling find it even more difficult to thrive in FCS situations. For example, women’s participa-tion in production or business management processes in the FCS countries is more limited than in non-FCS countries (figure 2.20).
In a nutshell, despite all the aforementioned entrepreneurial challenges—changes in institutions, security, and product and factor markets—in many cases,
Regression Table 2.2 Temporary Disruptions in Sales in Sub-Saharan Africa due to Fragility
Dependent variable (log) Clustered at country levelDependent variable (log)
(1)Total Sales (last year)
(2)Total Sales
(3 years ago)
(3)Total Sales (last year)
(4)Total Sales
(3 years ago)
Being fragile (d) −0.2515***(0.102)
−0.2429**(0.129)
−0.2515( 1.056)
−0.2429(0.211)
Having more than 50% domestic ownership (d)
−0.7123***(0.119)
−0.7420***(0.151)
−0.7123 (0.446)
−0.7420**(0.312)
Small size (d) −1.1354***(0.113)
−1.0584***(0.146)
−1.1354** (0.489)
−1.0584***(0.327)
Size of locality−city (250,000−1mil population) (d)
0.5934***(0.173)
−0.0063(0.236)
0.5934 (0.497)
−0.0063(0.723)
Using own website to communicate with clients/suppliers (d)
0.7464***(0.137)
0.9272***(0.177)
0.7464** (0.316)
0.9272***(0.302)
Having paid for security (d) −0.2438***(0.100)
−0.1471(0.131)
−0.2438(0.500)
−0.1471(0.408)
Dispose checking/savings account (d) 0.6026***(0.129)
0.5654***(0.180)
0.6026(0.429)
0.5654(0.548)
Dispose overdraft facility (d) 1.4578***(0.108)
1.8441***(0.138)
1.4578***(0.333)
1.8441***(0.466)
Dispose line of credit/loan (d) 0.0640(0.116)
−0.3703**(0.146)
0.0640(0.336)
−0.3703(0.265)
Dispose internationally recognized quality certification (d)
0.5246***(0.157)
0.3868**(0.194)
0.5246(0.373)
0.3868(0.422)
% of senior management’s time spent on gov. regulations
0.0339***(0.002)
0.0276***(0.003)
0.0339***(0.006)
0.0276***(0.006)
Years of experience of Top Manager in the sector
0.0047(0.005)
0.0368*(0.007)
0.0047(0.016)
0.0368*(0.010)
Constant 16.631***(0.209)
15.946***(0.269)
16.631***(1.285)
15.946***(1.439)
R-squaredNumber of observations
0.24923,198
0.25612,204
0.2523,198
0.26012,204
Source: World Bank Enterprise Surveys 2009–11, http://datacatalog.worldbank.org/datacatalog-offline.aspx.
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Figure 2.13 Why FCS Firms Should Not Apply for Loans
Source: World Bank Enterprise Surveys 2009–11.Note: For technical details, see appendix G.
Non-fragile Fragile
0
10
20
30
40
50
No need for lo
an
Perc
ent
b. FCS firms in SSA find interest rates unfavorable
a. FCS firms in ECA have no need for loans
Perc
ent
Unfavorable interest
rates
Complex applicatio
n
proce
dures
High colla
teral
requirements
166% of loan valuein fragile states, while130% of loan value in
non-fragile states
0
10
20
30
40
Complex applicatio
n
proce
dures
No need for lo
an
Unfavorable interest
rates
c. FCS firms in Asia have no need for loans
0
10
20
30
No need for lo
an
Complex applicatio
n
proce
dures
Unfavorable
interest rates
High colla
teral
requirements
existing enterprises have proved resilient, and new enterprises have emerged. These enterprises are either well-established larger firms with strong financial services (often partly offshore) that have secured highly attractive market posi-tions (key agro-industries, trading, and services roles); or entrepreneurs who effectively have no choice in an environment in which household survival impera-tives, financial constraints, remittances (and their possible “disincentive effects”), and informal and criminal economies have been important in determining their behavior.
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28 Observations of FCS Firms, Sectors, and Business Environments
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Figure 2.14 Credit Transactions Less Common in FCS Countries than in Non-FCS Countries in Sub-Saharan Africa
Source: World Bank Enterprise Surveys 2009–11.Note: Purchases of material inputs or services: p-value (before delivery) = 0.313, p-value (on delivery) = 0.021, p-value (after delivery) = 0.676. Sales of goods and services: p-value (before delivery) = 0.749, p-value (on delivery) = 0.078, p-value (after delivery) = 0.099 (for technical details see appendix G).
Paid for beforedelivery
Valu
e of
ann
ual p
urch
ases
/sal
es, %
Paid for ondelivery
Paid for afterdelivery
0
10
a. Purchase of material inputs or services
20
30
40
50
60
b. Sales of goods and services
Valu
e of
ann
ual p
urch
ases
/sal
es, %
Paid for beforedelivery
Paid for ondelivery
Paid for afterdelivery
0
10
20
30
40
50
60
Non-fragile Fragile
Figure 2.15 Longer or More Frequent Power/Water Shortages Common in FCS Countries (% of Firms that Experienced Power/Water Shortage the Past Year)Percent
Source: Authors. World Bank Enterprise Surveys 2009–11, http://datacatalog.worldbank.org/datacatalog-offline.aspx.Note: Data points refer to average duration/length of the shortage (in hours). Power outages: p-value (SS Africa) = 0.921, p-value (ECA) = 0.044, p-value (Asia) = 0.056. Water shortages: p-value (SS Africa) = 0.496, p-value (ECA) = 0.000, p-value (Asia) = 0.000 (appendix G).
b. Water shortages
0
10
20
30
40
50
60
70
80
Sub-Saharan Africa
Asia ECA
Perc
ent o
f fir
ms
repo
rtin
g “y
es”
0
10
20
30
40
50
60
70
80a. Power outages
Asia ECA Sub-Saharan Africa
Perc
ent o
f fir
ms
repo
rtin
g “y
es”
Non-fragile Fragile
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Figure 2.16 Power Supply Lacking or Very Expensive in FCS Countries
Source: World Bank Enterprise Surveys 2009–11.Note: p-value (sharing generators) = 0.011 (see appendix G for technical details).
No Yes
0
20
40
60
80
100
Perc
ent o
f fir
ms
repo
rtin
gon
poo
r acc
ess
to e
lect
rici
ty
a. 97 percent of firms in Kosovo lack quality access to electricity
Tajikist
an
Georgia
Uzbekist
an
Bosnia and H
erzegovina
Belarus
Turkey
Ukraine
Russian Federatio
n
Poland
Romania
Serbia
Kazakhsta
n
Moldova
Azerb
aijan
Macedonia, F
YR
Armenia
Kyrgyz R
epublic
Estonia
Czech
Republic
HungaryLatvia
Lithuania
Slovak Republic
Slovenia
Bulgaria
Croatia
Montenegro
Kosovo
Non-fragile Fragile0
1020304050607080
Pere
nt o
f fir
ms
shar
ing
gene
rato
rs in
SSA
b. 73 percent of firms in FCS SSA rely on private power supply
Figure 2.17 Access to General Purpose Technology Worse in FCS than in Non-FCS CountriesPercent
Source: World Bank Enterprise Surveys 2009–11, http://datacatalog.worldbank.org/datacatalog-offline.aspx.Note: For technical details, see appendix G.
Use email in communication with clients and suppliers
Use its own website
Dispose high-speed internetconnection
Non-fragileFragile
0 20 40 60 80 100
ECA
Sub-Saharan Africa
Asia
ECA
Sub-Saharan Africa
Asia
ECA
Sub-Saharan Africa
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Figure 2.18 FCS Enterprises in SSA and ECA Face High Losses due to Crime, Theft, and Disorder
Source: World Bank Enterprise Surveys 2009–11, http://datacatalog.worldbank.org/datacatalog-offline.aspx.Note: Annual sales paid for security: p-value (ECA) = 0.383, p-value (SS Africa) = 0.830, p-value (Asia) = 0.010. Annual sales lost due to crime: p-value (ECA) = 0.010, p-value (SS Africa) = 0.254, p-value (Asia) = 0.008 (appendix G).
0
2
4
6
8
b. Annual sales lost due to crime (percent)a. Annual sales paid for security (percent)
10
12
14
16
Asia ECA Sub-SaharanAfrica
Asia ECA Sub-SaharanAfrica
0
2
4
6
8
10
12
14
16
Non-fragile Fragile
Figure 2.19 FCS Firms in Four Countries Experience Disruptions in Their Product Markets with Uneven Recoveries
–50–40–30–20–10
0102030
Perc
enta
ge c
hang
e in
GD
P (c
onst
ant p
rice
s)
a. Rwanda
19911992
19931994
19951996
19971998
19992000
20012002
20032004
20052006
20072008
20092010
20112012
1990
–50–40–30–20–10
0
2010
504030
60
Perc
enta
ge c
hang
e in
GD
P (c
onst
ant p
rice
s)
b. Iraq
19992000
20012002
20032004
20052006
20072008
20092010
20112012
1998
figure continues next page
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Source: IMF 2012.Note: % change in GDP, constant prices; Dot = periods of disruptions; black = trend line.
Figure 2.19 FCS Firms in Four Countries Experience Disruptions in Their Product Markets with Uneven Recoveries (continued)
–6–4–2
0
42
1086
1214
Perc
enta
ge c
hang
e in
GD
P (c
onst
ant p
rice
s)
20032004
20052006
20072008
20092010
20112012
2002
c. Georgia
–15–10
–50
105
2015
25
Perc
enta
ge c
hang
e in
GD
P (c
onst
ant p
rice
s)
d. Eritrea
20032004
20052006
20072008
20092010
20112012
20021997
19981999
20002001
Source: World Bank Enterprise Surveys 2009–11.Note: p-value (other sectors) = 0.074, p-value (manufacturing-production) = 0.036, p-value (manufacturing-non-production) = 0.058, p-value (top manager) = 0.000, p-value (owner) = 0.340 (appendix G).
Figure 2.20
a. In FCS firms in ECA, women less likely to participate in production and management
0
5
10
15
20
30
25
Ave
rage
num
ber o
f fe
mal
e em
ploy
ees
051015202530354045
Full-time employee(all other sectors)
Full-time productionemployee
(manufacturing)
Full-time non- productionemployee
(manufacturing)
Top manager Owner of establishment
Non-fragile Fragile
figure continues next page
[[AU: Please provide the caption for fi gure 2.20.]]
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Notes
1. Other Regions were excluded due to data limitations or inconsistency. In particular, regarding Enterprise Surveys (“surveys” hereafter) of countries in Central and Latin America as well as in the Middle East and North Africa, the team either was unable to match the time periods of the surveys conducted in FCS and non-FCS countries, or surveys for specific countries of interest were nonexistent. Therefore, any analysis of these surveys conducted for this report would not be accurate due to data-time inconsistency. Furthermore, many surveys of the countries in Asia selected for the analysis do not have exactly the same questions on topics such as innovation as the questions in the surveys of Sub-Saharan Africa and the ECA Region. Finally, the majority of firms in Asia selected for the analysis often chose not to reply to specific
Source: World Bank Enterprise Surveys 2009–11.Note: p-value (other sectors) = 0.387, p-value (manufacturing-production) = 0.319, p-value (manufacturing-non-production) = 0.815, p-value (top manager) = 0.000, p-value (owner) = 0.004 (appendix G).
Source: World Bank Enterprise Surveys 2009–11.Note: p-value (other sectors) = 0.132, p-value (manufacturing-production) = 0.079, p-value (manufacturing-non-production) = 0.277, p-value (top manager) = 0.091, p-value (owner) = 0.000 (appendix G).
Figure 2.20 (continued)
b. In FCS firms of Sub-Saharan Africa, women more likely to be principal owners
0
5
10
15
20
25
30
Ave
rage
num
ber o
f fe
mal
e em
ploy
ees
0102030405060708090
Full-time employee(all other sectors)
Full-time productionemployee
(manufacturing)
Full-time non- productionemployee
(manufacturing)
Top manager Owner of establishment
c. In Asian FCS firms, women less likely to be top managers or principal owners
0
5
10
15
20
25
Ave
rage
num
ber o
f fe
mal
e em
ploy
ees
Non-fragile Fragile
051015202530354045
Full-time employee(all other sectors)
Full-time productionemployee
(manufacturing)
Full-time non- productionemployee
(manufacturing)
Top manager Owner of establishment
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questions such as the frequency of informal payments to “get things done.” Thus, the results for the Region frequently are missing from the visual presentations in this report. Drawing overall conclusions would be difficult due to the large number of missing values.
2. Comparisons are made within the pool of countries created specifically for our analy-sis, not the entire universe.
3. In some countries, such as Zimbabwe, during or after a violent event, the merchandise exports to neighbors move in tandem with declining manufacturing exports. In other countries, including Cameroon, the Central African Republic, and Côte d’Ivoire, the decline in merchandise exports to neighbors usually follows a sharp contraction in manufacturers’ exports.
4. GDP per capita in 2000 constant US$ prices (World Bank 2009–12).
References
Heston, A., R. Summers, and B. Aten. 2011. Penn World Table 7.0. Center for International Comparisons of Production, Income and Prices at the University of Pennsylvania. http://pwt.econ.upenn.edu/.
IMF (International Monetary Fund). 2012. Global Economic Outlook. April.
ITU (International Telecommunications Union) Development Index. http://www.itu.int / en/ITU-D/Pages/About.aspx.
KP-FATA (Governments of Khyber Pakhtunkhwa and the Federally Administered Tribal Areas Secretariat), ADB (Asian Development Bank), EU (European Union), UN (United Nations), and World Bank. 2010. “Post Crisis Needs Assessment: PCNA Khyber-Pakhtunkhwa and FATA.” Pakistan. September. http://www. khyberpakhtunkhwa .gov.pk/Departments/PnD/mne/MnE/Download/7.%20PCNA%20Report.pdf.
UNWTO (United Nations World Tourism Organization). 2011. Yearbook of Tourism Statistics. Madrid. http://www.untwo.org.
Wikipedia. http://en.wikipedia.org/wiki/Hawala.
World Bank. 2009–11. Enterprise Surveys. http://datacatalog.worldbank.org/datacatalog -offline.aspx.
———. 2009–12. World Development Indicators. Washington, DC. http://datacatalog .worldbank.org/datacatalog-offline.aspx.
———. 2011. Arab Republic of Egypt Investment Climate Survey. Washington, DC.
———. 2012b. Rwanda Competitiveness and Enterprise Development Project Implementation Completion Report. http://imagebank.worldbank.org/servlet/WDSContentServer / IW3P /IB/2012/03/16/000333038_20120316013602/Rendered/PDF / ICR22110P057290C0disclosed030140120.pdf.
World Bank and International Finance Corporation (IFC). 2012. “Supporting Innovation in Small and Medium Enterprises in Lebanon.” Washington, DC, World Bank and IFC. http://siteresources.worldbank.org/FINANCIALSECTOR/Resources/Investment _ Funds_SME_Innovation_in_Lebanon.pdf.
[[AU: For John Speakman: Please confi rm year 2012 added to reference.]]
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Implications of Findings
The findings have implications for (a) program design of private sector develop-ment (PSD) interventions in FCS, and (b) Bank Group interventions in particu-lar. The findings also uncover opportunities to improve operational processes and collaboration.
Program Design
Not surprisingly, a typical private sector program in FCS countries generally contains interventions similar to those in non-FCS countries that aim at encour-aging investment and getting markets to work better and more competitively. Typically, the program includes interventions that (a) address public private coordination failures, (b) encourage innovation and entrepreneurship, (c) resolve market failures in the provision of public goods, (d) provide a generally predict-able business environment, and (e) encourage demand. The Afghanistan Road Map is illustrative (box 3.1). It has most of these interventions with the excep-tion of efforts to encourage demand, in a context in which donors already had made strong efforts to involve local contractors in providing construction and facilities management services.
However, based on our empirical findings, the intervention in FCS to develop further the private sector and support entrepreneurship in cycles of violence needs to be tailored.
Interventions that Address Public-Private Coordination FailuresSuccessful interventions in public-private coordination are predicated on an effective public-private dialogue (PPD) at both the overall economy and sector levels (box 3.2). Although formal PPD mechanisms can improve coordination, for these systems to be fully effective, there are certain important requirements. They include (a) the existence of a strong public sector combined with political will and leadership; (b) a well-organized and -led private sector that does not fear governmental retribution for speaking out; (c) a “highly visible” champion that can attract the attention of participants and media; and (d) instruments to make
C H A P T E R 3
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Box 3.1 Afghanistan Road Map for Improving the Business Enabling Environment
Addressing Public Private Coordination Failures
• Instill an active practice of social responsibility and philanthropy that leads to the institu-tionalization of private (business and individual) support for economic and social develop-ment through civil society.
• Establish a framework to strengthen the governance and operations of civil society organi-zations (CSOs) to enhance their contributions to social and economic development in Afghanistan through, among other measures, revising and clarifying laws governing civil society as well as establishing independent certification bodies for CSOs.
• Establish mechanisms to oversee the implementation of measures to create an enabling environment, initially focusing on the 2007 Enabling Environment Conference recommendations.a
• Establish programs (both private and public-led) to build capacity to alleviate the binding capacity constraints facing the private and public sectors.
Encouraging Innovation and Entrepreneurship• Strengthen the financial sector to increase access to credit and financial services, paying
special attention to alleviating capacity constraints.
Resolve Market Failures in the Provision of Public Goods
• Implement measures to facilitate access to land by clarifying property rights, simplifying procedures for the transfer of titles, and allowing for longer term leases.
• Involve the private sector in the provision of public services through public-private partner-ships (PPPs) and other modalities in areas such as power generation and distribution, water supply, transportation infrastructure, and social development.
Provide a Generally Predictable Business Environment
• Build the structures, systems, and capacity of mediation and arbitration tribunals to ensure the efficient, effective, and impartial resolution of disputes.
• Enact and implement key laws and amendments to establish the basic legal and regulatory framework that will encourage private sector involvement in social and economic develop-ment in Afghanistan. The laws and regulations should (a) be clearly specified and transpar-ent; (b) be further streamlined to include only the minimum necessary steps, bureaucratic processes, and institutions; (c) reduce discretionary decisionmaking; and (d) be predictably, consistently, competently, and impartially applied.
Source: Private Sector Enabling Council 2007.Note: Effective Private Sector Contribution to Development in Afghanistan Conference Statement and Road Map. Kabul, Afghanistan, June 5, 2007 (Private Sector Enabling Council 2007).
[[AU: Please provide the signifi cance of superscript indicator “a” given here.]]
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coordination happen: seed funding, and logistical and personnel support. Meeting these conditions in fragile countries will be very difficult and will require extraor-dinary leadership and support (box 3.2). Nevertheless, there are critical success factors for two specific interventions that can make meaningful differences to fragile states:
1. Encouragement of competitive industries.2. Establishment of development corridors and/or economic zones, and last, the
facilitation of local economic development.
Box 3.2 Public-Private Dialogue in Investment Climate Interventions
Public-private dialogue (PPD) has proven an important mechanism in World Bank interven-tions to improve national and Regional investment climates in client countries. In particular, PPD provides a mechanism between the private sector and political parties in government to encourage a national discussion focused on the reforms needed to generate new investments and jobs.
In 2009 the monitoring and evaluation (M&E) review of 30 WBG-sponsored PPD’s found that they had been an effective instrument of choice to prioritize and promote reforms in International Development Agency (IDA) and post-conflict countries, both top WBG priorities.
In 2011 an additional review of investment climate programs in 16 countries was under-taken to catalog and assess alternative approaches to investment climate and private sector development (PSD) in fragile and conflicted-affected states. The review found that interven-tions were successful in implementing its investment climate projects, based on the necessity for “quick wins” and reaching important results established at the project design stage. According to lessons learned and staff interviews, quick wins with regulatory reforms are important both for the client government to restore confidence to country constituents and for the WBG team to establish credibility and win support for follow-on work in future. Across all country groups, PPDs have worked well as entry strategy programs to discuss regulatory reforms in progress and to create dialogue on additional reforms. In fact, the PPDs have been essential to the reforms’ success.
A post-completion evaluation of the Nepal Business Forum Phase I (NBF) undertaken by the Independent Evaluation Group (IEG) further confirms the usefulness of a PPD in a conflict-affected state. IEG found appropriate the objective to promote PPD around private sector reforms in the context of a country’s struggle to establish democracy. Under this project, the PPD objectives have been broadly met. In addition, by August 2012, during the second phase of this project, over 41 recommendations of 120 coming from the PPD had been implemented. Two of these reforms have delivered US$5.67 m in private sector cost savings, notably in an environment of significant political turmoil and formerly little public-private or even private-private dialogue.
Source: Excerpted and edited from Goldberg 2011.
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At the sector level, in most FCS countries, opportunities for engagement exist in the extractive sectors and sectors in which the country already has existing capabilities. Therefore, the industries in FCS countries often are resource based, including agriculture, fishing, forestry, and mining. A quick tour of FCS countries in Africa shows that Cameroon has strong forestry potential; Guinea has huge mineral deposits; Guinea-Bissau grows some of the best cashew nuts in the world; Rwanda has tea (box 3.4); and Somalia has underdeveloped fisheries. Sometimes, the industries are service based, such as tourism.1 If peace is estab-lished, construction, and logistics are additional typical examples. However, industries also can be labor cost based, as in Haiti. Therefore, cross-sectoral proj-ects between finance and PSD and rural development or human development (especially for education and health services) would be an effective approach to PSD in FCS countries.
A sharp focus on these sectors that have underlying competitive advantage can provide quick returns. In Haiti in 2011, providing just-in-time production of ready-made garments using the low-cost labor advantage was identified as a mar-ket niche. After the earthquake, the government immediately focused—with the support of the donor community—on rehabilitating and developing industrial
Box 3.3 Bulldozer Initiative in Bosnia and Herzegovina
Bosnia and Herzegovina launched the Bulldozer Initiative in 2002 to involve the private sector in reforms. A reform coordination unit invited 30 local associations to help in proposing, evalu-ating, and refining reforms. Among them were regional business associations, municipal asso-ciations of entrepreneurs, the Employers’ Confederation, the Women’s Business Network, the Micro-Credit Network, and the Association of Honey and Bee Production—all members of the Bulldozer Plenary Committee.
A group of lawyers and economists evaluated proposals. Each proposal was subjected to a cost-benefit analysis, and industry experts were invited to comment on ideas before taking the reform to the next stage. In this way, no single firm could exploit the process to serve its own interests. The proposed reforms then were submitted to the government, opening an intensive dialogue between the Bulldozer Committee and the Council of Ministers and Regional Governments. Once the reform was designed, the committee became an implementation watchdog. A biannual publication informed the public of progress, including scores for each reform.
The initiative has helped to reduce significantly the burden of bureaucratic procedures on firms. It has halved the number of steps to register foreign direct investment (FDI), expedited customs clearance procedures, bridged the constituency gap by training and empowering local advocacy groups, and established mechanisms for civic participation in government. In June 2003, the initiative established regional bulldozer committees, all voluntary and self-financed.
Source: Herzberg 2004.
[[AU: for John Speakman: Please provide in-text callout for box 3.3.]]
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space to maintain and expand this opportunity. However, some industries, par-ticularly large-scale mining, may take longer to develop. The time lapse from the initial geophysical survey to production could be a decade. The detailed geologi-cal analyses, building the necessary transportation (often rail), and developing a mine all are time-consuming activities. It is in this area of efficient use of time that the notion of competitive industries and development corridors can be com-bined by using a cross-sectoral approach to design an effective intervention that provides quick returns.
Moreover, strengthening competitive industries typically begins with the iden-tification of the constraints to development. As suggested, strengthening is best done in a consultative mode. There must be buy-in from both the public and the private sectors. Typically, the consultation process will identify three broad groups of sector-specific constraints that are over and above general enabling environment concerns. These sector-specific constraints can be regulatory, tech-nology, or capacity related, such as a public market or a cool store.
Spatial approaches, such as enclave economies created through foreign investment or development corridors, are a common intervention in FCS states.
Box 3.4 Reforming Rwanda’s Tea Sector
Tea was 1 of the 2 main export crops in Rwanda, contributing 30–40 percent of total exports at the turn of the millennium, when the country was classified as a fragile state. Tea also was one of the few crops that provided regular cash income to farmers. There were 10 tea factories in Rwanda, 9 of which were owned and managed by the state through OCIR-Thé. At that time, yields of the tea estates were low and costs high; the price levels were too low to attract grow-ers to increase production; and the industry lacked factory capacity to process increases in tea production. The government was committed to the liberalization of the industry and privatiza-tion of state-owned assets. To these ends, the government prepared and adopted a strategy that addressed three main actions. They were (1) the participation of nationals and key stake-holders (cooperatives, small-holders, factory employees) in the ownership of tea factories and estates through privatization; (2) accompanying measures, including the empowerment of farmers to take over management of all commercial and technical activities that were under the responsibility of the government-owned tea body; and (3) the establishment of an inde-pendent Tea Board.
The twin foci of the reforms were to complete the privatization of the tea factories and to establish the independent Tea Board. These reforms succeeded. The Tea Board was created. It later was incorporated under the National Agricultural Export Development Board (NAEB), and 7 of the 9 tea factories and estates were privatized. The selling price of tea per kg increased from US$1.49 in 2001 to US$2.59 in 2010—a 70 percent increase. The earnings from tea exports increased from US$22.71 million in 2001 to US$44.95 million in 2008, and to US$55.71 million in 2010—an overall increase of 250 percent in 9 years.
Source: World Bank 2012b.
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In Africa, virtually every FCS has looked at encouraging some kind of spatial development such as a growth pole, development corridor, or special economic zone (SEZ) to reap the benefits of agglomeration and clustering. These advan-tages are common infrastructure and accessibility to transportation systems, chain suppliers, knowledge and technology, and production inputs. The idea is that, in limited-capacity contexts, a management and investment focus has the best prospects for meaningful results.
Interventions that Encourage Entrepreneurship and Innovation at the Firm LevelAs was shown above, FCS firms tend not to be particularly innovative and competitive. Thus, many PSD interventions aim to address this weakness. In many FCS, a common intervention is to support business development services. This support typically involves upgrading firms’ managerial capabilities (such as accounting and governance), production skills (on-the-job training) systems (quality standards), and market connectivity (market development support). When this support works, the pay-offs can be very high (box 3.5).
Box 3.5 West Bank and Gaza Facility for New Market Development and Gaza Back-to-Work Programs
The West Bank Gaza Facility for New Market Development (FNMD) ($2.5 million) is a combined matching grant and challenge fund program that supports business development services for established funds and start-ups. Initiated in 2008 this program is jointly coordinated by the World Bank and DFID. It was modeled on successful programs implemented in Mauritius and Tunisia.
Results in WBG to date are impressive. A total of 560 firms was planned to be sup-ported; 603 actually were. An increase of exports of 40 percent was planned; exporters actually recorded an increase of 52 percent, creating remarkable success stories of new market entry. The volume of incremental sales reached US$100 million, exceeding the tar-get of US$75 million. These sales figures do not take account of the 132 firms that could not yet report sales figures attributable to FNMD support due to the lag between the delivery of support and effects taking place. These firms improved products, obtained quality certification, and developed new products. In a recent initiative, the facility also operates a challenge fund for start-ups and has supported 11 firms so far.
The Gaza Back-to-Work Program ($7.5 million) was designed by DFID and initiated in 2010 as an emergency response to assist firms whose operations had been severely disrupted. This matching grant program provides working capital for firms to rehire staff and repair equip-ment. The program has supported 219 firms, and an additional 1,700 staff have been hired (directly and indirectly). To date, 183 of the supported firms have reported increased sales and total new investment in excess of $10 m.
Source: TripleLine Consulting (Siegfried Jenders) 2012.
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Many firms struggle to start up due to key factor markets such as finance—oftentimes due to banks’ reservations about providing loans or lines of credit to clients with a high perceived risk. Again, whether support to microfinance institutions or small and medium-size enterprise (SME) financing, these are com-mon areas of intervention. What is less common but, in some cases, more critical is the provision of equity. A recent project in Lebanon illustrates one approach (box 3.6).
Box 3.6 Lebanon Innovation and SME Growth Project
The Government of Lebanon has requested support from the World Bank to develop a project to promote innovation, competitiveness, and growth of private sector firms. The proposed project will consist of a funding facility that will provide two types of funding. The process will engage private sector investors, including national, regional, and international venture capital funds; and industry experts and entrepreneurs from among the diaspora. The activities are detailed below.1. Development Grant (approximately US$15,000 each)Potential entrepreneurs with new business ideas will be invited to apply for a small grant to help them develop their innovative concepts. The grants will fund collecting evidence and building a case for external investment in their businesses, along with assessing the key areas of risk. The outcomes will be an improvement in the ability of potential entrepreneurs to dem-onstrate the value of their proposed business ideas, and to convert the idea into businesses ready for investment. The grants will be provided in 2 phases: (a) a small grant of up to $5,000 during the first phase will enable the entrepreneur to begin working on a proof of concept; and (b) a larger second phase grant of up to $10,000 will enable the entrepreneur to work closely with venture capitalists (VCs) to prepare the enterprise for possible early stage.2. Equity Investment (up to US$1,500,000)Potential entrepreneurs, both those who are in the stages covered by the development grant above and others who seek growth financing, will be encouraged to meet with VCs. These meetings will ensure that the evidence that the entrepreneurs have assembled, or their busi-ness plans, will address the investors’ information needs and will truly demonstrate that the entrepreneur is investment ready. To qualify for the equity investment financing, the entrepre-neur first must have approached a potential investor with the completed business plan and received from the investor a commitment to invest in the new venture. Having acquired this commitment, the venture investor or the entrepreneur then can approach the project funding facility to seek a matching investment that will share the initial venture fund’s risk, and add to the capital available to the new business.
The scheme relies on the efforts of partner VC funds both to identify and promote new business projects and to provide the active mentoring and professional inputs that character-ize truly effective VC participation in successful investments. For these reasons, VCs will be screened in advance to ensure that they enjoy a reputation of active participation and have a proven track record of mentoring and support.
Source: http://siteresources.worldbank.org/FINANCIALSECTOR/Resources/Investment_Funds_SME_Innovation_in_Lebanon.pdf.
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Special measures sometimes are required to target key groups such as women, youth, and ex-combatants. When compared with the overall private sector, disadvantaged groups often suffer disproportionately regarding employ-ment and employment benefits. Thus, extraordinary measures often are required. These can be a mix of (a) targeting with strong monitoring and evaluation (M&E) within overall PSD programs, or (b) specific programs targeted at these groups for which they are the sole beneficiaries. These programs can be imple-mented through government agencies, donors, or nongovernmental organizations (NGOs). A typical example is the ILO’s Training for Rural Economic Empowerment (TREE) program (box 3.7), which easily can be focused on any particular target.
Interventions that Resolve Market FailuresPPPs can mitigate inefficient markets in FCS countries. The inefficiency of FCS markets typically results from (a) regulatory systems that obstruct rather than support market efficiency; (b) lack of critical public goods, such as roads; and (c) limited availability of serviced industrial land for purchase or lease. There can be too much regulation, not enough, and/or a failure to implement. In such situ-ations, the public-private partnership (PPP) serves as the short-term vehicle to deliver essential infrastructure and services, rehabilitate hard-hit industries and businesses, and mitigate entrepreneurs’ lack of trust and risk-aversion (box 3.8, example on PPPs in Somalia).
Box 3.7 ILO’s TREE Program
The International Labour Organization’s (ILO’s) Training for Rural Economic Empowerment (TREE) Program is a proven platform that assists workers in largely informal economies to build the skills and abilities they need to generate additional income. Tested under recent technical cooperation projects in Bangladesh, Burkina Faso, Madagascar, Niger, Pakistan, the Philippines, and Sri Lanka, TREE builds on ILO’s long experience in promoting community-based training worldwide.
A TREE program starts with institutional arrangements and planning among partner orga-nizations at the national and local levels. The program aims to systematically identify employ-ment- and income-generating opportunities at the community level; design and deliver appropriate training programs employing local public and private training providers; and pro-vide the necessary post-training support, for example, facilitating access to markets and credit.
By linking training directly to community-determined economic opportunities, TREE pro-grams ensure that the skills delivered are relevant. In communities in which formal training institutions do not exist, for example, remote rural locations, arrangements for mobile training may bring in teachers and equipment to identify the appropriate levels of training, design cur-ricula, and deliver training locally. Programs such as TREE’s can strengthen training delivery by formal institutions through developing new training programs that meet local demands.
Source: www.ilo.org/skills/projects/WCMS_103528/lang–en/index/htm.
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Interventions that Support the General Predictability of the Business EnvironmentSurvey after survey identifies predictability factors as the biggest constraints to doing business in FCS. These factors include (a) managers’ perceptions of politi-cal uncertainty; (b) general governance environment, particularly regarding cor-ruption; (c) randomness of implementing rules and unreliability of judicial systems; (d) security; (e) ensuring basic macroeconomic stability for trade and fiscal and monetary parameters; and (f) access to electricity. These matters largely are beyond the scope of typical PSD interventions. Nevertheless, a private-sector-focused intervention is possible in three of these areas: (a) providing investor guarantees, (b) developing alternate dispute resolution (ADR) systems, and (c) using public-private dialogue (PPD) mechanisms to manage predictability and other issues (box 3.9).
As in the case of the Arab Republic of Egypt (box B.5), demand often can be a constraining factor. If the demand for products is not there, busi-nesses simply will not invest. Five areas of intervention can address demand challenges: (a) trade preferences, (b) encouragement of competitive indus-tries, (c) development of linkages of local demand with commodities and
Box 3.8 Public-Private Partnerships in Somalia
“The Sustainable Employment and Economic Development” (SEED) program was inaugu-rated in late 2010 as a flagship project to improve economic and employment prospects for youth and women in Somalia. The UKAID-funded program brings together FAO-Somalia, UNDP-Somalia, ILO-Somalia, and Save-the-Children as implementing partners. The goal of the program is to improve stability in Somalia through economic growth and sustainable employment. All of these are to be achieved by developing markets and creating employ-ment with accompanying skills training focusing on agriculture, livestock, fisheries, and fod-der and honey production in Somaliland, Puntland, and south-central regions of Somalia. The program also works toward improving the investment climate and supporting strengthening the regulatory framework to enhance economic growth in the three regions (DFID 2010).
Program interventions entailed infrastructure development along the livestock and fisher-ies value chain. This included the rehabilitation of the meat market in Borama Somaliland, rehabilitation of the livestock market in Hargeisa Somaliland, construction of a slaughterhouse in Burco Somaliland, and rehabilitation of a fish market in Garowe, Puntland. Stakeholders including regional administrations, local authorities, and associations within the value chain show concern for the fact that there are challenges related to governance by stakeholders. It is generally agreed that the said infrastructure projects should be managed through public- private partnership (PPP). A PPP is viewed as a means through which local authorities can improve revenue collection and the private sector can realize profitability, while ensuring effective delivery of services to value chain actors and the general public.
Sources: DFID 2010; Mangéni and Nyawira 2012.
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local sourcing of aid (construction, logistics, facilities management), and (d) encouraging and supporting remittance flows.
Trade preferences often are offered to FCS by donor countries. These prefer-ences can take many forms (box 3.10). Some decades ago, as part of a peace pro-cess, the United States created a Qualified Industrial Zone program in which new investments in the textile sector in the Arab Republic of Egypt and Jordan that had Israeli partners qualified for preferential entry of goods into the United States.
Encouraging industries that are truly competitive can help both through sub-stituting for imported products that, in non-FCS circumstances, would be pro-duced locally; and through increasing exports. As a result of high transport costs relative to its value, cement is a typical example of import substitution. To quote from a USAID report on the Iraq cement industry: “The domestic demand for cement has risen with the rehabilitation of the country. However, the domestic supply has not kept pace with the increases in demand and the price of cement has therefore been elastic with prices in 2003 quoted at US$20 per ton and reportedly rising to US$120.00 per ton in 2005” (USAID 2007).
Encouraging export industries is more challenging. Trying to identify indus-tries that can export occupies much of policymakers’ time. A good example is Guinea-Bissau’s cashew nut sector, which has tremendous potential to increase export sales by increasing value added in the country (box 3.11).
Box 3.9 Supporting Predictability: Examples from World Bank Projects
Predictability remains the biggest concern to entrepreneurs in FCS countries. Still, there are some success stories among the World Bank projects regarding managing low predictability:
• Bosnia Emergency Industrial Re-Start Project. To vouchsafe government commitment to maintain the policy environment and “to mitigate non-commercial political risks in order to promote a transparent business climate based on rule of law,” Political Risk Guarantee Facility was designed. It sold risks against political and related risks in the aftermath of war. A World Bank loan backstopped the guarantee fund. The project was rated in the Implementation Completion Report as satisfactory with high institutional development impact. The project issued 26 guarantees/insurance policies totaling Euro 20.3 million in value. (http://imagebank.worldbank.org/servlet/WDSContentServer/IW3P/IB/2005/05/10 /000090341_20050510110253/Rendered/PDF/31976.pdf)
• Albania Private Industry Recovery Project. In 2004 the Albanian Government developed a simi-lar Political Risk Guarantee Facility. It issued 24 guarantee contracts totaling $8.7 million. During the period in which guarantees were current, 680 jobs were created, and production levels increased 341 percent. (http://www.worldbank.org/projects/P051602/private-industry -recovery-project?lang=en&tab=overview)
• Related projects. Africa Regional Trade Facilitation Project, Afghanistan Investment Guarantee Facility, Moldova Pre-Export Guarantee Facility, Russia Coal and Forestry Guarantee Facility.
Source: World Bank (URLs above).
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Box 3.10 EU’s Trade Preferences to Western Balkans
In 2000 the European Union (EU) granted autonomous trade preferences to all the Western Balkans. Renewed in 2005, and subsequently in 2011 through 2015, these preferences allow nearly all of the region’s exports to enter the EU without customs duties or limits on quantities. Only wine, baby beef, and certain fisheries products enter the EU under prefer-ential tariff quotas.
This preferential regime has contributed to an increase in the Western Balkans’ exports to the EU. In 2010 the EU was the region’s largest trading partner for both imports (61 percent) and exports (65 percent).
The EU strongly supports the Western Balkans’ membership in the World Trade Organization (WTO). Albania (2000), Croatia (2000), the former Yugoslav Republic of Macedonia (2003), and Montenegro (2011) already are members. The WTO accession negotiations with Bosnia and Herzegovina and Serbia are ongoing.
Source: European Commission 2013.
Box 3.11 Guinea-Bissau Cashew Nuts
The cashew sector is critical to Guinea-Bissau’s economic growth and poverty alleviation. Agriculture is the dominant sector of the economy (contributing approximately 50 percent of total GDP), and cashew is the country’s most important agricultural product. It is grown by close to 55 percent of all agricultural households (mostly smallholders) and equals approxi-mately one-third of the sector’s total output. Cashew is responsible for more than 90 percent of the country’s exports and offers employment, directly or indirectly, to more than two-thirds of the population. Cashew is by far the main source of revenue for agricultural households, which are the poorest in the country. The rural poverty level is close to 80 percent. Therefore, the development of the cashew sector directly benefits the majority of the population. Achieving economic and social development in Guinea-Bissau would be very difficult without a flourishing cashew sector.
Despite negligible state support, the development of Guinea-Bissau’s cashew sector has been remarkable. Cashew production increased from 30,000 tons in the early 1990s to 180,000 tons in 2011. Guinea-Bissau is the world’s fifth largest producer of cashew, following India, Côte d’Ivoire, Vietnam, and Brazil. Guinea-Bissau’s nuts are considered of relatively high quality. This quality has been achieved despite minimal government support and severe constraints in the institutional and business environment. Approximately 50 percent of the trees are fewer than 10 years old, so have not yet reached their peak production period. Thus, output will continue to expand and be a major source of growth for the foreseeable future.
On the other hand, the sector also faces serious challenges that should be addressed immediately. Plantations are established primarily with low-productivity planting material. Moreover, due to the absence of research programs and appropriate extension services since
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Encouraging SME linkages to donor aid and FCS exports of agricultural or mineral commodities is another area of opportunity. For both commodity exports and donor procurement, certain inputs could be provided locally but, largely for reasons of local capacity, are not. FCS programs need to work with both the demand and the supply sides. The programs could include demand-side efforts such as encouraging donors and firms to design procurements to enable local firms to participate on their own or in partnership. On the supply side, the programs could emphasize building capacities to enable local firms to participate (box 3.12).
Finally, in many FCS countries, remittances are the main source of income so play an important role in domestic demand. Policies that encourage and support remittances flows, such as more efficient payments systems and assisting emi-grant workers with visas and marketable skills, can significantly increase the otherwise suppressed local demand and, thus, the willingness of investors to do business.
Interventions that Encourage InvestmentAlthough the question of investment promotion is the topic of a separate inves-tigation, two areas of investment in the FCS countries require comment: dias-pora and collective investment. In addition to traditional FDI, diaspora-based
the mid-1990s, agricultural practices are poor. There is little or no thinning or pruning of trees and no treatment against pests and diseases. Although yields appear relatively acceptable at 500–600 kg/ha, comparable to yields in India and Brazil, G-B’s yields can be significantly improved, thus freeing both land and labor and allowing for diversification of the country’s agricultural base. Harvest and post-harvest techniques also are inadequate. They are charac-terized by premature harvesting and inadequate drying, handling, and storing, which cause losses in quantity and quality of nuts.
Promoting processing of cashew can have major economic and social impacts. Currently, almost all of Guinea-Bissau’s cashew crop is exported as raw nuts, mainly to India and Vietnam. There is a small installed processing capacity for the production of cashew kernel (some 25,000 tons, or approximately 13 percent of total production). However, due to the low competitiveness of the domestic processing industry, all facilities currently are idle (a mere 60 tons were exported as kernel in 2010). By exporting only raw nuts, Guinea-Bissau (a) is putting itself in a position of dependence vis-à-vis its two main buyers, India and Vietnam and (b) is depriving itself of the value added and jobs created by the processing industry. Processing creates approximately 1 fulltime job for every 3 tons of processed raw nuts. Thus, processing 60,000 tons of nuts would create approximately 20,000 jobs, primarily in rural areas. Breaking this dependence will require the development of local processing and direct access to consumer countries.
Source: World Bank 2012a.
Box 3.11 Guinea-Bissau Cashew Nuts (continued)
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investment is common to encourage investment activity in FCS countries. This investment can be either fully foreign, or, more commonly, in partnership with local friends and family. Enabling measures that can support these types of investments are an important consideration in the program design. Collective investment in the form of investment funds remains rare. Nevertheless, the prospects for such investment should form part of the development of any PSD program.
World Bank Group Interventions
Any FCS government is unlikely to have the capacity to manage and resource a program of this complexity and magnitude. Therefore, focus from the World Bank Group is required. Focus will be a function of a number of variables includ-ing the government’s capacity; quality of governance; business environment; general capabilities, of which labor is the most important; and specific opportuni-ties that exist for growth.
• Regarding how programs should be designed, a 2012 detailed study of the Bank’s investment climate interventions in FCS countries in Africa identified three key success factors for a Bank Group intervention (Leo, Ramachandran, and Thuotte 2012). The study found that when these three factors were aligned, the Bank’s interventions tended to achieve their purposes. These success factors (a) address the most severe growth constraints identified by businesses, (b) match government priorities, and (c) target areas in which the Bank has proven track records. These findings are applicable in all FCS situations.
Box 3.12 Capacity Building for Employment in the Construction Sector
Well-designed and well-implemented, labor-based infrastructure programs offer specific advantages to the social partners (governments, employers, and workers) in developing countries: access to public markets, increased employment, and better returns to investment. Moreover, these programs provide a good opportunity to each of these partners to incorpo-rate social policy objectives in infrastructure investment policies. Such programs also offer better prospects for small entrepreneurs to establish themselves in the domestic market for civil works. In most developing countries, this market so far has been dominated by large-scale and non-local firms. Finally, such programs are attractive to donors and governments alike because they respond to employment and poverty objectives, increase incomes and standards of living in rural and urban areas, reduce foreign exchange requirements, and strengthen the domestic construction sector.
Source: http://www.ilo.org/public/english/employment/recon/eiip/download/green_guide.pdf.
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• A review of WBG projects reveals an additional set of six lessons regard-ing design. These lessons include the necessity for stronger Bank Group coordination, flexibility, the necessity to augment government capac-ity through strong supervision, use of third parties (NGOs and UN agencies), Bank Group execution, and the need to finance unconventional programs.
• FCS projects in particular experience strong benefits from close coordination across the World Bank Group. These benefits range from the operational reali-ties of a small on-the-ground presence to the differing modalities of how the agencies within the World Bank Group function. IFC Advisory staff them-selves tend to execute the work, whereas the Bank’s projects are, with the odd exception, executed by the recipients. These varying modalities allow for strong IFC technical assistance in partnership with Bank operations, which also can finance hard assets, such as information systems, that IFC cannot finance easily.
• Flexibility in design is important. Recovery is very difficult to predict. The recovery pattern is very uneven (figure 2.19 in chapter 2). The realities of on-the-ground security are ever changing. The willingness of market par-ticipants to provide services is variable, and counterparts can change quickly.
• Uniformly weak FCS government capacity makes the traditional project cycle very difficult to implement. This problem is common whether the project involves infrastructure or social service delivery. However, there is a particular problem with the private sector for three reasons. First, counterparts often are not clearly defined, and multiple agencies are involved. Second, much of the work is TA so differs from the more standard works-type contracts with which most counterparts are familiar. Third, in many cases, the notion of private sec-tor support is neither clear nor well understood so there is a lack of trust between the public and private sectors.
• Project implementation models that allow for more WBG execution of proj-ects can help. Simple and straightforward components can be executed by government while the Bank executes the more complex areas. In this regard, the Bank can use NGOs and UN agencies to help implement.
• Necessary interventions often take the Bank outside its comfort zone. This point is well established by the comment on Timor-Leste (box 3.13). Examples of such necessary, but somewhat controversial, interventions include matching grants that support rehabilitation of destroyed assets in Gaza, grant programs that provide subsidized equity as in Lebanon or the provision of generators to the private sector in Kosovo.
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Note
1. An example is Sri Lanka’s tourism sector, which has doubled in a few years. Given the country’s remarkable touristic endowments, there is no reason that this growth would not continue (Sri Lanka Tourism Development Authority http://www.sltda.gov.lk / index.html).
References
DFID (UK Department for International Development). 2010. Case Study: Sustainable Employment and Economic Development (SEED) Project/Somalia. http://shuraako.org / sites/shuraako.org/files/casestudy-dfid-final.pdf.
European Commission. 2013. http://ec.europa.eu/trade/policy/countries-and-regions / regions/western-balkans/2013.
Goldberg, M. 2011. World Bank, Washington, DC, http://www.publicprivatedialogue.org.
Herzberg, B. 2004. “Investment Climate Reform—Going the Last Mile: The Bulldozer Initiative in Bosnia and Herzegovina.” In World Development Report 2005: A Better Investment Climate for Everyone. Washington, DC: World Bank.
ILO (International Labour Organization). Geneva. http://www.ilo.org/skills/projects / WCMS_103528/lang–en/index/htm.
Box 3.13 Timor-Leste: A Reflection
At the outset of the engagement in 2000, the World Bank Group recognized that, in the short term, the public sector had the larger role to play in generating growth and creating jobs. However, in the longer term, the WBG saw the private sector as the engine for growth and employment.a This latter assumption, which is reasonable for many economies, should have called for going beyond the standard Doing Business approach to identify and address what really was needed to create a flourishing private sector in an FCS country such as Timor-Leste. Given the absence of an entrepreneurial tradition and skills, the lack of any obvious areas of comparative advantage, the small agriculture-based subsistence economy, and the total destruction of all nonagricultural production facilities in 1999 during the conflict, much more than the right legal environment was necessary to bolster the meager private sector to become the engine of growth. Moreover, it was not clear from the WBG’s documents from whence nor how fast the private sector growth would come. Also not clear was how important the nonpetroleum private sector activity ever could be relative to the public sector, which over time would benefit from huge petroleum revenues.
The Bank’s private sector strategy might have been more realistic and more credible if, instead of looking solely at overall business regulatory reforms, it had addressed the above questions upfront and focused on identifying and removing binding constraints in specific areas in which the private sector could have a future, such as agribusiness and tourism.
Source: World Bank 2011.
[[AU: Please provide the signifi cance of superscript indicator “a” given here.]]
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Leo, B., V. Ramachandran, and R. Thuotte. 2012. “Supporting Private Business Growth in African Fragile States, Center for Global Development.” Center for Global Development, Washington, DC. http://www.cgdev.org/files/1426061_file_Leo _ Ramachandran_Thuotte_fragile_states_FINAL.pdf.
Mangéni, B. E., and Nyawira, K. 2012. “Public-Private Partnerships in Fragile States: Reflection on the Practice, Challenges and Opportunities in Somaliland.” SEED Program. FAO (Food and Agriculture Organization of the United Nations), Rome, August.
Private Sector Enabling Council. 2007. “Effective Private Sector Contribution to Development in Afghanistan Conference Statement and Road Map.” Kabul, Afghanistan, June 5.
Sri Lanka Tourism Development Authority. http://www.sltda.gov.lk/index.html.
TripleLine Consulting (Siegfried Jenders). 2012. “Facility for New Market Development (FNMD) to Strengthen the Private Sector in the Occupied Palestinian Territories.” Final Evaluation. London. https://www.gov.uk/government/uploads/system/uploads / attachment_data/file/204627/Facility-new-market-development-strengthen-private -sector-palestine.pdf.
USAID (United States Agency for International Development). 2007. “An Overview of the Iraq Cement Industry.” IZDIHAR (Iraq Private Sector Growth and Employment Generation), Washington, DC, November. http://www.izdihar-iraq.com/resources / papers_pdfs/cement_industry_overview_rev3_acc_opt.pdf.
World Bank. 2005. Bosnia and Herzegovina—Emergency Industrial Restart Project. Washington, DC: World Bank. http://documents.worldbank.org/curated / en/2005/04/5790712/bosnia-herzegovina-emergency-industrial-restart-project.
———. 2011. IEG (Independent Evaluation Group) Evaluation of Timor-Leste. Washington, DC.
———. 2012a. Guinea-Bissau Private Sector Rehabilitation and Agribusiness Development Project Appraisal Document. http://documents.worldbank.org/curated /en /2012/02/15879759/guinea-bissau-private-sector-rehabilitation-agribusiness - development -project-environmental-assessment-vol-1-4-plano-e-enquadramento -de-gestao-ambiental-e-social.
———. 2012b. Rwanda Competitiveness and Enterprise Development Project Implementation Completion Report. http://imagebank.worldbank.org/servlet/WDSContentServer / IW3P/IB/2012/03/16/000333038_20120316013602/Rendered/PDF / ICR22110P057290C0disclosed030140120.
———. n.d. “Supporting Innovation in Small and Medium Enterprises in Lebanon.” IFC / Financial and Private Sector Development. http://siteresources.worldbank .org / FINANCIALSECTOR/Resources/Investment_Funds_SME_Innovation_in _ Lebanon.pdf.
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Conclusions and Recommendations
Conclusions
In the course of this investigation, the following key points emerged:
• From a private sector perspective, the list of challenges and constraints at first often is overwhelming.
• Unexploited private sector opportunities often coexist with even the direst circumstance.
• Unfortunately, in most FCS, the private sector is too small to make an immedi-ate difference (box 4.1). Therefore, in most FCS, a private sector program needs to work in close harmony with public sector solutions.
Recommendations
The Bank has substantial room to improve its private sector performance to support of FCS through better designed operations, stronger coordination, and more pragmatic implementation. These would take into account:
• The difference in timing of the conflict cycle (that is, continued fragility vs. periods immediately after political settlement, peace agreement, or other action that reduces violence). The heightened weakness and urgency of post-crisis areas call for immediate, small-scale, and more flexible interventions versus the more traditional approach applied throughout the cycle following the post-conflict period.
• The link between constant data review and continuous information flow (analytics) and innovative intervention (operations).
C H A P T E R 4
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Table 4.1 Strategy Matrix for Analysis and Intervention in FCS Areas
Analytic strategy Operational strategy
All FCS areas Common approach(a) Invest in data to constantly evaluate business
environment in FCS through frequent surveys. Enterprise Surveys (ES) can be sporadic in terms of periods and FCS areas (especially regarding Iraq, West Bank and Gaza, and Yemen, Rep.). ES also lack the flexibility to analyze crucial topics (such as innovative activity) across Regions. Moreover, in general, ES contain very few questions that can serve as proxies to evaluate the uniqueness of the FCS business environments. For example, to rigorously assess the impact of fragility on innovative behavior using the ES was possible only for the ECA Region. Questions relevant to innovation were included in only a few questionnaires for countries, for instance, in Sub-Saharan Africa (CAR, Mauritius, and Zimbabwe). Thus, the availability of data specific to the topic in other Regions was very limited. ES also lack the ability to focus in detail on issues unique to FCS areas. These include security, disruptions in product and factor markets, chances for survival and factors that affect these chances, unique factors that influence the ability to grow and create profits and jobs despite severe essential constraints, and, most importantly, widespread informality.
Moreover, surveys are perception based. Therefore, to capture formal aspects of institutional and entrepreneurial settings in FCS, it also is crucial to
(b) Design other tools that can provide a detailed analysis of the longer term issues related to sustainability and risk.
(c) Encourage (public-private) dialogues and information flows (web space) to set measurable targets and reform in a coordinated manner. Data and dialogues are vital to define priorities, decide on concrete directions, and track results (M&E). Taken together, all of these actions can build trust and confidence among all stakeholders.
(a) Pursue a joint World Bank Group strategy to ensure accountability.
(b) Adopt a joint Bank-client project implementation approach (see, for example, project implementation in West Bank and Gaza as well as in Somalia). Move from recipient-executed mode to joint Bank-client project implementation whereby straightforward components can be executed by government, and the Bank can execute more complex areas.
(c) Fine-tune project design. Review project design. Address the most severe growth constraints identified by the business environment. Match government priorities with target areas for which the Bank has a proven track record of success.
Box 4.1 How Much Growth Does It Take to Generate Jobs?
Even with the most supportive and favorable of policy environments, it can take a decade or more of stellar growth (10 percent + per annum) before the private sector will be of sufficient size to generate the needed jobs. The Khyber Pashtunkhwa and Federally Administered Territories Post Crisis Needs Assessment (KP-FATA PCNA) determined the resources required to generate a sufficient number of private sector jobs to bring employment to a level at which peace could be sustained. This annual level of growth was calculated at 15 percent. However, no other country in the history of the world had achieved these heady heights in 10 years.
Source: World Bank. http://imagebank.worldbank.org/servlet/WDSContentServer/IW3P/IB/2012/07/03/000386194_20120703013107/Rendered/PDF/703300ESW0P11700PCNA0FINAL0REPORT01.pdf.
[[AU: For John Speakman: Please provide the publication year for this citation “World Bank.” Or if this box text is original to this book, the source line can be deleted.]]
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Table 4.1 Strategy Matrix for Analysis and Intervention in FCS Areas (continued)
Analytic strategy Operational strategy
Post-crisis areas Innovative/highly flexible approach(a) Conduct updated surveys in the immediate aftermath
of the conflict/violent event to diagnose immediate shocks to the business and economic environment and prioritize short-term policy interventions (Arab Republic of Egypt 2011).
Due to weak capacity and urgency of post-crisis situations, (a) deliver services through a joint strategy. Make the Bank’s execution more flexible through partnering with IFC in on-the-ground presence as well as in general modalities of how WBG works. This close coordination would enable strong IFC TA in partnership with the Bank’s operations that finance/procure hardware or provide services such as cutting- edge business/corporate governance products (such as project execution in Pakistan). The joint strategy also would enable leveraging Bank staff, since the Bank is rigid regarding providing staff assistance. Joint strategy also would address IFC’s rigidity regarding purchasing hardware.
(b) Take into account cycles of violence and introduce very flexible package. In repeating cycles of violence and in post-crisis situations it is very difficult to predict the recovery. First, wait for the moment of reduced violence and heightened political commitment to reform. Then introduce a small matching grant with a very flexible operational menu. Grant will be executed by, for instance, a preprocured firm and will aim at business membership organizations (see Afghanistan), challenge funds for NGOs (since, in FCS areas, government-run projects are not feasible), business plan competitions for firms (see Nigeria), microfinance to provide quick (urgent) capital to stabilize and smooth firms’ operations, or programs that provide subsidized equity (see Lebanon), support rehabilitations of destroyed assets (see Gaza), and enhance access to electricity (such as provision of generators in Kosovo). Last, re-engage to assess the response to the package. If successful, expand it; if not, reduce/cut it.
Fragile areas More traditional approachMost FCS firms are small and informal.(a) Choose specific analytic tools that can reach these
small and informal enterprises systematically over time.(b) Aim to improve local capacity in data analysis and
information provision directly to business environment to restore confidence in the markets. (Re)build public sector institutions responsible for private sector development (PSD) (such as Government Services for Business Development project in West Bank and Gaza); or improve the information flow through enhanced general purpose technology such as access to high-speed internet, own website, or email.
In fragile situations, the urgency is limited so adopt a more traditional approach.
(a) If the public sector is strong enough, launch private-public dialogues (PPDs). Otherwise, (re)build the public sector institutions that have the primary responsibility for PSD and business reforms (see West Bank and Gaza “Government Services for Business Development” project).
(b) Intervene to encourage entrepreneurship and innovative activity at a firm level through, for example, business development services. Examples are training in SME loan applications, accumulation of managerial and production capabilities, and enhancement of market connectivity.
(c) Intervene to support general predictability of business environment through managing perceptions of political uncertainty (see Bosnia Emergency Industrial Re-Start Project), security (see Africa Regional Trade Facilitations Project), access to electricity, reliable judicial systems, and reduced corruption.
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References
Arab Republic of Egypt. 2011. “Investment Climate Update: Private Enterprises in the Aftermath of the Revolution.” Cairo.
Herzberg, B. 2004. “Investment Climate Reform—Going the Last Mile: The Bulldozer Initiative in Bosnia and Herzegovina.” In World Development R eport 2005: A Better Investment Climate for Everyone. Washington, DC: World Bank.
Table 4.1 Strategy Matrix for Analysis and Intervention in FCS Areas (continued)
Analytic strategy Operational strategy
(d) Intervene to increase demand through encouraging competitive industries, developing linkages with commodities and local sourcing of aid, and supporting remittance flows or trade preferences.
(e) Intervene to attract nonconventional investment such as diaspora-based or collective investment.
[[AU: Note that Herzberg 2004 is not cited in the text. Please cite or delete it.]]
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User’s Guide to Data
The assessment of the impact of fragility on entrepreneurship is based primarily on World Bank’s Enterprise Surveys (ES), which enable both perceptive and objective analyses of business environment using indicators standardized across different Regions and time. The following data sources also were used:
• Penn World Table 7.0 (2011). Provides purchasing power parity and national income accounts converted to international prices for 189 countries/territories for the years 1950–2010. In the current analysis, the Penn World Table is used to quantitatively assess the openness of an economy by fragility for selected countries of the ECA Region, Sub-Saharan Africa, South Asia, and East Asia and the Pacific.
• World Bank World Development Indicators 2012.• International Monetary Fund (IMF) World Economic Outlook 2012.
For each Region, the following approach to data analysis was adopted. First, within each Region, country-specific ES data were pooled and weighted using median weights. Next, based on the World Bank’s official Fragile and Conflict-Affected Situations (FCS) list, countries within each Region were divided in two groups: fragile and non-fragile. Last, to ensure data consistency, the analysis pre-sented in this report was conducted separately for each Region within the same (or close) time period and, wherever relevant, controlled for GDP per capital levels.
The Regions, countries, and periods covered in the report are:
Eastern Europe and Central Asia (ECA) Region
The Business Environment and Enterprise Performance Surveys (BEEPS) of for-mal enterprises for 2008 or 2009 were pooled for this series of countries:
• Fragile states: Bosnia and Herzegovina (2009), Georgia (2008), Kosovo (2009), Tajikistan (2008), and Uzbekistan (2008).
A P P E N D I X A
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• Non-fragile states: Armenia (2009), Azerbaijan (2009), Belarus (2008), Bulgaria (2009), Croatia (2009), the Czech Republic (2009), Estonia (2009), the for-mer Yugoslav Republic of Macedonia (2009), Hungary (2009), Kazakhstan (2009), the Kyrgyz Republic (2009), Latvia (2009), Lithuania (2009), Moldova (2009), Montenegro (2009), Poland (2009), Romania (2009), the Russian Federation (2009), Serbia (2009), the Slovak Republic (2009), Slovenia (2009), Turkey (2008), and Ukraine (2008). Although the Albania 2009 Enterprise Survey is available, the country is excluded from the analysis due to inconsistent data weights compared to the rest of the countries.
Sub-Saharan Africa
The Enterprise Surveys of formal enterprises for 2009, 2010, or 2011 were pooled for the following countries:
• Fragile states: Angola (2010), Cameroon (2009), the Central African Republic (2011), Chad (2009), the Republic of Congo (2009), the Democratic Republic of Congo (2009), Eritrea (2009), Côte d’Ivoire (2009), Liberia (2009), Niger (2009), Sierra Leone (2009), Togo (2009), Tonga (2009), and Zimbabwe (2011). Although the Nigeria 2010 Enterprise Survey is available, the country is excluded from the analysis due to inconsistent data weights compared to the rest of the countries.
• Non-fragile states: Benin (2009), Botswana (2010), Burkina Faso (2009), Cape Verde (2009), Gabon (2009), Lesotho (2009), Madagascar (2009), Malawi (2009), Mali (2010), and Mauritius (2009).
South Asia and East Asia and the Pacific
The Enterprise Surveys of formal enterprises for 2009 or 2011 were pooled for the following countries:
• Fragile states: the Lao People’s Democratic Republic (2009), Nepal (2009), Sri Lanka (2011), and Timor-Leste (2009).
• Non-fragile states: Bhutan (2009), Indonesia (2009), Mongolia (2009), the Philippines (2009), and Vietnam (2009).
Issues and Constraints to Data Analysis
Enterprise Surveys of other Regions, such as the Middle East and North Africa or Central and South America, are not included in the current analysis due to either limited data or data inconsistency. For example, for the fragile and conflict states of the MENA Region (Iraq, West Bank and Gaza, and the Republic of Yemen), the surveys available do not match the specific periods chosen for this analysis. Thus, including them would have compromised the consistency of the analysis. The probit model presented in the analysis to assess innovative behavior was not applicable to the group of countries of
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Sub-Saharan Africa due to a significant portion of missing data. In addition, the relevant-to- innovation survey questions are not standardized across all, or at least most, of the Sub-Saharan countries included in this analysis.
Additional limitations of using the Enterprise Surveys as a tool to broadly analyze the impact of fragility on entrepreneurship were:
1. Since the ambition of the current approach was to compare general issues of fragility and conflict across Regions, the focus was on the core questionnaires. This focus reduced the flexibility to analyze in detail specific topics within specific countries. For example, the results presented in the report referring to the primary use of mobile phones for operations in fragile countries of SSA are based on specific questions available for African countries only.
2. Can the findings be trusted? Most of the descriptive findings are statistically significant. However, obtaining accurate results when aiming for a causal anal-ysis requires care to ensure external validity, which would enable generalizing the results to population. In addition, internal validity (the degree to which a study produces a single, unambiguous explanation for the results), is difficult to achieve when analyzing perceptive surveys in general.
3. The Enterprise Surveys contain very little information on fragile environments. This lack sometimes makes it difficult to even descriptively assess what deter-mines successful entrepreneurship or failure in these violent and conflict-affected situations.
4. Moreover, the indices used in the report that measure institutional quality capture respondents’ perceptions, rather than any of the formal aspects of the institutional setting. An example of such indices would be one in which firms are asked whether they consider courts, access to land, business inspections, and other as the biggest obstacle to their operations. Rather, such indices mea-sure how these factors are perceived to operate and whether they positively or negatively contribute to the business environment at a given moment, but not what those institutional rules are (Rodrik 2007). Consequently, even though these indices are useful in discovering specific trends at the time, it would be misleading to generalize the respondents’ perceptions, especially across time.
5. Finally, most of the analysis presented in the report determines predictive, not causal, relationships. For example, significant correlations are found between innovative behavior and the fact of being fragile. However, one aspect might not necessarily cause the other. The approach of this report is mainly descrip-tive (with the exception of the two probit regressions that test the impact of fragility on innovative behavior and sales disruptions) and aims to compare two types of business environments: firms that operate in a fragile environ-ment and those that do not.
Reference
Rodrik, D. 2007. One Economics, Many Recipes: Globalization, Institutions, and Economic Growth. Princeton, NJ: Princeton University Press.
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Additional World Bank Studies and Field Observations
Some of the outstanding entrepreneurship success stories from FCS countries are highlighted below.
A P P E N D I X B
Box B.1 Hayel Saeed Anam Group: First Commercial Group in the Republic of Yemen
Hayel Saeed Anam Group of companies is a commercial entity established in the Republic of Yemen in 1938. Its activities include various investment fields (industrial, trading, and services) located in many countries. The important countries company has a significant presence in the Arab Republic of Egypt, Indonesia, Malaysia, and Saudi Arabia. By reputation, Hayel Saeed Anam Group is considered the first commercial group in the Republic of Yemen. The reasons are the volume of its investment and its competitive position in the market; its internal structures; and its administrative, technical, and technological rules and regulations.
The company comprises six main trading divisions: Group Products, Consumer Products, Unilever Products, Kraft Products, Cigarettes, and Raw Materials.
Source: Wikipedia.
Box B.2 Success Story of Entrepreneurship in Republic of South Sudan: Importance of Business Competition
The decades of war that culminated in the independence of Republic of South Sudan on July 9, 2011 suppressed the development of the private sector to the extent that South Sudanese were resigned to think that the government was the only employer. Reminiscent of this mindset, on attaining a secondary school certificate, Manjok Elijah Dut took up a job as an assistant clerk with the Ministry of Finance, Economic Planning, Trade and Supply in
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the Government of Jonglei State. However, his skills in computer operations caused him to believe that there were other opportunities outside government offices. Through a Business Plan Competition run by the World Bank’s Multi-Donor Trust Fund (MDTF) Private Sector Development Project, Manjok obtained the capital to set up a printing and computer shop called Computer Supply, Ltd. in the new business area, Bor town. Within months, Manjok was registering monthly profits.
Exposure to computing provided an opportunity for Elijah to respond to an online call for proposals to participate in an innovative initiative by the World Bank and Ministry of Commerce, Industry, and Investment (MCII). At 27 years of age, he was 1 of the 1,600 South Sudanese entrepreneurs who took part in the Business Plan Competition and business training designed by MCII to promote entrepreneurship. This competition was sponsored by the Multi-Donor Trust Fund for South Sudan (MDTF-SS). Manjok was awarded a grant of US$20,000 that he accessed in March 2010 through KCB Sudan, Ltd. One year after setting up his business, the young entrepreneur applied the knowledge he acquired during business training to recordkeeping, customer care, cash flow, and the financial management of his business.
Manjok’s business received a boost when he won contracts to supply computers to the Government of Republic of South Sudan and to the Government of Jonglei State, and to train government employees in computer skills. With the expansion of his business, he abandoned his “zinc building” and rented a bigger and better building partitioned into rooms used for an internet café and storage for desktops, laptops, and computer accessories. His business also offers secretarial services including typing, printing, scanning, and photocopying. Earning a daily net profit of SDG 195 (US$70) from Internet and secretarial services and a monthly net profit of SDG 4,800 ($1,700), Manjok is contributing to the development of Jonglei State by employing 6 people.
Manjok was the first beneficiary of the business competition awards to repay his loan and has since taken another loan with KCB Sudan, Ltd. This entrepreneur has embraced the computer age with enthusiasm, as reflected in his business slogan: “We are your partner in the world of technology. We believe that ‘technology makes life better.’” He is pleased with his business growth, and is confident that online courses are now possible in Jonglei State. His confidence is evident in his plans to expand through acquisition of land to construct permanent structures and the establishment of a Business Center.
As the Managing Director of Computer Supply Company, Ltd, Manjok is not distanced from what goes around the world and affects his business. He does not hide the excitement of wit-nessing the birth of a new nation. He calls on entrepreneurs in Republic of South Sudan to seize the opportunity and turn their dreams into realities because the political atmosphere is now favorable for investment. His message to the youth is that business can thrive in a peace-ful and corruption-free environment!
Sources: Andres Garcia, AFTEE, World Bank.
Box B.2 Success Story of Entrepreneurship in Republic of South Sudan: Importance of Business Competition (continued)
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Box B.3 Cisco and the Importance of Corporate Social Responsibility in the Palestinian Territories
In September 2009, Cisco announced an investment of $10 million to seed a sustainable model of job-creation and economic development in the Palestinian Territories. Made in coop-eration with the president of the Palestinian Authority, Mahmoud Abbas, the three-year investment demonstrates Cisco’s continued commitment to build stronger and healthier global communities through strategic social investments.
“Education and the Internet are the great equalizers and vital to a sustainable, productive economy that increases the standard of living for all,” commented Cisco Chairman and CEO John Chambers. “It’s a core part of our culture to give back, but it’s also a core strategy of what drives our success in the regions of the world where we do business. We make all our business decisions with three to five years in mind and, given our strong business momentum in the region, it’s only appropriate to make this investment in its economy and its people.”
Palestinian President Abbas stated, “One of our key priorities is to build a market economy in close cooperation with the private sector. We commend Cisco for its commitment to help us accomplish this goal, and look forward to working together toward enhancing the social, economic and education opportunities for the people of Palestine. This contribution, we hope, will help prosperity and peace in the region.”
Key aspects of the commitment include a multimillion dollar venture capital investment targeted at high-potential small businesses throughout the region, as well as the develop-ment of training programs for critical information and communications technology (ICT) skills. In the future, Cisco’s intention is to engage in a multistakeholder collaboration to encourage additional investment in the Palestinian economy from local, regional, and global organizations.
Cisco Chairman Chambers added, “As we execute against this commitment over the com-ing years, our hope also is to create a catalyst of active engagement and a call to action for others across the public and private sector to contribute toward a diverse and sustainable economic model for the region.”
Note: For more information on Cisco’s global development and corporate social responsibility initiatives, see http://www . cisco.com/web/about/citizenship.
Box B.4 Importance of Household Enterprises (HE) in Rwanda
Rwanda no longer is classified as FCS, It was FCS in the 1990s, but today it is a success story of recovery from FCS. There are many reasons for Rwanda’s recovery, including remarkable leadership, but the resilience of the household enterprise (HE) is part of the story.
HEs are enterprises that engage in nonfarm activities, often operated by an individual with the support of family members. HEs do not hire labor. In Rwanda, 30 percent of households have HEs. The majority (86 percent) of these HEs labor in the service sector (trading and transport), with some artisanal-type manufacturing (crafts, food).
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HEs are driven by pull and push factors. The pull factors are the perceived opportunity to earn a better living, the ease of entry, and the desire to be one’s own boss. Push factors include the inability to find another job, lack of land, and lack of education/skills. The constraints to establish HEs are preliminary access to a working space and finance. The big constraints to operations are access to finance, markets, and infrastructure.
Policymakers can support HEs with a variety of measures. These include ensuring that there are public market spaces; ensuring that microfinance reaches and targets HEs, making avail-able very simple basic financial and management training, and encouraging collective action through the formation of associations.
Source: World Bank 2011.
Box B.4 Importance of Household Enterprises (HE) in Rwanda (continued)
Box B.5 Egypt’s First Revolution: A Cold for Large Businesses and Pneumonia for SMEs (Importance of Clear Strategy Reform)
Initially, the events of the 2011 Egyptian revolution and its aftermath imposed a substantial shock on the economy. Private firms reported significant setbacks in sales and exports. Firms’ own identification of constraints placed uncertainty at the top: uncertainty about the macroeconomic situation, including aggregate demand and prices; uncertainty about the unstable political situation; and uncertainty about the regulatory policies they face—including potential changes and arbitrary administration. By 2012, concern about corruption had risen to the top 3 constraints; and, for the first time, concern with crime and theft rose to the top 5, suggesting an overall decline in rule of law. Transport, which had not been a leading constraint before 2011, rose to the seventh most commonly identified serious constraint.
The “bad news” of the aftermath of the first revolution was a period of economic disruption in which private demand sharply contracted, causing the output of firms to fall substantially. Most firms tried to maintain their levels of capital and labor, resulting in a sharp decline in productivity. By 2012, sales and productivity had recovered part of the way to their former levels, but firms clearly had made labor force reductions and continued to confront lower demand. The decline in growth expectations and pervasive sense of uncertainty suggested a strong need for a new government to establish a clear reform strategy to encourage private-led growth and to take a few key actions to signal credible commitment to this strategy.
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References
Stone, A., H. Dabidian, and L. Badawy. 2012. “Egyptian Private Enterprises in the Aftermath of the Revolution: An Investment Climate Update.” No. 73009. World Bank, Washington, DC.
World Bank. 2011. “Resilience in the Face of Economic Diversity: Policies for Growth with a Focus on Household Enterprises.” Rwanda Economic Update 2011. Washington, DC.
Box B.5 Egypt’s First Revolution: A Cold for Large Businesses and Pneumonia for SMEs (Importance of Clear Strategy Reform) (continued)
Figure BB.5.1 Firm S ales Experience and Expectation, Weighted by Sales Value
Source: Stone, Dabidian, and Badawy 2012.
0
20
40
60
80
100
120
140
2010 2011 2012(expectation)
Micro Small LargeMediumOverall
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Appendix C. Innovation (Correlation Tables)
Correlat ion Table
Total Non-Fragile Fragile Total Non-Fragile Fragile
R&D (Yes/No) ECAo3 0.2753* 0.2677* 0.3908* 0.2525* 0.2470* 0.3251*
[0.0000] [0.0000] [0.0000] [0.0000] [0.0000] [0.0000]
Amount spent on R&D (LCU) ECAo4 -0.0462* -0.0478* 0.0546 -0.0255 -0.0272 0.1848*
[0.0853] [0.0903] [0.5342] [0.344] [0.3356] [0.0339]
Regular use of computers ECAo6 -0.1604* -0.1565* -0.2059* -0.1627* -0.1599* -0.1906*
[0.0000] [0.0000] [0.0000] [0.0000] [0.0000] [0.0000]
% of sales as national sales d3a 0.0331* 0.0241* 0.1665* 0.0467* 0.0393* 0.1498*
[0.0005] [0.0198] [0.0000] [0.0000] [0.0002] [0.0000]
% of sales as indirect exports d3b -0.0175* -0.013 -0.0855* -0.0144 -0.0113 -0.0499*
[0.0661] [0.2088] [0.0004] [0.1314] [0.2756] [0.0396]
% of sales as direct exports d3c -0.0291* -0.0212* -0.1489* -0.0456* -0.0388* -0.1442*
[0.0022] [0.0403] [0.0000] [0.0000] [0.0002] [0.0000]
Year of first export d8 -0.0907* -0.0962* 0.0862 -0.1372* -0.1447* 0.1293*
[0.0000] [0.0000] [0.1479] [0.0000] [0.0000] [0.0297]
Subsidies from government (Yes/No) ECAq53 0.1069* 0.1020* 0.1848* 0.1002* 0.0985* 0.1120*
[0.0000] [0.0000] [0.0000] [0.0000] [0.0000] [0.0000]
Competing against informal/unregistered firms (Yes/No) e11 0.0528* 0.0552* 0.0197 0.0792* 0.0814* 0.0555*
[0.0000] [0.0000] [0.4345] [0.0000] [0.0000] [0.0286]
Informal gift to get things done (Yes/No) j7a -0.1370* -0.1353* -0.3057* -0.0973* -0.0815* -0.2966*
[0.0000] [0.0000] [0.0000] [0.0002] [0.005] [0.0000]
Technology from foreign firms (Yes/No) e6 0.0961* 0.0947* 0.1152* 0.1308* 0.1239* 0.2417*
[0.0000] [0.0000] [0.006] [0.0000] [0.0000] [0.0000]
Using own website (Yes/No) c22b 0.2011* 0.1837* 0.3505* 0.1685* 0.1523* 0.3254*
[0.0000] [0.0000] [0.0000] [0.0000] [0.0000] [0.0000]
% of sales paid for security i2a 0.0148 0.0196 -0.1417* 0.014 0.0223 -0.2222*
[0.398] [0.3002] [0.0023] [0.4266] [0.239] [0.0000]
Informal gift for electrical connection (Yes/No) c5 0.0201 0.0154 0.1190* -0.0319 -0.0407 0.1467*
[0.431] [0.5826] [0.0548] [0.212] [0.1478] [0.018]
Paid for security (Yes/No) i1 0.1786* 0.1693* 0.2453* 0.1536* 0.1455* 0.2119*
[0.0000] [0.0000] [0.0000] [0.0000] [0.0000] [0.0000]
Losses due to theft, robbery etc. (Yes/No) i3 0.0927* 0.0829* 0.1885* 0.1297* 0.1227* 0.1954*
[0.0000] [0.0000] [0.0000] [0.0000] [0.0000] [0.0000]
Cheking/savings account (Yes/No) k6 0.0546* 0.0600* 0.0470* 0.0817* 0.0886* 0.0213
[0.0000] [0.0000] [0.0524] [0.0000] [0.0000] [0.3809]
Overdraft facil ity (Yes/No) k7 0.1158* 0.1020* 0.2291* 0.0717* 0.0539* 0.2928*
[0.0000] [0.0000] [0.0000] [0.0000] [0.0000] [0.0000]
Loan/credit l ine from fin. Institution (Yes/No) k8 0.0909* 0.0798* 0.1859* 0.0665* 0.0525* 0.2319*
[0.0000] [0.0000] [0.0000] [0.0000] [0.0000] [0.0000]
Main market of main product sold e1 -0.0867* -0.0838* -0.1278* -0.1241* -0.1252* -0.0834*
[0.0000] [0.0000] [0.0021] [0.0000] [0.0000] [0.0454]
# of competitors e2 -0.0520* -0.0453* -0.1522* -0.0786* -0.0778* -0.0797*
[0.0014] [0.0093] [0.0007] [0.0000] [0.0000] [0.0794]
Change in monthly sales e3 -0.1019* 0.1019* 0.1102* 0.1256* 0.1250* 0.1662*
[0.0000] [0.0000] [0.0148] [0.0000] [0.0000] [0.0002]
Change in prices e4 -0.0477 0.0522* 0.0242 0.0757* 0.0777* 0.0985*
[0.0033] [0.0027] [0.5938] [0.0000] [0.0000] [0.0299]
* significant at 10%
Introduction of new products/services
(las t 3 years )
Upgraded products/services
(last year)
Source: Authors’ calculations based on World Bank Enterprise Surveys 2009–11 (accessed April 2012).
Correlat ion Table (selec t ive based on GDP level)
Total Non-Fragile Fragile Total Non-Fragile Fragile
R&D (Yes/No) ECAo3 0.3344* 0.3908* 0.2525* 0.2470* 0.3251*
[0.0000] [0.0000] [0.0000] [0.0000] [0.0000]
Amount spent on R&D (LCU) ECAo4 0.0376 -0.0541 -0.0255 -0.0272 0.1848*
[0.0903] [0.6271] [0.344] [0.3356] [0.0339]
Regular use of computers (%) ECAo6 0.1728* 0.1842* -0.1627* -0.1599* -0.1906*
[0.0000] [0.0000] [0.0000] [0.0000] [0.0000]
% of sales as national sales d3a -0.0366* -0.1665* 0.0467* 0.0393* 0.1498*
[0.0279] [0.0000] [0.0000] [0.0002] [0.0000]
% of sales as indirect exports d3b -0.0373* 0.0855* -0.0144 -0.0113 -0.0499*
[0.0251] [0.0004] [0.1314] [0.2756] [0.0396]
% of sales as direct exports d3c 0.0644* 0.1489* -0.0456* -0.0388* -0.1442*
[0.0001] [0.0000] [0.0000] [0.0002] [0.0000]
Year of first export d8 -0.0112 0.0639 -0.1372* -0.1447* 0.1293*
[0.7790] [0.3402] [0.0000] [0.0000] [0.0297]
Subsidies from government (Yes/No) ECAq53 0.0593* 0.1848* 0.1002* 0.0985* 0.1120*
[0.0004] [0.0000] [0.0000] [0.0000] [0.0000]
0.0831* 0.0197 0.0792* 0.0814* 0.0555*
[0.0000] [0.4345] [0.0000] [0.0000] [0.0286]
Informal gift to get things done (%) j7a -0.0116 0.3057* -0.0973* -0.0815* -0.2966*
[0.8120] [0.0000] [0.0002] [0.005] [0.0000]
Technology from foreign firms (Yes/No) e6 0.1920* 0.1152* 0.1308* 0.1239* 0.2417*
[0.0000] [0.006] [0.0000] [0.0000] [0.0000]
Using own website (Yes/No) c22b 0.2271* 0.3505* 0.1685* 0.1523* 0.3254*
[0.0000] [0.0000] [0.0000] [0.0000] [0.0000]
% of sales paid for security i2a -0.0741* 0.1417* 0.014 0.0223 -0.2222*
[0.3002] [0.0023] [0.4266] [0.239] [0.0000]
Informal gift for electrical connection (Yes/No) c5 -0.027 0.1190* -0.0319 -0.0407 0.1467*
[0.5723] [0.0548] [0.212] [0.1478] [0.018]
Paid for security (Yes/No) i1 0.1600* 0.2453* 0.1536* 0.1455* 0.2119*
[0.0000] [0.0000] [0.0000] [0.0000] [0.0000]
Losses due to theft, robbery etc. (Yes/No) i3 0.1567* 0.1885* 0.1297* 0.1227* 0.1954*
[0.0000] [0.0000] [0.0000] [0.0000] [0.0000]
Cheking/savings account (Yes/No) k6 0.1331* 0.0470* 0.0817* 0.0886* 0.0213
[0.0000] [0.0524] [0.0000] [0.0000] [0.3809]
Overdraft facil ity (Yes/No) k7 0.1807* 0.2291* 0.0717* 0.0539* 0.2928*
[0.0000] [0.0000] [0.0000] [0.0000] [0.0000]
Loan/credit l ine from fin. Institution (Yes/No) k8 0.1650* 0.1859* 0.0665* 0.0525* 0.2319*
[0.0000] [0.0000] [0.0000] [0.0000] [0.0000]
Main market of main product sold e1 0.1250* 0.1822* -0.1241* -0.1252* -0.0834*
[0.0000] [0.0000] [0.0000] [0.0000] [0.0454]
# of competitors e2 0.0381 0.1989* -0.0786* -0.0778* -0.0797*
[0.2002] [0.0000] [0.0000] [0.0000] [0.0794]
Increase in sales 0.1687* 0.1280* 0.1256* 0.1250* 0.1662*
[0.0000] [0.0047] [0.0000] [0.0000] [0.0002]
Decrease in sales -0.1149* -0.0701
[0.0001] [0.1227]
Sales unchanged -0.0890* -0.0812*
[0.0024] [0.0736]
Increase in price of main product 0.0275 -0.0575
[0.3487] [0.2061]
Decrease in price of main product -0.0053 -0.1063*
[0.8569] [0.0191]
Price of main product unchanged -0.0259 0.1114*
[0.3764] [0.0140]
* significant at 10%
Competing against informal/unregistered firms (Yes/No) e11
Introduction of new products/services
(las t 3 years )
Upgraded products/services
(last year)
Upgraded products/servicesIntroduction of new products/services
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Survey Sample Statistics, ECA Region
A P P E N D I X D
Non-fragile
n = 9,401 (%) Fragile
n = 1,730 (%)Total
n = 11,131 (%)
IndustryOther manufacturing 9 8.7 9Food 4.4 5.9 4.5Textiles 1.8 0.7 1.7Garments 3 1.6 2.9Chemicals 1 1.3 1.1Plastics & rubber 2 1.5 2Nonmetallic mineral products 1.2 3 1.3Basic metals 0.4 0.6 0.4Fabricate metal products 4.2 2.2 4.1Machinery and equipment 2.3 1 2.2Electronics 0.9 1.6 0.9Construction 10.6 12.6 10.7Other services 6.7 3.3 6.5Wholesale 14.2 13.5 14.2Retail 22.1 27 22.3Hotel and restaurants 6.1 8.6 6.2Transport 8 6.7 8IT 2.1 0 2
Size Micro 5.9 1.3 5.7Small 59.8 66.1 60.1Medium 25.5 23.7 25.4Large 8.8 8.8 8.8
Industry by sizeMicro Other manufacturing 1.6 0 1.6Food 2 5 2.5
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Non-fragile
n = 9,401 (%) Fragile
n = 1,730 (%)Total
n = 11,131 (%)
Textiles 0.3 0 0.3Garments 0.8 1.7 0.8Chemicals 0.3 0 0.3Plastics & rubber 0 0 0Nonmetallic mineral products 0 0 0Basic metals 0 0 0Fabricate metal products 4 8 4.1Machinery and equipment 1.1 2.6 1.1Electronics 0.3 0 0.3Construction section 12.1 0 12Other services 8.9 16.1 9Wholesale 19.2 21.6 19.2Retail 20.8 42.5 21.1Hotel and restaurants 11 2.3 10.9Transport section 15 0 14.8IT 1.9 0 1.9
SmallOther manufacturing 9 7 8.9Food 3.6 5.9 3.7Textiles 1.1 0.3 1.1Garments 2.2 1.5 2.1Chemicals 0.9 1.5 0.9Plastics & rubber 1.8 1.8 1.8Nonmetallic mineral products 0.9 3.1 1Basic metals 0.3 0.3 0.3Fabricate metal products 4.1 1.7 4Machinery and equipment 2.1 0.9 2Electronics 0.6 2.2 0.7Construction section 8.6 13.0 8.9Other services 7.9 3.8 7.6Wholesale 15.3 11.8 15.1Retail 26.8 29.2 27Hotel and restaurants 6.1 9.1 6.3Transport section 6.3 6.8 6.3IT 2.4 0.1 2.3
MediumOther manufacturing 9.7 13.1 9.9Food 5.2 5.8 5.3Textiles 2.8 1.3 2.7Garments 4.3 1.6 4.2Chemicals 1.4 0.7 1.4Plastics & rubber 2.9 0.8 2.8
Appendix D (continued)
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Non-fragile
n = 9,401 (%) Fragile
n = 1,730 (%)Total
n = 11,131 (%)
Nonmetallic mineral products 1.3 3.1 1.4Basic metals 0.4 1.2 0.5Fabricate metal products 4.9 3.3 4.8Machinery and equipment 2.6 0.3 2.5Electronics 1.1 0.6 1.0Construction section 14.4 9.7 14.2Other services 4.2 2 4.1Wholesale 13.2 19.1 13.5Retail 15.4 23.2 15.8Hotel and restaurants 5.9 8.8 6Transport section 9 4.2 8.7IT 1.3 1.2 1.3
LargeOther manufacturing 11.6 10.4 11.5Food 8.6 6.9 8.5Textiles 4.7 1.5 4.5Garments 5.7 1.6 5.5Chemicals 1.3 2.1 1.3Plastics & rubber 2.9 0.8 2.8Nonmetallic mineral products 3.8 2.2 3.7Basic metals 1.6 1.1 1.5Fabricate metal products 3.7 2 3.6Machinery and equipment 3.8 3 3.7Electronics 2.6 0.5 2.5Construction section 11.7 19.2 12.1Other services 4.3 1.2 4.2Wholesale 6.1 10 6.3Retail 9.9 19.3 10.4Hotel and restaurants 3.4 4.9 3.5Transport section 12.3 13.4 12.4IT 2 0 1.9
Size of localityCapital city 16.6 34 17.5City with population over 1 million 14.2 4.1 13.7City with population over 250,000 to
1 million 18.7 16.6 18.6City with population 50,000 to 250,000 25 31.7 25.4City with less than 50,000 population 25.4 13.7 24.8
ParentshipYes 9.7 4.3 9.4No, a firm on its own 90.3 95.7 90.6
Appendix D (continued)
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Non-fragile
n = 9,401 (%) Fragile
n = 1,730 (%)Total
n = 11,131 (%)
Legal statusPublicly listed company 7.3 8.7 7.3Privately held, limited liability
company 57.3 24.2 55.6Sole proprietorship 20.6 40.4 21.6Partnership 5.2 1.4 5Limited partnership 6.5 21.9 7.3Other 3.1 3.3 3.2
Average share of ownershipDomestic ownership share 92.2 92.7 92.3Foreign ownership share 5.2 4 5.2Government ownership share 1.1 1.6 1.1Other ownership share 1.3 1.7 1.3
AgePercentiles: 10 4 years 4 years 4 years25 8 years 7 years 8 years50 (median age) 13 years 11 years 12 years75 17 years 16 years 17 years90 30 years 38 years 32 yearsAverage age 16 years 16 years 16 yearsMinimum age 0 years 0 years 0 yearsMaximum age 183 years 140 years 183 yearsPercentage of establishments that: Started 2008 0.1 0.1 0.1Started 2007 1.2 1.2 1.2Started 2006 2.6 3.2 2.7Started before 2006 96.1 95.5 96
Average sales breakdownNational sales 91.2 95.5 91.5Indirect exports 2 0.8 2Direct exports 6.7 3.7 6.6
Source: World Bank Enterprise Surveys 2009–11, http://www.enterprisesurveys.org (accessed April 2012) .
Appendix D (continued)
TSEF.indb 70TSEF.indb 70 6/10/14 7:04 PM6/10/14 7:04 PM
Appendix E. Survey Sample Statistics, Sub-Saharan Africa Region
Non-fragile Fragile Total
Industry
Manufacturing 5.7% 3.2% 4.2%
Services 29.5% 22.7% 25.5%
Food 3.4% 3.1% 3.2%
Textiles 1.9% 0.5% 1%
Garments 2.4% 4.8% 3.9%
Transport services (informal) 0% 0.1% 0%
Cleaning and washing services (informal) 0% 0.2% 0.1%
Hairdressers and barber shops (informal) 0% 0.3% 0.2%
Professional services (informal) 0% 0.2% 0.1%
Chemicals 0.8% 1% 0.9%
Plastics and rubber 0.8% 0.8% 0.8%
Non-metallic mineral products 0.4% 0.6% 0.5%
Basic metals 1.7% 0.5% 1%
Fabricated metal products 2.5% 1.4% 1.8%
Machinery and equipment 0.3% 1.3% 0.9%
Electronics (31 and 32) 0.3% 0.3% 0.3%
Construction Section F 7.6% 2.7% 4.7%
Services of motor vehicles 12.7% 11.9% 12.2%
Wholesales 5.3% 7.3% 6.5%
Retail 18.4% 22.1% 20.6%
Hotel and restaurants 2.3% 9.9% 6.8%
Transport Section I (60–64) 2.9% 3.6% 3.3%
IT 1.3% 1.3% 1.3%
Total 100.0% 99.8% 99.9%
Zone
Non-fragile Fragile Total
Size
Small 70.2% 76.5% 73.8%
Medium 21.8% 18.4% 19.8%
Large 8% 5.2% 6.3%
Total 100% 100% 100%
Zone
Non-fragile Fragile Total
Size of locality
Capital city 54.1% 40.7% 46.4%
City with population over 1 million 10% 49.7% 32.9%
City with population over 250,000 to 1 million 8.5% 4.7% 6.3%
City with population 50,000 to 250,000 15.5% 4.1% 8.9%
City with less than 50,000 population 11.9% 0.9% 5.5%
Total 100% 100% 100%
Parentship
Yes 18.4% 16.3% 17.2%
No, a firm on its own 81.6% 83.7% 82.8%
Total 100% 100% 100%
Legal status
Publicly listed company 4.1% 2.3% 3.1%
Privately held, limited liability company 27.2% 11.1% 17.8%
Sole proprietorship 53.6% 64.3% 59.8%
Partnership 8.4% 7.5% 7.9%
Limited partnership 4.1% 7.8% 6.3%
Other 2.5% 7.0% 5.1%
Total 100% 100% 100%
Average share of ownership
Domestic ownership share 75.3% 79.8% 77.9%
Foreign ownership share 18.4% 11.5% 14.4%
Government ownership share 0.4% 0.4% 0.4%
Other ownership share 5.8% 8.3% 7.3%
Total 99.9% 100% 100%
Zone
TSEF.indb 72TSEF.indb 72 6/10/14 7:04 PM6/10/14 7:04 PM
73 The Small Entrepreneur in Fragile and Conflict-Affected Situationshttp://dx.doi.org/10.1596/978-1-4648-0018-4
Basic Quantitative Indicators, ECA Region
A P P E N D I X F
TSEF.indb 73TSEF.indb 73 6/10/14 7:04 PM6/10/14 7:04 PM
74
Non
-frag
ile st
ates
Doi
ng
Busin
ess
2008
ra
nkin
gs
(181
coun
-tr
ies)
Doi
ng
Busin
ess
2009
ra
nkin
gs
(181
coun
-tr
ies)
Dur
atio
n of
pow
er
outa
ges
(hou
rs)
Annu
al
cost
of
secu
rity
(% o
f sa
les)
% o
f co
ntra
ct
valu
e pa
id
info
rmal
ly
to se
cure
co
ntra
ct
% o
f tot
al
annu
al sa
les
paid
info
r-m
ally
to “g
et
thin
gs d
one”
% o
f tim
e sp
ent b
y se
nior
man
-ag
emen
t on
gove
rnm
ent
regu
latio
ns
% o
f new
in
vest
-m
ent
from
pr
ivat
e ba
nks
% o
f new
in
vest
men
t fro
m st
ate-
owne
d ba
nks
% o
f firm
s w
ith in
ter-
natio
nally
re
cogn
ized
qu
ality
cert
i-fic
atio
n
% o
f firm
s us
ing
tech
nolo
gy
licen
se fr
om
fore
ign
com
pani
es
% o
f fir
ms
usin
g th
eir o
wn
web
site
Bela
rus
110
853
31
615
1110
1418
36Tu
rkey
5759
53
41
2735
330
1675
Ukr
aine
139
145
64
47
1417
113
2736
Russ
ian
Fede
ratio
n10
612
06
45
622
75
1225
55Po
land
7476
42
24
1416
717
664
Rom
ania
4847
54
34
1119
226
1635
Serb
ia86
942
42
514
254
2215
65Ka
zakh
stan
7170
65
67
616
211
1527
Mol
dova
9210
33
42
48
201
915
32A
zerb
aija
n96
334
42
113
140
1824
22M
aced
onia
, FYR
7571
310
05
1725
421
4139
Arm
enia
3944
43
15
1318
427
4063
Kyrg
yz R
epub
lic94
687
75
86
131
1619
26Es
toni
a17
224
30
57
221
2126
67Cz
ech
Repu
blic
5675
42
23
1311
643
1281
Hun
gary
4541
32
07
1625
739
1370
Latv
ia22
295
75
711
226
1828
56Li
thua
nia
2628
22
16
1129
316
2562
Slov
ak R
epub
lic32
362
65
69
183
2930
73Sl
oven
ia55
542
30
49
1123
2815
80Bu
lgar
ia46
452
21
512
243
2012
48Cr
oatia
9710
64
81
1916
258
1915
63M
onte
negr
o81
903
32
313
403
1317
30To
tal n
on-fr
agile
st
ates
44
34
1618
521
1756
tabl
e co
ntin
ues n
ext p
age
TSEF.indb 74TSEF.indb 74 6/10/14 7:04 PM6/10/14 7:04 PM
75
App
endi
x F
(con
tinue
d)
Frag
ile st
ates
Doi
ng
Busin
ess
2008
ra
nkin
gs
(181
coun
-tr
ies)
Doi
ng
Busin
ess
2009
ra
nkin
gs
(181
coun
-tr
ies)
Dur
atio
n of
pow
er
outa
ges
(hou
rs)
Annu
al
cost
of
secu
rity
(% o
f sa
les)
% o
f co
ntra
ct
valu
e pa
id
info
rmal
ly
to se
cure
co
ntra
ct
% o
f tot
al
annu
al sa
les
paid
info
r-m
ally
to “g
et
thin
gs d
one”
% o
f tim
e sp
ent b
y se
nior
man
-ag
emen
t on
gove
rnm
ent
regu
latio
ns
% o
f new
in
vest
-m
ent
from
pri-
vate
ba
nks
% o
f new
in
vest
men
t fro
m st
ate-
owne
d ba
nks
% o
f firm
s w
ith in
ter-
natio
nally
re
cogn
ized
qu
ality
cert
i-fic
atio
n
% o
f firm
s us
ing
tech
nolo
gy
licen
se fr
om
fore
ign
com
pani
es
% o
f fir
ms
usin
g th
eir o
wn
web
site
Geo
rgia
1815
84
03
326
116
1731
Tajik
ista
n15
315
910
43
1314
56
1725
21U
zbek
ista
n13
813
815
34
613
35
111
7Bo
snia
and
H
erze
govi
na10
511
97
40
313
252
3025
56Ko
sovo
n/a
n/a
210
16
109
08
2036
Tota
l fra
gile
stat
es
12
52
612
163
1016
22
Dur
atio
n of
po
wer
ou
tage
s (h
ours
)
Annu
al co
st
of se
curit
y (%
of s
ales
)
% o
f co
ntra
ct
valu
e pa
id
info
rmal
ly
to se
cure
co
ntra
ct
% o
f tot
al
annu
al
sale
s pai
d in
for-
mal
ly to
“g
et
thin
gs
done
”
% o
f tim
e sp
ent b
y se
nior
m
anag
e-m
ent o
n go
vern
-m
ent r
egu-
latio
ns
% o
f new
in
vest
men
t fro
m p
rivat
e ba
nks
% o
f new
in
vest
men
t fro
m st
ate-
owne
d ba
nks
% o
f firm
s w
ith
inte
rna-
tiona
lly
reco
g-ni
zed
qual
ity
cert
ifica
-tio
n
% o
f firm
s us
ing
tech
nolo
gy
licen
se fr
om
fore
ign
com
pani
es
% o
f firm
s us
ing
thei
r ow
n w
ebsit
e
Non
-frag
ile st
ates
44
34
1618
521
1756
Frag
ile st
ates
125
26
1216
310
1622
Sour
ce: W
orld
Ban
k En
terp
rise
Surv
eys
2009
–11,
htt
p://
ww
w.e
nter
prise
surv
eys.o
rg (a
cces
sed
Apr
il 20
12).
Not
e: R
ed =
the
high
est v
alue
with
in th
at c
olum
n; g
reen
= th
e lo
wes
t val
ue w
ithin
that
col
umn.
TSEF.indb 75TSEF.indb 75 6/10/14 7:04 PM6/10/14 7:04 PM
TSEF.indb 76TSEF.indb 76 6/10/14 7:04 PM6/10/14 7:04 PM
Appendix G. STATA Output Underlying Graphical Presentation
<<A>> Capacity Utilization
<<B>> ECA (mean GDP per capita = US$4073.735)
<<B>> Sub-Saharan Africa (mean GDP per capita = US$1083.353)
<<B>> Asia (mean GDP per capita = US$962.512):
<<A>> Purchase of Fixed Assets
_cons 71.4185 3.271089 21.83 0.000 64.70678 78.13022
gdppc .0011848 .0006346 1.87 0.073 -.0001173 .002487
fragile -2.289879 3.859401 -0.59 0.558 -10.20872 5.628958
f1 Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Root MSE = 21.922
R-squared = 0.0199
Prob > F = 0.1057
F( 2, 27) = 2.45
Linear regression Number of obs = 4308
(sum of wgt is 1.4174e+05)
. reg f1 fragile gdppc [pw=wmedian], cluster(a1)
_cons 70.33577 2.618385 26.86 0.000 64.6791 75.99245
gdppc -.0002154 .0014583 -0.15 0.885 -.0033658 .002935
fragile -.2862403 4.218791 -0.07 0.947 -9.400385 8.827905
f1 Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 14 clusters in a1)
Root MSE = 22.795
R-squared = 0.0002
Prob > F = 0.9876
F( 2, 13) = 0.01
Linear regression Number of obs = 1924
(sum of wgt is 9.8050e+03)
. reg f1 fragile gdppc [pw=wmedian], cluster(a1)
_cons 72.32358 7.0921 10.20 0.000 54.09276 90.55441
gdppc .008996 .0065748 1.37 0.230 -.007905 .025897
fragile -7.764435 1.123269 -6.91 0.001 -10.65189 -4.87698
f1 Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 6 clusters in a1)
Root MSE = 25.288
R-squared = 0.0048
Prob > F = .
F( 1, 5) = .
Linear regression Number of obs = 3307
(sum of wgt is 2.7715e+05)
. reg f1 fragile gdppc [aw=wmedian], cluster(a1)
<<B>> ECA (mean GDP per capita = US$4073.735)
OR
<<B>> Sub-Saharan Africa (mean GDP per capita = US$1083.353)
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc .0000121 .00001 1.15 0.251 -8.5e-06 .000033 4071.28
fragile* -.1688796 .12482 -1.35 0.176 -.413522 .075762 .052205
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .55424437
y = Pr(k4) (predict)
Marginal effects after probit
. mfx
. do "C:\Users\wb417696\AppData\Local\Temp\STD02000000.tmp"
end of do-file
.
_cons .0343614 .1091231 0.31 0.753 -.1795159 .2482386
gdppc .0000305 .0000267 1.14 0.253 -.0000218 .0000829
fragile -.4271728 .3240945 -1.32 0.187 -1.062386 .2080407
k4 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -405086.86 Pseudo R2 = 0.0082
Prob > chi2 = 0.1610
Wald chi2(2) = 3.65
Probit regression Number of obs = 11043
Iteration 3: log pseudolikelihood = -405086.86
Iteration 2: log pseudolikelihood = -405086.86
Iteration 1: log pseudolikelihood = -405088.61
Iteration 0: log pseudolikelihood = -408443.46
. probit k4 fragile gdppc [pw=wmedian], cluster(a1)
_cons .5146554 .0425392 12.10 0.000 .4273721 .6019387
gdppc .0000118 .0000102 1.16 0.255 -9.05e-06 .0000327
fragile -.1677259 .1217537 -1.38 0.180 -.4175439 .082092
k4 Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Root MSE = .49432
R-squared = 0.0113
Prob > F = 0.1581
F( 2, 27) = 1.98
Linear regression Number of obs = 11043
(sum of wgt is 5.9429e+05)
. reg k4 fragile gdppc [pw=wmedian], cluster(a1)
OR
<<B>> Asia (mean GDP per capita = US$962.512):
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc .0000178 .00001 1.52 0.129 -5.2e-06 .000041 1227.44
fragile* -.0743776 .06915 -1.08 0.282 -.209917 .061162 .608209
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .42814941
y = Pr(k4) (predict)
Marginal effects after probit
. mfx
. do "C:\Users\wb417696\AppData\Local\Temp\STD00000000.tmp"
end of do-file
.
_cons -.1217025 .1307542 -0.93 0.352 -.377976 .134571
gdppc .0000453 .00003 1.51 0.131 -.0000135 .0001042
fragile -.1891318 .1771196 -1.07 0.286 -.5362797 .1580162
k4 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 23 clusters in a1)
Log pseudolikelihood = -25969.437 Pseudo R2 = 0.0095
Prob > chi2 = 0.0286
Wald chi2(2) = 7.11
Probit regression Number of obs = 6017
Iteration 3: log pseudolikelihood = -25969.437
Iteration 2: log pseudolikelihood = -25969.437
Iteration 1: log pseudolikelihood = -25969.44
Iteration 0: log pseudolikelihood = -26219.087
. probit k4 fragile gdppc [pw=wmedian], cluster(a1)
_cons .451553 .0518291 8.71 0.000 .344066 .55904
gdppc .0000181 .0000119 1.52 0.144 -6.63e-06 .0000427
fragile -.0740307 .0688549 -1.08 0.294 -.2168271 .0687657
k4 Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 23 clusters in a1)
Root MSE = .49176
R-squared = 0.0131
Prob > F = 0.0417
F( 2, 22) = 3.68
Linear regression Number of obs = 6017
(sum of wgt is 3.8391e+04)
. reg k4 fragile gdppc [pw=wmedian], cluster(a1)
OR
<<A head??>> Innovative Activity in ECA, ECA (mean GDP per capita = US$4073.735)
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc -.0003785 .00021 -1.84 0.066 -.000781 .000024 1040.71
fragile* -.0163108 .0522 -0.31 0.755 -.118619 .085998 .053431
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .28863321
y = Pr(k4) (predict)
Marginal effects after probit
. mfx
. do "C:\Users\wb417696\AppData\Local\Temp\STD01000000.tmp"
end of do-file
.
_cons .5985919 .6340042 0.94 0.345 -.6440335 1.841217
gdppc -.0011083 .0005922 -1.87 0.061 -.002269 .0000524
fragile -.0483486 .1543412 -0.31 0.754 -.3508517 .2541545
k4 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -250741.68 Pseudo R2 = 0.0269
Prob > chi2 = 0.1059
Wald chi2(2) = 4.49
Probit regression Number of obs = 5849
Iteration 3: log pseudolikelihood = -250741.68
Iteration 2: log pseudolikelihood = -250741.68
Iteration 1: log pseudolikelihood = -250744.63
Iteration 0: log pseudolikelihood = -257675.51
. probit k4 fragile gdppc [pw=wmedian], cluster(a1)
_cons .722492 .2447215 2.95 0.018 .1581634 1.286821
gdppc -.0004127 .0002263 -1.82 0.106 -.0009345 .0001091
fragile -.0098382 .0539035 -0.18 0.860 -.1341399 .1144636
k4 Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Root MSE = .44697
R-squared = 0.0351
Prob > F = 0.1857
F( 2, 8) = 2.09
Linear regression Number of obs = 5849
(sum of wgt is 4.2637e+05)
. reg k4 fragile gdppc [pw=wmedian], cluster(a1)
<<B>> Introducing new products/services
OR
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc -2.44e-06 .00001 -0.31 0.757 -.000018 .000013 4074.11
fragile* -.2031131 .09925 -2.05 0.041 -.397647 -.008579 .052255
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .51611306
y = Pr(ECAo1) (predict)
Marginal effects after probit
. mfx
. do "C:\Users\wb417696\AppData\Local\Temp\STD02000000.tmp"
end of do-file
.
_cons .0927338 .130368 0.71 0.477 -.1627828 .3482504
gdppc -6.12e-06 .0000198 -0.31 0.757 -.0000449 .0000326
fragile -.5245789 .2735136 -1.92 0.055 -1.060656 .0114979
ECAo1 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -409006.35 Pseudo R2 = 0.0057
Prob > chi2 = 0.1473
Wald chi2(2) = 3.83
Probit regression Number of obs = 11072
Iteration 3: log pseudolikelihood = -409006.35
Iteration 2: log pseudolikelihood = -409006.35
Iteration 1: log pseudolikelihood = -409008.61
Iteration 0: log pseudolikelihood = -411351.6
. probit ECAo1 fragile gdppc [pw=wmedian], cluster(a1)
_cons .5370233 .0518303 10.36 0.000 .4306762 .6433704
gdppc -2.45e-06 7.86e-06 -0.31 0.757 -.0000186 .0000137
fragile -.2038618 .1008653 -2.02 0.053 -.4108203 .0030968
ECAo1 Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Root MSE = .49785
R-squared = 0.0078
Prob > F = 0.1341
F( 2, 27) = 2.17
Linear regression Number of obs = 11072
(sum of wgt is 5.9391e+05)
. reg ECAo1 fragile gdppc [pw=wmedian], cluster(a1)
<<B>> Investment in R&D
OR
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc -6.08e-07 .00001 -0.09 0.932 -.000014 .000013 4074.93
fragile* -.0827478 .09924 -0.83 0.404 -.277253 .111757 .05218
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .20696099
y = Pr(ECAo3) (predict)
Marginal effects after probit
. mfx
. do "C:\Users\wb417696\AppData\Local\Temp\STD02000000.tmp"
end of do-file
.
_cons -.7910882 .1123867 -7.04 0.000 -1.011362 -.5708143
gdppc -2.13e-06 .0000248 -0.09 0.932 -.0000507 .0000465
fragile -.330531 .4683909 -0.71 0.480 -1.24856 .5874983
ECAo3 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -302305.86 Pseudo R2 = 0.0022
Prob > chi2 = 0.7794
Wald chi2(2) = 0.50
Probit regression Number of obs = 11022
Iteration 3: log pseudolikelihood = -302305.86
Iteration 2: log pseudolikelihood = -302305.86
Iteration 1: log pseudolikelihood = -302307.24
Iteration 0: log pseudolikelihood = -302965.22
. probit ECAo3 fragile gdppc [pw=wmedian], cluster(a1)
_cons .2147329 .0327917 6.55 0.000 .1474499 .2820158
gdppc -6.85e-07 7.20e-06 -0.10 0.925 -.0000155 .0000141
fragile -.083481 .1013652 -0.82 0.417 -.2914652 .1245032
ECAo3 Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Root MSE = .40522
R-squared = 0.0020
Prob > F = 0.7125
F( 2, 27) = 0.34
Linear regression Number of obs = 11022
(sum of wgt is 5.9319e+05)
. reg ECAo3 fragile gdppc [pw=wmedian], cluster(a1)
<<B>> Upgrading existing lines
OR
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc -4.79e-06 .00001 -0.36 0.719 -.000031 .000021 4068.35
fragile* -.1605464 .14693 -1.09 0.275 -.448524 .127431 .051884
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .67844518
y = Pr(ECAo13) (predict)
Marginal effects after probit
. mfx
_cons .5395683 .2338194 2.31 0.021 .0812907 .997846
gdppc -.0000134 .0000375 -0.36 0.721 -.0000868 .0000601
fragile -.4207678 .3749604 -1.12 0.262 -1.155677 .3141411
ECAo13 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -368556.03 Pseudo R2 = 0.0040
Prob > chi2 = 0.5282
Wald chi2(2) = 1.28
Probit regression Number of obs = 10996
Iteration 3: log pseudolikelihood = -368556.03
Iteration 2: log pseudolikelihood = -368556.03
Iteration 1: log pseudolikelihood = -368556.4
Iteration 0: log pseudolikelihood = -370032.17
. probit ECAo13 fragile gdppc [pw=wmedian], cluster(a1)
_cons .7052307 .0816439 8.64 0.000 .5377113 .8727502
gdppc -4.70e-06 .0000132 -0.36 0.725 -.0000318 .0000224
fragile -.1586606 .1441343 -1.10 0.281 -.4543998 .1370785
ECAo13 Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Root MSE = .46612
R-squared = 0.0052
Prob > F = 0.5517
F( 2, 27) = 0.61
Linear regression Number of obs = 10996
(sum of wgt is 5.8880e+05)
. reg ECAo13 fragile gdppc [pw=wmedian], cluster(a1)
<<A>> Growth in Employment
“growthempl” = (current number of employees – number of employees upon start-up)/firm age
<<B>> ECA (mean GDP per capita = US$4073.735)
<<B>> Sub-Saharan Africa (mean GDP per capita = US$1083.353)
<<B>> Asia (mean GDP per capita = US$962.512)
_cons 4.547478 1.023738 4.44 0.000 2.446941 6.648014
gdppc .0001607 .000268 0.60 0.554 -.0003892 .0007105
fragile -6.528735 4.718425 -1.38 0.178 -16.21014 3.152674
growthempl Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Root MSE = 83.292
R-squared = 0.0009
Prob > F = 0.3399
F( 2, 27) = 1.12
Linear regression Number of obs = 10856
. reg growthempl fragile gdppc, cluster(a1)
_cons 4.070451 1.946647 2.09 0.048 .0333533 8.10755
gdppc -.0008981 .0004815 -1.87 0.076 -.0018966 .0001005
fragile -2.601048 1.755854 -1.48 0.153 -6.242465 1.04037
growthempl Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 23 clusters in a1)
Root MSE = 46.627
R-squared = 0.0009
Prob > F = 0.1974
F( 2, 22) = 1.75
Linear regression Number of obs = 5202
. reg growthempl fragile gdppc, cluster(a1)
_cons 7.803868 5.234201 1.49 0.174 -4.266223 19.87396
gdppc -.0027269 .0040509 -0.67 0.520 -.0120684 .0066146
fragile -1.465518 1.908247 -0.77 0.465 -5.865943 2.934906
growthempl Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Root MSE = 38.982
R-squared = 0.0007
Prob > F = 0.7494
F( 2, 8) = 0.30
Linear regression Number of obs = 5913
. reg growthempl fragile gdppc, cluster(a1)
<<A>> Trade Destination, Sub-Saharan Africa
<<B>> Sub-Saharan Africa (mean GDP per capita = US$1083.353)
(A) <<C>> Neighboring countries within Sub-Saharan Africa
(B) <<C>> Developed countries
(C) <<C>> Other
<<A>> Unpredictability
_cons 51.07685 18.75959 2.72 0.042 2.853777 99.29992
gdppc -.0321273 .028995 -1.11 0.318 -.1066613 .0424068
fragile 24.35791 18.12839 1.34 0.237 -22.24261 70.95844
afd3f Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 6 clusters in a1)
Root MSE = 40.276
R-squared = 0.0470
Prob > F = 0.3937
F( 2, 5) = 1.13
Linear regression Number of obs = 184
(sum of wgt is 7.1757e+02)
. reg afd3f fragile gdppc [pw=wmedian], cluster(a1)
_cons 51.40556 18.99618 2.71 0.042 2.574322 100.2368
gdppc -.001651 .0292056 -0.06 0.957 -.0767263 .0734244
fragile -34.07735 18.75567 -1.82 0.129 -82.29034 14.13563
afd3g Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 6 clusters in a1)
Root MSE = 38.987
R-squared = 0.1662
Prob > F = 0.2404
F( 2, 5) = 1.92
Linear regression Number of obs = 184
(sum of wgt is 7.1757e+02)
. reg afd3g fragile gdppc [pw=wmedian], cluster(a1)
_cons -2.48241 7.462948 -0.33 0.753 -21.66653 16.70171
gdppc .0337782 .0281172 1.20 0.283 -.0384993 .1060557
fragile 9.719436 6.886858 1.41 0.217 -7.983797 27.42267
afd3h Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 6 clusters in a1)
Root MSE = 28.371
R-squared = 0.1215
Prob > F = 0.1684
F( 2, 5) = 2.60
Linear regression Number of obs = 184
(sum of wgt is 7.1757e+02)
. reg afd3h fragile gdppc [pw=wmedian], cluster(a1)
<<B>> ECA
<<C>> Crime, theft, and disorder
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc -.0000302 .00001 -3.49 0.000 -.000047 -.000013 3290.67
fragile* .0406057 .07906 0.51 0.608 -.114349 .19556 .157998
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .26296235
y = Pr(msocrime) (predict)
Marginal effects after probit
. mfx
. do "C:\Users\wb417696\AppData\Local\Temp\STD02000000.tmp"
end of do-file
.
_cons -.3490376 .1153365 -3.03 0.002 -.5750931 -.1229822
gdppc -.0000925 .000027 -3.42 0.001 -.0001454 -.0000396
fragile .1213778 .2298931 0.53 0.598 -.3292043 .5719599
msocrime Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -6096.5704 Pseudo R2 = 0.0271
Prob > chi2 = 0.0004
Wald chi2(2) = 15.67
Probit regression Number of obs = 10747
Iteration 3: log pseudolikelihood = -6096.5704
Iteration 2: log pseudolikelihood = -6096.5704
Iteration 1: log pseudolikelihood = -6097.5763
Iteration 0: log pseudolikelihood = -6266.6012
. probit msocrime fragile gdppc, cluster(a1)
Labelled to here Corruption
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc -.0000295 .00001 -4.06 0.000 -.000044 -.000015 3306.64
fragile* -.0291753 .07954 -0.37 0.714 -.18508 .126729 .156561
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .35779431
y = Pr(msocorr) (predict)
Marginal effects after probit
. mfx
. do "C:\Users\wb417696\AppData\Local\Temp\STD02000000.tmp"
end of do-file
.
_cons -.091111 .0978134 -0.93 0.352 -.2828217 .1005997
gdppc -.0000789 .0000193 -4.09 0.000 -.0001167 -.0000411
fragile -.0789734 .218153 -0.36 0.717 -.5065454 .3485986
msocorr Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -6730.9526 Pseudo R2 = 0.0155
Prob > chi2 = 0.0001
Wald chi2(2) = 17.93
Probit regression Number of obs = 10456
Iteration 3: log pseudolikelihood = -6730.9526
Iteration 2: log pseudolikelihood = -6730.9526
Iteration 1: log pseudolikelihood = -6731.3598
Iteration 0: log pseudolikelihood = -6837.2107
. probit msocorr fragile gdppc, cluster(a1)
Courts
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc -.0000151 .00001 -2.40 0.017 -.000027 -2.8e-06 3371.62
fragile* -.0633163 .02603 -2.43 0.015 -.114327 -.012306 .156767
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .20806218
y = Pr(msocourts) (predict)
Marginal effects after probit
. mfx
_cons -.5983602 .1072057 -5.58 0.000 -.8084795 -.3882409
gdppc -.0000527 .0000216 -2.44 0.015 -.000095 -.0000103
fragile -.2368886 .0973221 -2.43 0.015 -.4276364 -.0461408
msocourts Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -5141.9949 Pseudo R2 = 0.0083
Prob > chi2 = 0.0250
Wald chi2(2) = 7.38
Probit regression Number of obs = 10085
Iteration 3: log pseudolikelihood = -5141.9949
Iteration 2: log pseudolikelihood = -5141.9949
Iteration 1: log pseudolikelihood = -5142.084
Iteration 0: log pseudolikelihood = -5184.7763
. probit msocourts fragile gdppc, cluster(a1)
Informal competition
Political instability
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc -.0000222 .00000 -4.90 0.000 -.000031 -.000013 3323.92
fragile* -.095201 .01899 -5.01 0.000 -.13243 -.057973 .161168
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .28328491
y = Pr(msoinfcomp) (predict)
Marginal effects after probit
. mfx
_cons -.3068337 .0538887 -5.69 0.000 -.4124537 -.2012137
gdppc -.0000655 .0000138 -4.75 0.000 -.0000926 -.0000385
fragile -.3002718 .0611207 -4.91 0.000 -.4200662 -.1804775
msoinfcomp Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -6093.7433 Pseudo R2 = 0.0122
Prob > chi2 = 0.0000
Wald chi2(2) = 36.29
Probit regression Number of obs = 10306
Iteration 3: log pseudolikelihood = -6093.7433
Iteration 2: log pseudolikelihood = -6093.7433
Iteration 1: log pseudolikelihood = -6093.9197
Iteration 0: log pseudolikelihood = -6168.9052
. probit msoinfcomp fragile gdppc, cluster(a1)
Sub-Saharan Africa
Crime, theft, and disorder
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc -.0000196 .00001 -1.62 0.105 -.000043 4.1e-06 3333.95
fragile* -.0334405 .08403 -0.40 0.691 -.19813 .131249 .15281
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .39899776
y = Pr(msopolinst) (predict)
Marginal effects after probit
. mfx
_cons -.0730396 .1415955 -0.52 0.606 -.3505617 .2044826
gdppc -.0000509 .0000314 -1.62 0.105 -.0001123 .0000106
fragile -.0873545 .2214749 -0.39 0.693 -.5214374 .3467283
msopolinst Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -7149.1768 Pseudo R2 = 0.0066
Prob > chi2 = 0.2675
Wald chi2(2) = 2.64
Probit regression Number of obs = 10693
Iteration 3: log pseudolikelihood = -7149.1768
Iteration 2: log pseudolikelihood = -7149.1768
Iteration 1: log pseudolikelihood = -7149.2368
Iteration 0: log pseudolikelihood = -7196.4327
. probit msopolinst fragile gdppc, cluster(a1)
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc -3.87e-06 .00002 -0.21 0.835 -.00004 .000032 1082.63
fragile* -.0560162 .0842 -0.67 0.506 -.221039 .109006 .588372
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .34219976
y = Pr(msocrime) (predict)
Marginal effects after probit
. mfx
_cons -.3057461 .1664697 -1.84 0.066 -.6320206 .0205285
gdppc -.0000105 .0000503 -0.21 0.834 -.000109 .000088
fragile -.1518108 .2309321 -0.66 0.511 -.6044295 .3008079
msocrime Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 23 clusters in a1)
Log pseudolikelihood = -3871.2558 Pseudo R2 = 0.0023
Prob > chi2 = 0.8056
Wald chi2(2) = 0.43
Probit regression Number of obs = 6037
Iteration 3: log pseudolikelihood = -3871.2558
Iteration 2: log pseudolikelihood = -3871.2558
Iteration 1: log pseudolikelihood = -3871.2562
Iteration 0: log pseudolikelihood = -3880.0715
. probit msocrime fragile gdppc, cluster(a1)
Corruption
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc -.0000141 .00002 -0.60 0.547 -.00006 .000032 1046.34
fragile* .0808102 .10186 0.79 0.428 -.118832 .280452 .589863
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .50220173
y = Pr(msocorr) (predict)
Marginal effects after probit
. mfx
_cons -.0771367 .2284712 -0.34 0.736 -.524932 .3706587
gdppc -.0000354 .0000588 -0.60 0.547 -.0001507 .0000799
fragile .202925 .2566793 0.79 0.429 -.3001572 .7060072
msocorr Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 23 clusters in a1)
Log pseudolikelihood = -3976.2384 Pseudo R2 = 0.0077
Prob > chi2 = 0.3030
Wald chi2(2) = 2.39
Probit regression Number of obs = 5781
Iteration 3: log pseudolikelihood = -3976.2384
Iteration 2: log pseudolikelihood = -3976.2384
Iteration 1: log pseudolikelihood = -3976.2402
Iteration 0: log pseudolikelihood = -4007.0208
. probit msocorr fragile gdppc, cluster(a1)
Courts
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc -.0000229 .00001 -2.14 0.032 -.000044 -1.9e-06 1019.74
fragile* -.001971 .04382 -0.04 0.964 -.087856 .083914 .595998
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .20526843
y = Pr(msocourts) (predict)
Marginal effects after probit
. mfx
_cons -.736712 .1014973 -7.26 0.000 -.9356431 -.5377808
gdppc -.0000805 .0000364 -2.21 0.027 -.0001518 -9.24e-06
fragile -.0069278 .1542201 -0.04 0.964 -.3091937 .295338
msocourts Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 23 clusters in a1)
Log pseudolikelihood = -2811.8401 Pseudo R2 = 0.0054
Prob > chi2 = 0.0723
Wald chi2(2) = 5.25
Probit regression Number of obs = 5547
Iteration 3: log pseudolikelihood = -2811.8401
Iteration 2: log pseudolikelihood = -2811.8401
Iteration 1: log pseudolikelihood = -2811.9004
Iteration 0: log pseudolikelihood = -2827.0671
. probit msocourts fragile gdppc, cluster(a1)
Informal competition
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc -.0000247 .00001 -1.70 0.088 -.000053 3.7e-06 1065.08
fragile* -.0176209 .06689 -0.26 0.792 -.148716 .113474 .590855
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .4328145
y = Pr(msoinfcomp) (predict)
Marginal effects after probit
. mfx
_cons -.0759556 .1382114 -0.55 0.583 -.346845 .1949339
gdppc -.0000627 .0000365 -1.72 0.086 -.0001342 8.78e-06
fragile -.0447791 .1700872 -0.26 0.792 -.378144 .2885858
msoinfcomp Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 23 clusters in a1)
Log pseudolikelihood = -4042.1057 Pseudo R2 = 0.0032
Prob > chi2 = 0.1827
Wald chi2(2) = 3.40
Probit regression Number of obs = 5927
Iteration 3: log pseudolikelihood = -4042.1057
Iteration 2: log pseudolikelihood = -4042.1057
Iteration 1: log pseudolikelihood = -4042.1073
Iteration 0: log pseudolikelihood = -4055.0744
. probit msoinfcomp fragile gdppc, cluster(a1)
Political Instability
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc -.0000575 .00004 -1.60 0.110 -.000128 .000013 1070.79
fragile* .1892112 .1099 1.72 0.085 -.026186 .404608 .590547
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .44905409
y = Pr(msopolinst) (predict)
Marginal effects after probit
. mfx
_cons -.2593948 .2304874 -1.13 0.260 -.7111417 .1923521
gdppc -.0001453 .000091 -1.60 0.110 -.0003236 .0000329
fragile .4859548 .2859247 1.70 0.089 -.0744472 1.046357
msopolinst Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 23 clusters in a1)
Log pseudolikelihood = -3740.9395 Pseudo R2 = 0.0602
Prob > chi2 = 0.0161
Wald chi2(2) = 8.26
Probit regression Number of obs = 5776
Iteration 3: log pseudolikelihood = -3740.9395
Iteration 2: log pseudolikelihood = -3740.9395
Iteration 1: log pseudolikelihood = -3742.1044
Iteration 0: log pseudolikelihood = -3980.7177
. probit msopolinst fragile gdppc, cluster(a1)
Asia
Crime, theft and disorder
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc 7.22e-06 .00006 0.13 0.897 -.000102 .000116 960.795
fragile* .0076196 .05527 0.14 0.890 -.100714 .115953 .190762
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .08906026
y = Pr(msocrime) (predict)
Marginal effects after probit
. mfx
. do "C:\Users\wb417696\AppData\Local\Temp\STD01000000.tmp"
end of do-file
.
_cons -1.398478 .4166762 -3.36 0.001 -2.215148 -.5818075
gdppc .0000448 .0003508 0.13 0.898 -.0006426 .0007323
fragile .0463858 .3295981 0.14 0.888 -.5996146 .6923861
msocrime Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -1749.5702 Pseudo R2 = 0.0003
Prob > chi2 = 0.9748
Wald chi2(2) = 0.05
Probit regression Number of obs = 5824
Iteration 2: log pseudolikelihood = -1749.5702
Iteration 1: log pseudolikelihood = -1749.5703
Iteration 0: log pseudolikelihood = -1750.0139
. probit msocrime fragile gdppc, cluster(a1)
Corruption
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc .0000115 .00011 0.11 0.913 -.000195 .000219 967.711
fragile* -.0268556 .0586 -0.46 0.647 -.141705 .087994 .183954
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .17526264
y = Pr(msocorr) (predict)
Marginal effects after probit
. mfx
_cons -.9570817 .4694272 -2.04 0.041 -1.877142 -.0370213
gdppc .0000447 .0004105 0.11 0.913 -.0007599 .0008494
fragile -.1075026 .2338658 -0.46 0.646 -.5658713 .350866
msocorr Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -2527.6606 Pseudo R2 = 0.0010
Prob > chi2 = 0.8612
Wald chi2(2) = 0.30
Probit regression Number of obs = 5447
Iteration 3: log pseudolikelihood = -2527.6606
Iteration 2: log pseudolikelihood = -2527.6606
Iteration 1: log pseudolikelihood = -2527.6616
Iteration 0: log pseudolikelihood = -2530.2159
. probit msocorr fragile gdppc, cluster(a1)
Courts
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc .0000128 .00005 0.25 0.799 -.000086 .000112 980.959
fragile* .0090328 .04644 0.19 0.846 -.081984 .100049 .180707
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .06680597
y = Pr(msocourts) (predict)
Marginal effects after probit
. mfx
_cons -1.609464 .5090007 -3.16 0.002 -2.607087 -.6118408
gdppc .0000991 .0004011 0.25 0.805 -.0006869 .0008852
fragile .0675236 .3373227 0.20 0.841 -.5936168 .728664
msocourts Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -1264.8745 Pseudo R2 = 0.0008
Prob > chi2 = 0.9646
Wald chi2(2) = 0.07
Probit regression Number of obs = 5152
Iteration 3: log pseudolikelihood = -1264.8745
Iteration 2: log pseudolikelihood = -1264.8745
Iteration 1: log pseudolikelihood = -1264.8751
Iteration 0: log pseudolikelihood = -1265.9224
. probit msocourts fragile gdppc, cluster(a1)
Informal competition
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc .0000583 .00004 1.56 0.120 -.000015 .000132 963.921
fragile* .0452807 .03883 1.17 0.244 -.030828 .12139 .195169
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .17899353
y = Pr(msoinfcomp) (predict)
Marginal effects after probit
. mfx
_cons -1.166585 .149909 -7.78 0.000 -1.460401 -.8727683
gdppc .0002231 .000143 1.56 0.119 -.0000571 .0005033
fragile .1655793 .1362494 1.22 0.224 -.1014645 .4326232
msoinfcomp Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -2662.0756 Pseudo R2 = 0.0044
Prob > chi2 = 0.1206
Wald chi2(2) = 4.23
Probit regression Number of obs = 5672
Iteration 3: log pseudolikelihood = -2662.0756
Iteration 2: log pseudolikelihood = -2662.0756
Iteration 1: log pseudolikelihood = -2662.0824
Iteration 0: log pseudolikelihood = -2673.8045
. probit msoinfcomp fragile gdppc, cluster(a1)
Political instability
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc -.0002198 .00023 -0.95 0.343 -.000674 .000235 959.029
fragile* -.1056923 .1054 -1.00 0.316 -.31228 .100896 .19322
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .16148579
y = Pr(msopolinst) (predict)
Marginal effects after probit
. mfx
_cons -.0288962 .9949836 -0.03 0.977 -1.979028 1.921236
gdppc -.0008981 .0008274 -1.09 0.278 -.0025197 .0007235
fragile -.5082382 .5621058 -0.90 0.366 -1.609945 .5934689
msopolinst Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -2433.0662 Pseudo R2 = 0.0595
Prob > chi2 = 0.5258
Wald chi2(2) = 1.29
Probit regression Number of obs = 5605
Iteration 3: log pseudolikelihood = -2433.0662
Iteration 2: log pseudolikelihood = -2433.0663
Iteration 1: log pseudolikelihood = -2434.0967
Iteration 0: log pseudolikelihood = -2586.9373
. probit msopolinst fragile gdppc, cluster(a1)
Rent Seeking
ECA
Electrical connections
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0110541 .03443 0.32 0.748 -.056433 .078542 .044105
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .09187484
y = Pr(c5) (predict)
Marginal effects after probit
. mfx
_cons -1.332142 .1353715 -9.84 0.000 -1.597465 -1.066819
fragile .0644884 .1999592 0.32 0.747 -.3274244 .4564013
c5 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -22233.333 Pseudo R2 = 0.0001
Prob > chi2 = 0.7471
Wald chi2(1) = 0.10
Probit regression Number of obs = 1543
Iteration 2: log pseudolikelihood = -22233.333
Iteration 1: log pseudolikelihood = -22233.334
Iteration 0: log pseudolikelihood = -22235.5
. probit c5 fragile [pw=wmedian], cluster(a1)
Water connection
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0145964 .02153 0.68 0.498 -.027603 .056796 .052836
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .06267433
y = Pr(c14) (predict)
Marginal effects after probit
. mfx
_cons -1.538511 .1344805 -11.44 0.000 -1.802088 -1.274934
fragile .1099015 .1656919 0.66 0.507 -.2148485 .4346516
c14 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -9721.1107 Pseudo R2 = 0.0004
Prob > chi2 = 0.5071
Wald chi2(1) = 0.44
Probit regression Number of obs = 940
Iteration 3: log pseudolikelihood = -9721.1107
Iteration 2: log pseudolikelihood = -9721.1107
Iteration 1: log pseudolikelihood = -9721.1181
Iteration 0: log pseudolikelihood = -9724.6525
. probit c14 fragile [pw=wmedian], cluster(a1)
Phone connection
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0077812 .01558 0.50 0.617 -.022749 .038311 .034316
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .03321667
y = Pr(c21) (predict)
Marginal effects after probit
. mfx
_cons -1.83881 .1078104 -17.06 0.000 -2.050115 -1.627506
fragile .0967929 .1873622 0.52 0.605 -.2704303 .4640161
c21 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -16385.213 Pseudo R2 = 0.0002
Prob > chi2 = 0.6054
Wald chi2(1) = 0.27
Probit regression Number of obs = 2287
Iteration 3: log pseudolikelihood = -16385.213
Iteration 2: log pseudolikelihood = -16385.213
Iteration 1: log pseudolikelihood = -16385.223
Iteration 0: log pseudolikelihood = -16388.5
. probit c21 fragile [pw=wmedian], cluster(a1)
Construction-related permit
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0350246 .11202 0.31 0.755 -.184537 .254586 .041085
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .20196764
y = Pr(g4) (predict)
Marginal effects after probit
. mfx
_cons -.8395041 .164901 -5.09 0.000 -1.162704 -.516304
fragile .119034 .3702867 0.32 0.748 -.6067146 .8447826
g4 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -47709.95 Pseudo R2 = 0.0003
Prob > chi2 = 0.7479
Wald chi2(1) = 0.10
Probit regression Number of obs = 2062
Iteration 3: log pseudolikelihood = -47709.95
Iteration 2: log pseudolikelihood = -47709.95
Iteration 1: log pseudolikelihood = -47709.956
Iteration 0: log pseudolikelihood = -47723.649
. probit g4 fragile [pw=wmedian], cluster(a1)
Import license
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0243319 .04277 0.57 0.569 -.059505 .108168 .07612
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .08920154
y = Pr(j12) (predict)
Marginal effects after probit
. mfx
_cons -1.356304 .2205779 -6.15 0.000 -1.788629 -.9239798
fragile .139467 .2553577 0.55 0.585 -.361025 .639959
j12 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -7805.9752 Pseudo R2 = 0.0008
Prob > chi2 = 0.5850
Wald chi2(1) = 0.30
Probit regression Number of obs = 805
Iteration 3: log pseudolikelihood = -7805.9752
Iteration 2: log pseudolikelihood = -7805.9752
Iteration 1: log pseudolikelihood = -7805.988
Iteration 0: log pseudolikelihood = -7812.2052
. probit j12 fragile [pw=wmedian], cluster(a1)
Business license
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .1514066 .0783 1.93 0.053 -.002059 .304872 .043975
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .12635789
y = Pr(j15) (predict)
Marginal effects after probit
. mfx
_cons -1.168575 .1349949 -8.66 0.000 -1.43316 -.9039898
fragile .5638896 .2589318 2.18 0.029 .0563926 1.071387
j15 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -44275.214 Pseudo R2 = 0.0091
Prob > chi2 = 0.0294
Wald chi2(1) = 4.74
Probit regression Number of obs = 2140
Iteration 3: log pseudolikelihood = -44275.214
Iteration 2: log pseudolikelihood = -44275.215
Iteration 1: log pseudolikelihood = -44279.595
Iteration 0: log pseudolikelihood = -44679.693
. probit j15 fragile [pw=wmedian], cluster(a1)
Inspections by tax officials
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0617788 .07295 0.85 0.397 -.081199 .204757 .038651
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .07327704
y = Pr(j5) (predict)
Marginal effects after probit
. mfx
_cons -1.465493 .14636 -10.01 0.000 -1.752353 -1.178632
fragile .3539714 .3575471 0.99 0.322 -.3468081 1.054751
j5 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -78551.544 Pseudo R2 = 0.0033
Prob > chi2 = 0.3222
Wald chi2(1) = 0.98
Probit regression Number of obs = 6086
Iteration 3: log pseudolikelihood = -78551.544
Iteration 2: log pseudolikelihood = -78551.544
Iteration 1: log pseudolikelihood = -78555.428
Iteration 0: log pseudolikelihood = -78808.895
. probit j5 fragile [pw=wmedian], cluster(a1)
Africa
Electrical connection
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0407867 .07511 0.54 0.587 -.106421 .187994 .680066
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .20146224
y = Pr(c5) (predict)
Marginal effects after probit
. mfx
_cons -.9373433 .2520194 -3.72 0.000 -1.431292 -.4433943
fragile .1484174 .2835528 0.52 0.601 -.4073358 .7041706
c5 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 24 clusters in a1)
Log pseudolikelihood = -3103.7524 Pseudo R2 = 0.0023
Prob > chi2 = 0.6007
Wald chi2(1) = 0.27
Probit regression Number of obs = 790
Iteration 3: log pseudolikelihood = -3103.7524
Iteration 2: log pseudolikelihood = -3103.7524
Iteration 1: log pseudolikelihood = -3103.7553
Iteration 0: log pseudolikelihood = -3110.8322
. probit c5 fragile [pw=wmedian], cluster(a1)
Phone connection
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0637112 .07632 0.83 0.404 -.085877 .2133 .561578
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .12885362
y = Pr(c21) (predict)
Marginal effects after probit
. mfx
_cons -1.305517 .1596301 -8.18 0.000 -1.618386 -.9926474
fragile .3092888 .3342452 0.93 0.355 -.3458198 .9643975
c21 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 24 clusters in a1)
Log pseudolikelihood = -2407.512 Pseudo R2 = 0.0115
Prob > chi2 = 0.3548
Wald chi2(1) = 0.86
Probit regression Number of obs = 857
Iteration 3: log pseudolikelihood = -2407.512
Iteration 2: log pseudolikelihood = -2407.512
Iteration 1: log pseudolikelihood = -2407.5876
Iteration 0: log pseudolikelihood = -2435.5758
. probit c21 fragile [pw=wmedian], cluster(a1)
Construction-related permit
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .1736227 .084 2.07 0.039 .008987 .338259 .499141
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .23724042
y = Pr(g4) (predict)
Marginal effects after probit
. mfx
_cons -.9974871 .1745298 -5.72 0.000 -1.339559 -.6554149
fragile .5655313 .2651715 2.13 0.033 .0458048 1.085258
g4 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 24 clusters in a1)
Log pseudolikelihood = -2081.2612 Pseudo R2 = 0.0370
Prob > chi2 = 0.0329
Wald chi2(1) = 4.55
Probit regression Number of obs = 674
Iteration 3: log pseudolikelihood = -2081.2612
Iteration 2: log pseudolikelihood = -2081.2612
Iteration 1: log pseudolikelihood = -2081.4861
Iteration 0: log pseudolikelihood = -2161.3077
. probit g4 fragile [pw=wmedian], cluster(a1)
Inspections by tax officials
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .1387549 .06123 2.27 0.023 .018744 .258765 .632214
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .17475343
y = Pr(j5) (predict)
Marginal effects after probit
. mfx
_cons -1.302509 .1475199 -8.83 0.000 -1.591643 -1.013375
fragile .5804403 .2339253 2.48 0.013 .1219551 1.038926
j5 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 24 clusters in a1)
Log pseudolikelihood = -10871.92 Pseudo R2 = 0.0338
Prob > chi2 = 0.0131
Wald chi2(1) = 6.16
Probit regression Number of obs = 3929
Iteration 3: log pseudolikelihood = -10871.92
Iteration 2: log pseudolikelihood = -10871.92
Iteration 1: log pseudolikelihood = -10875.285
Iteration 0: log pseudolikelihood = -11252.133
. probit j5 fragile [pw=wmedian], cluster(a1)
Import license
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .1455259 .06995 2.08 0.037 .008423 .282629 .59556
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .15801035
y = Pr(j12) (predict)
Marginal effects after probit
. mfx
_cons -1.3845 .2742818 -5.05 0.000 -1.922082 -.8469171
fragile .6411289 .3308039 1.94 0.053 -.0072349 1.289493
j12 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 24 clusters in a1)
Log pseudolikelihood = -1717.0085 Pseudo R2 = 0.0429
Prob > chi2 = 0.0526
Wald chi2(1) = 3.76
Probit regression Number of obs = 819
Iteration 3: log pseudolikelihood = -1717.0085
Iteration 2: log pseudolikelihood = -1717.0086
Iteration 1: log pseudolikelihood = -1717.8703
Iteration 0: log pseudolikelihood = -1794.0404
. probit j12 fragile [pw=wmedian], cluster(a1)
Business license
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .171794 .10152 1.69 0.091 -.02719 .370778 .630776
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .12356487
y = Pr(j15) (predict)
Marginal effects after probit
. mfx
_cons -1.76185 .1322818 -13.32 0.000 -2.021118 -1.502583
fragile .9583449 .3735148 2.57 0.010 .2262694 1.69042
j15 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 24 clusters in a1)
Log pseudolikelihood = -2890.632 Pseudo R2 = 0.0775
Prob > chi2 = 0.0103
Wald chi2(1) = 6.58
Probit regression Number of obs = 1315
Iteration 4: log pseudolikelihood = -2890.632
Iteration 3: log pseudolikelihood = -2890.632
Iteration 2: log pseudolikelihood = -2890.6455
Iteration 1: log pseudolikelihood = -2896.8656
Iteration 0: log pseudolikelihood = -3133.4898
. probit j15 fragile [pw=wmedian], cluster(a1)
Water connection
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.0204772 .12574 -0.16 0.871 -.266927 .225973 .669645
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .18606863
y = Pr(c14) (predict)
Marginal effects after probit
. mfx
_cons -.8418648 .3256235 -2.59 0.010 -1.480075 -.2036544
fragile -.0755808 .4641448 -0.16 0.871 -.9852879 .8341262
c14 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 24 clusters in a1)
Log pseudolikelihood = -1605.5971 Pseudo R2 = 0.0006
Prob > chi2 = 0.8706
Wald chi2(1) = 0.03
Probit regression Number of obs = 499
Iteration 2: log pseudolikelihood = -1605.5971
Iteration 1: log pseudolikelihood = -1605.5972
Iteration 0: log pseudolikelihood = -1606.6108
. probit c14 fragile [pw=wmedian], cluster(a1)
Asia
Electrical connection
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.0332923 .03339 -1.00 0.319 -.098727 .032143 .020227
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .27303337
y = Pr(c5) (predict)
Marginal effects after probit
. mfx
_cons -.6015745 .098414 -6.11 0.000 -.7944624 -.4086866
fragile -.1033251 .1005526 -1.03 0.304 -.3004044 .0937543
c5 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -23407.305 Pseudo R2 = 0.0001
Prob > chi2 = 0.3042
Wald chi2(1) = 1.06
Probit regression Number of obs = 731
Iteration 2: log pseudolikelihood = -23407.305
Iteration 1: log pseudolikelihood = -23407.306
Iteration 0: log pseudolikelihood = -23409.573
. probit c5 fragile [pw=wmedian], cluster(a1)
Water connection
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.1478524 .07369 -2.01 0.045 -.292277 -.003428 .046015
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .1460811
y = Pr(c14) (predict)
Marginal effects after probit
. mfx
_cons -.9952567 .2953351 -3.37 0.001 -1.574103 -.4164105
fragile -1.263371 .6086217 -2.08 0.038 -2.456248 -.0704947
c14 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -4980.92 Pseudo R2 = 0.0135
Prob > chi2 = 0.0379
Wald chi2(1) = 4.31
Probit regression Number of obs = 422
Iteration 4: log pseudolikelihood = -4980.92
Iteration 3: log pseudolikelihood = -4980.92
Iteration 2: log pseudolikelihood = -4980.9206
Iteration 1: log pseudolikelihood = -4982.6194
Iteration 0: log pseudolikelihood = -5048.995
. probit c14 fragile [pw=wmedian], cluster(a1)
Phone connection
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0647568 .05213 1.24 0.214 -.037413 .166927 .002027
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .06370198
y = Pr(c21) (predict)
Marginal effects after probit
. mfx
_cons -1.525212 .2222962 -6.86 0.000 -1.960904 -1.089519
fragile .3910337 .3061832 1.28 0.202 -.2090743 .9911417
c21 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 8 clusters in a1)
Log pseudolikelihood = -9732.6587 Pseudo R2 = 0.0002
Prob > chi2 = 0.2016
Wald chi2(1) = 1.63
Probit regression Number of obs = 966
Iteration 3: log pseudolikelihood = -9732.6587
Iteration 2: log pseudolikelihood = -9732.6587
Iteration 1: log pseudolikelihood = -9732.7137
Iteration 0: log pseudolikelihood = -9734.9547
. probit c21 fragile [pw=wmedian], cluster(a1)
Construction-related permit
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.2408774 .04339 -5.55 0.000 -.325923 -.155832 .071794
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .39277624
y = Pr(g4) (predict)
Marginal effects after probit
. mfx
_cons -.2199646 .0629986 -3.49 0.000 -.3434397 -.0964896
fragile -.7260444 .1538357 -4.72 0.000 -1.027557 -.424532
g4 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -16920.82 Pseudo R2 = 0.0134
Prob > chi2 = 0.0000
Wald chi2(1) = 22.27
Probit regression Number of obs = 858
Iteration 3: log pseudolikelihood = -16920.82
Iteration 2: log pseudolikelihood = -16920.82
Iteration 1: log pseudolikelihood = -16921.061
Iteration 0: log pseudolikelihood = -17150.849
. probit g4 fragile [pw=wmedian], cluster(a1)
Inspections by tax officials
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.1066884 .05286 -2.02 0.044 -.210299 -.003078 .112852
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .18805251
y = Pr(j5) (predict)
Marginal effects after probit
. mfx
_cons -.8317792 .1428713 -5.82 0.000 -1.111802 -.5517567
fragile -.4724458 .2462283 -1.92 0.055 -.9550444 .0101529
j5 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -54131.829 Pseudo R2 = 0.0087
Prob > chi2 = 0.0550
Wald chi2(1) = 3.68
Probit regression Number of obs = 3336
Iteration 3: log pseudolikelihood = -54131.829
Iteration 2: log pseudolikelihood = -54131.829
Iteration 1: log pseudolikelihood = -54132.753
Iteration 0: log pseudolikelihood = -54609.071
. probit j5 fragile [pw=wmedian], cluster(a1)
Import license
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.0160457 .15183 -0.11 0.916 -.313635 .281543 .091409
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .15106268
y = Pr(j12) (predict)
Marginal effects after probit
. mfx
_cons -1.025434 .1017354 -10.08 0.000 -1.224831 -.8260358
fragile -.0705927 .6927179 -0.10 0.919 -1.428295 1.287109
j12 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -5571.8903 Pseudo R2 = 0.0002
Prob > chi2 = 0.9188
Wald chi2(1) = 0.01
Probit regression Number of obs = 833
Iteration 2: log pseudolikelihood = -5571.8903
Iteration 1: log pseudolikelihood = -5571.8907
Iteration 0: log pseudolikelihood = -5573.0116
. probit j12 fragile [pw=wmedian], cluster(a1)
Business license
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0457166 .14441 0.32 0.752 -.237313 .328746 .040851
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .17857807
y = Pr(j15) (predict)
Marginal effects after probit
. mfx
_cons -.9274926 .1953639 -4.75 0.000 -1.310399 -.5445863
fragile .16389 .4939378 0.33 0.740 -.8042102 1.13199
j15 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -32269.181 Pseudo R2 = 0.0006
Prob > chi2 = 0.7400
Wald chi2(1) = 0.11
Probit regression Number of obs = 1957
Iteration 3: log pseudolikelihood = -32269.181
Iteration 2: log pseudolikelihood = -32269.181
Iteration 1: log pseudolikelihood = -32269.199
Iteration 0: log pseudolikelihood = -32287.328
. probit j15 fragile [pw=wmedian], cluster(a1)
Phone connection
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0647568 .05213 1.24 0.214 -.037413 .166927 .002027
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .06370198
y = Pr(c21) (predict)
Marginal effects after probit
. mfx
_cons -1.525212 .2222962 -6.86 0.000 -1.960904 -1.089519
fragile .3910337 .3061832 1.28 0.202 -.2090743 .9911417
c21 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 8 clusters in a1)
Log pseudolikelihood = -9732.6587 Pseudo R2 = 0.0002
Prob > chi2 = 0.2016
Wald chi2(1) = 1.63
Probit regression Number of obs = 966
Iteration 3: log pseudolikelihood = -9732.6587
Iteration 2: log pseudolikelihood = -9732.6587
Iteration 1: log pseudolikelihood = -9732.7137
Iteration 0: log pseudolikelihood = -9734.9547
. probit c21 fragile [pw=wmedian], cluster(a1)
Major obstacle to business
ECA
Design-based F(12.74, 1.3e+05)= 4.5659 P = 0.0000
Uncorrected chi2(14) = 104.2085
Pearson:
Key: column proportions
Total 1 1 1
transpor .0109 .0078 .0108
tax rate .1971 .2017 .1974
tax admi .0374 .0614 .0386
practice .1022 .0871 .1015
politica .1147 .0909 .1134
labor re .0384 .0182 .0373
inadequa .12 .0783 .1179
electric .0243 .0886 .0275
customs .0202 .0236 .0204
crime, t .0267 .0283 .0268
courts .0189 .0105 .0185
corrupti .0652 .0839 .0661
business .044 .0498 .0443
access t .0282 .0147 .0275
access t .1518 .1552 .152
ment 0 1 Total
establish fragile
of this
operation
the
affecting
obstacle
serious
most
Design df = 9827
Subpop. size = 530480.12
Subpop. no. of obs = 9930
Number of PSUs = 9930 Population size = 530480.12
Number of strata = 103 Number of obs = 9930
(running tabulate on estimation sample)
subpop() != 0 indicates subpopulation
Note: subpop() takes on values other than 0 and 1
. svy, subpop(a1): tab m1a fragile if m1a>0, col
Sub-Saharan Africa
Design-based F(10.82, 53173.33)= 10.4999 P = 0.0000
Uncorrected chi2(14) = 576.7497
Pearson:
Key: column proportions
Total 1 1 1
transpor .0686 .0183 .039
tax rate .0758 .0357 .0523
tax admi .031 .028 .0292
practice .1287 .0921 .1072
politica .0368 .2046 .1354
labor re .0149 .0161 .0156
inadequa .0485 .0132 .0278
electric .1208 .0828 .0985
customs .0417 .0201 .029
crime, t .0709 .0247 .0438
courts .0044 .0065 .0056
corrupti .0583 .08 .071
business .0164 .0088 .0119
access t .0298 .0305 .0302
access t .2533 .3387 .3035
ment 0 1 Total
establish fragile
of this
operation
the
affecting
obstacle
serious
most
Design df = 4913
Subpop. size = 36587.27
Subpop. no. of obs = 4988
Number of PSUs = 4988 Population size = 36587.27
Number of strata = 75 Number of obs = 4988
(running tabulate on estimation sample)
subpop() != 0 indicates subpopulation
Note: subpop() takes on values other than 0 and 1
. svy, subpop(a1): tab m1a fragile if m1a>0, col
Asia
Note: missing test statistics because of stratum with single sampling unit.
Design-based F(., .) = . P = .
Uncorrected chi2(14) = 288.4714
Pearson:
Key: column proportions
Total 1 1 1
15 .0502 .0304 .0491
14 .0236 .1428 .0304
13 .0121 .0548 .0146
12 .1407 .1467 .141
11 .0768 .0099 .0729
10 .0234 .0589 .0254
9 .0661 .0743 .0665
8 .0669 .1132 .0696
7 .0178 .026 .0183
6 .0238 .0195 .0235
5 .0016 .0047 .0018
4 .0187 .0186 .0187
3 .0235 .0578 .0254
2 .0469 .0945 .0496
1 .4081 .148 .3931
obstacle 0 1 Total
biggest fragile
Design df = 5041
Subpop. size = 381361.57
Subpop. no. of obs = 5226
Number of PSUs = 5226 Population size = 381361.57
Number of strata = 185 Number of obs = 5226
(running tabulate on estimation sample)
subpop() != 0 indicates subpopulation
Note: subpop() takes on values other than 0 and 1
. svy, subpop(a1): tab m1a fragile if m1a>0, col
Disposal of loan or line of credit
ECA (mean GDP per capita = US$4073.735)
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc .0000246 .00001 2.88 0.004 7.8e-06 .000041 4069.51
fragile* -.1120079 .14489 -0.77 0.439 -.395982 .171966 .052362
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .43464353
y = Pr(k8) (predict)
Marginal effects after probit
. mfx
_cons -.4032404 .122858 -3.28 0.001 -.6440378 -.1624431
gdppc .0000624 .0000218 2.86 0.004 .0000196 .0001053
fragile -.2943291 .3995865 -0.74 0.461 -1.077504 .4888461
k8 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -399284.67 Pseudo R2 = 0.0142
Prob > chi2 = 0.0061
Wald chi2(2) = 10.19
Probit regression Number of obs = 11004
Iteration 3: log pseudolikelihood = -399284.67
Iteration 2: log pseudolikelihood = -399284.67
Iteration 1: log pseudolikelihood = -399290.43
Iteration 0: log pseudolikelihood = -405035.07
. probit k8 fragile gdppc [pw=wmedian], cluster(a1)
Sub-Saharan Africa (mean GDP per capita = US$1083.353)
(*) dy/dx is for discrete change of dummy variable from 0 to 1
gdppc .0000297 .00001 2.61 0.009 7.4e-06 .000052 1242.69
fragile* -.1338436 .04846 -2.76 0.006 -.228831 -.038856 .607041
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .22346204
y = Pr(k8) (predict)
Marginal effects after probit
. mfx
_cons -.6200937 .1265223 -4.90 0.000 -.8680728 -.3721145
gdppc .0000993 .000037 2.68 0.007 .0000266 .0001719
fragile -.4345861 .1595001 -2.72 0.006 -.7472006 -.1219717
k8 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 23 clusters in a1)
Log pseudolikelihood = -19687.554 Pseudo R2 = 0.0537
Prob > chi2 = 0.0000
Wald chi2(2) = 32.97
Probit regression Number of obs = 5958
Iteration 3: log pseudolikelihood = -19687.554
Iteration 2: log pseudolikelihood = -19687.554
Iteration 1: log pseudolikelihood = -19690.113
Iteration 0: log pseudolikelihood = -20804.673
. probit k8 fragile gdppc [pw=wmedian], cluster(a1)
Reasons not to apply for a loan
ECA
No need of a loan
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.0470761 .03379 -1.39 0.164 -.113296 .019144 .051888
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .40969517
y = Pr(k17noneed) (predict)
Marginal effects after probit
. mfx
_cons -.2219517 .0423567 -5.24 0.000 -.3049693 -.1389341
fragile -.1229088 .0891557 -1.38 0.168 -.2976508 .0518333
k17noneed Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -405421.26 Pseudo R2 = 0.0003
Prob > chi2 = 0.1680
Wald chi2(1) = 1.90
Probit regression Number of obs = 11131
Iteration 2: log pseudolikelihood = -405421.26
Iteration 1: log pseudolikelihood = -405421.27
Iteration 0: log pseudolikelihood = -405557.95
. probit k17noneed fragile [pw=wmedian], cluster(a1)
Application procedures
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0705845 .03717 1.90 0.058 -.002271 .14344 .051888
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .03416896
y = Pr(k17complex) (predict)
Marginal effects after probit
. mfx
_cons -1.853169 .0820723 -22.58 0.000 -2.014027 -1.69231
fragile .5858104 .2211834 2.65 0.008 .1522989 1.019322
k17complex Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -90609.597 Pseudo R2 = 0.0161
Prob > chi2 = 0.0081
Wald chi2(1) = 7.01
Probit regression Number of obs = 11131
Iteration 4: log pseudolikelihood = -90609.597
Iteration 3: log pseudolikelihood = -90609.597
Iteration 2: log pseudolikelihood = -90609.797
Iteration 1: log pseudolikelihood = -90712.647
Iteration 0: log pseudolikelihood = -92089.634
. probit k17complex fragile [pw=wmedian], cluster(a1)
Interest rates and loan maturity
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0331415 .01087 3.05 0.002 .011844 .054439 .051888
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .07704986
y = Pr(k17intrate) (predict)
Marginal effects after probit
. mfx
_cons -1.435688 .0724007 -19.83 0.000 -1.577591 -1.293785
fragile .2021474 .0747226 2.71 0.007 .0556938 .3486011
k17intrate Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -162817.91 Pseudo R2 = 0.0013
Prob > chi2 = 0.0068
Wald chi2(1) = 7.32
Probit regression Number of obs = 11131
Iteration 3: log pseudolikelihood = -162817.91
Iteration 2: log pseudolikelihood = -162817.91
Iteration 1: log pseudolikelihood = -162818.98
Iteration 0: log pseudolikelihood = -163022.76
. probit k17intrate fragile [pw=wmedian], cluster(a1)
Collateral requirements
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0131304 .01203 1.09 0.275 -.010454 .036715 .051888
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .0304404
y = Pr(k17collat) (predict)
Marginal effects after probit
. mfx
_cons -1.882968 .0625574 -30.10 0.000 -2.005578 -1.760358
fragile .1658927 .1382505 1.20 0.230 -.1050732 .4368587
k17collat Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -81777.816 Pseudo R2 = 0.0009
Prob > chi2 = 0.2302
Wald chi2(1) = 1.44
Probit regression Number of obs = 11131
Iteration 3: log pseudolikelihood = -81777.816
Iteration 2: log pseudolikelihood = -81777.816
Iteration 1: log pseudolikelihood = -81778.494
Iteration 0: log pseudolikelihood = -81854.751
. probit k17collat fragile [pw=wmedian], cluster(a1)
Sub-Saharan Africa
No need for loan
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.1675433 .07921 -2.12 0.034 -.322793 -.012294 .578049
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .29118863
y = Pr(k17noneed) (predict)
Marginal effects after probit
. mfx
_cons -.2711343 .1780001 -1.52 0.128 -.6200081 .0777394
fragile -.4822797 .222029 -2.17 0.030 -.9174486 -.0471108
k17noneed Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 24 clusters in a1)
Log pseudolikelihood = -24239.317 Pseudo R2 = 0.0268
Prob > chi2 = 0.0298
Wald chi2(1) = 4.72
Probit regression Number of obs = 6243
Iteration 3: log pseudolikelihood = -24239.317
Iteration 2: log pseudolikelihood = -24239.317
Iteration 1: log pseudolikelihood = -24239.857
Iteration 0: log pseudolikelihood = -24907.643
. probit k17noneed fragile [pw=wmedian], cluster(a1)
Application procedures
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .1681089 .05438 3.09 0.002 .06152 .274698 .578049
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .14925766
y = Pr(k17complex) (predict)
Marginal effects after probit
. mfx
_cons -1.483399 .1555017 -9.54 0.000 -1.788177 -1.178622
fragile .7677147 .2252221 3.41 0.001 .3262876 1.209142
k17complex Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 24 clusters in a1)
Log pseudolikelihood = -17317.594 Pseudo R2 = 0.0605
Prob > chi2 = 0.0007
Wald chi2(1) = 11.62
Probit regression Number of obs = 6243
Iteration 3: log pseudolikelihood = -17317.594
Iteration 2: log pseudolikelihood = -17317.595
Iteration 1: log pseudolikelihood = -17333.566
Iteration 0: log pseudolikelihood = -18433.75
. probit k17complex fragile [pw=wmedian], cluster(a1)
Interest rate
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .002171 .02752 0.08 0.937 -.051761 .056103 .578049
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .09288883
y = Pr(k17intrate) (predict)
Marginal effects after probit
. mfx
_cons -1.330733 .0858113 -15.51 0.000 -1.49892 -1.162546
fragile .0130771 .1650862 0.08 0.937 -.3104859 .33664
k17intrate Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 24 clusters in a1)
Log pseudolikelihood = -12672.212 Pseudo R2 = 0.0000
Prob > chi2 = 0.9369
Wald chi2(1) = 0.01
Probit regression Number of obs = 6243
Iteration 2: log pseudolikelihood = -12672.212
Iteration 1: log pseudolikelihood = -12672.212
Iteration 0: log pseudolikelihood = -12672.492
. probit k17intrate fragile [pw=wmedian], cluster(a1)
Collateral requirements
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0515886 .02628 1.96 0.050 .000074 .103103 .578049
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .08383774
y = Pr(k17collat) (predict)
Marginal effects after probit
. mfx
_cons -1.579797 .1352849 -11.68 0.000 -1.844951 -1.314644
fragile .3461394 .1768468 1.96 0.050 -.000474 .6927529
k17collat Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 24 clusters in a1)
Log pseudolikelihood = -11928.394 Pseudo R2 = 0.0145
Prob > chi2 = 0.0503
Wald chi2(1) = 3.83
Probit regression Number of obs = 6243
Iteration 3: log pseudolikelihood = -11928.394
Iteration 2: log pseudolikelihood = -11928.395
Iteration 1: log pseudolikelihood = -11929.426
Iteration 0: log pseudolikelihood = -12103.533
. probit k17collat fragile [pw=wmedian], cluster(a1)
Asia
No need for loan
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0129436 .05345 0.24 0.809 -.091808 .117695 .053543
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .25479712
y = Pr(k17noneed) (predict)
Marginal effects after probit
. mfx
_cons -.661604 .0830985 -7.96 0.000 -.824474 -.498734
fragile .0398631 .1635899 0.24 0.807 -.2807673 .3604935
k17noneed Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -243076.59 Pseudo R2 = 0.0000
Prob > chi2 = 0.8075
Wald chi2(1) = 0.06
Probit regression Number of obs = 5922
Iteration 2: log pseudolikelihood = -243076.59
Iteration 1: log pseudolikelihood = -243076.59
Iteration 0: log pseudolikelihood = -243086.07
. probit k17noneed fragile [pw=wmedian], cluster(a1)
Application process
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0667949 .01401 4.77 0.000 .03933 .09426 .053543
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .08502077
y = Pr(k17complex) (predict)
Marginal effects after probit
. mfx
_cons -1.3908 .0834729 -16.66 0.000 -1.554404 -1.227196
fragile .3498005 .0873962 4.00 0.000 .178507 .521094
k17complex Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -124766.22 Pseudo R2 = 0.0042
Prob > chi2 = 0.0001
Wald chi2(1) = 16.02
Probit regression Number of obs = 5922
Iteration 3: log pseudolikelihood = -124766.22
Iteration 2: log pseudolikelihood = -124766.22
Iteration 1: log pseudolikelihood = -124772.26
Iteration 0: log pseudolikelihood = -125288.2
. probit k17complex fragile [pw=wmedian], cluster(a1)
Interest rates
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0006516 .02217 0.03 0.977 -.042808 .044111 .053543
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .10712966
y = Pr(k17intrate) (predict)
Marginal effects after probit
. mfx
_cons -1.242127 .0978541 -12.69 0.000 -1.433918 -1.050337
fragile .0035249 .120038 0.03 0.977 -.2317454 .2387951
k17intrate Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -145825.89 Pseudo R2 = 0.0000
Prob > chi2 = 0.9766
Wald chi2(1) = 0.00
Probit regression Number of obs = 5922
Iteration 2: log pseudolikelihood = -145825.89
Iteration 1: log pseudolikelihood = -145825.89
Iteration 0: log pseudolikelihood = -145825.94
. probit k17intrate fragile [pw=wmedian], cluster(a1)
Collateral requirements
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.0428498 .02602 -1.65 0.100 -.093842 .008143 .053543
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .11364021
y = Pr(k17collat) (predict)
Marginal effects after probit
. mfx
_cons -1.193641 .1247558 -9.57 0.000 -1.438158 -.9491241
fragile -.2568603 .1404851 -1.83 0.067 -.532206 .0184853
k17collat Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -151753.75 Pseudo R2 = 0.0015
Prob > chi2 = 0.0675
Wald chi2(1) = 3.34
Probit regression Number of obs = 5922
Iteration 3: log pseudolikelihood = -151753.75
Iteration 2: log pseudolikelihood = -151753.75
Iteration 1: log pseudolikelihood = -151754.03
Iteration 0: log pseudolikelihood = -151974.72
. probit k17collat fragile [pw=wmedian], cluster(a1)
Transactions on credit
Sub-Saharan Africa
Material inputs or services paid for before delivery
Material inputs or services paid for on delivery
Material inputs or services paid for after delivery
_cons 33.17218 4.425939 7.49 0.000 23.73852 42.60585
gdppc -.0015459 .0009363 -1.65 0.120 -.0035416 .0004498
fragile -5.467889 5.231642 -1.05 0.313 -16.61887 5.683092
k1a Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 16 clusters in a1)
Root MSE = 37.557
R-squared = 0.0050
Prob > F = 0.2809
F( 2, 15) = 1.38
Linear regression Number of obs = 4410
(sum of wgt is 2.8550e+04)
. reg k1a fragile gdppc [aw=wmedian], cluster(a1)
_cons 35.89287 4.025609 8.92 0.000 27.31249 44.47325
gdppc -.0007168 .0009191 -0.78 0.448 -.0026758 .0012423
fragile 17.20316 6.642286 2.59 0.021 3.045459 31.36085
k1b Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 16 clusters in a1)
Root MSE = 42.985
R-squared = 0.0436
Prob > F = 0.0165
F( 2, 15) = 5.46
Linear regression Number of obs = 4409
(sum of wgt is 2.8542e+04)
. reg k1b fragile gdppc [aw=wmedian], cluster(a1)
_cons 29.69211 6.45445 4.60 0.000 16.26935 43.11487
gdppc .003612 .0020382 1.77 0.091 -.0006267 .0078507
fragile -3.867669 9.132063 -0.42 0.676 -22.85883 15.1235
k1c Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 22 clusters in a1)
Root MSE = 38.772
R-squared = 0.0325
Prob > F = 0.0496
F( 2, 21) = 3.48
Linear regression Number of obs = 5704
(sum of wgt is 3.5833e+04)
. reg k1c fragile gdppc [aw=wmedian], cluster(a1)
Goods and services paid before delivery
Goods and services paid on delivery
Goods and services paid after delivery
_cons 29.16608 5.021884 5.81 0.000 18.69061 39.64154
gdppc -.0018651 .0012447 -1.50 0.150 -.0044615 .0007312
fragile -1.955167 6.016054 -0.32 0.749 -14.50443 10.5941
k2a Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 21 clusters in a1)
Root MSE = 36.15
R-squared = 0.0055
Prob > F = 0.2689
F( 2, 20) = 1.40
Linear regression Number of obs = 5008
(sum of wgt is 3.3982e+04)
. reg k2a fragile gdppc [aw=wmedian], cluster(a1)
_cons 36.20965 3.401131 10.65 0.000 29.11502 43.30429
gdppc .0004247 .0008522 0.50 0.624 -.001353 .0022023
fragile 16.22754 8.722239 1.86 0.078 -1.966737 34.42181
k2b Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 21 clusters in a1)
Root MSE = 42.272
R-squared = 0.0318
Prob > F = 0.2024
F( 2, 20) = 1.73
Linear regression Number of obs = 5006
(sum of wgt is 3.3961e+04)
. reg k2b fragile gdppc [aw=wmedian], cluster(a1)
_cons 34.60672 6.533126 5.30 0.000 21.05784 48.15559
gdppc .001383 .0015735 0.88 0.389 -.0018803 .0046463
fragile -12.76353 7.409498 -1.72 0.099 -28.12989 2.602825
k2c Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 23 clusters in a1)
Root MSE = 35.931
R-squared = 0.0426
Prob > F = 0.0151
F( 2, 22) = 5.10
Linear regression Number of obs = 5734
(sum of wgt is 3.6291e+04)
. reg k2c fragile gdppc [aw=wmedian], cluster(a1)
Power and water shortages
ECA
Power outages
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .1307661 .06478 2.02 0.044 .003803 .25773 .052538
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .367603
y = Pr(c6) (predict)
Marginal effects after probit
. mfx
_cons -.3558165 .1045436 -3.40 0.001 -.5607181 -.1509148
fragile .3351481 .1663511 2.01 0.044 .009106 .6611903
c6 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -387725.78 Pseudo R2 = 0.0027
Prob > chi2 = 0.0439
Wald chi2(1) = 4.06
Probit regression Number of obs = 11031
Iteration 3: log pseudolikelihood = -387725.78
Iteration 2: log pseudolikelihood = -387725.78
Iteration 1: log pseudolikelihood = -387725.84
Iteration 0: log pseudolikelihood = -388772.46
. probit c6 fragile [pw=wmedian], cluster(a1)
Water supply shortages
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0715702 .01536 4.66 0.000 .041474 .101667 .056004
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .07480809
y = Pr(c15) (predict)
Marginal effects after probit
. mfx
_cons -1.463148 .0784614 -18.65 0.000 -1.61693 -1.309367
fragile .3974656 .0922798 4.31 0.000 .2166006 .5783307
c15 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -41440.648 Pseudo R2 = 0.0059
Prob > chi2 = 0.0000
Wald chi2(1) = 18.55
Probit regression Number of obs = 4641
Iteration 3: log pseudolikelihood = -41440.648
Iteration 2: log pseudolikelihood = -41440.649
Iteration 1: log pseudolikelihood = -41444.698
Iteration 0: log pseudolikelihood = -41687.156
. probit c15 fragile [pw=wmedian], cluster(a1)
Sub-Saharan Africa
Power outages
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0116085 .11754 0.10 0.921 -.21876 .241977 .582239
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .69396977
y = Pr(c6) (predict)
Marginal effects after probit
. mfx
_cons .4878933 .2555706 1.91 0.056 -.0130159 .9888025
fragile .0330469 .3341406 0.10 0.921 -.6218567 .6879505
c6 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 24 clusters in a1)
Log pseudolikelihood = -24872.939 Pseudo R2 = 0.0001
Prob > chi2 = 0.9212
Wald chi2(1) = 0.01
Probit regression Number of obs = 6143
Iteration 2: log pseudolikelihood = -24872.939
Iteration 1: log pseudolikelihood = -24872.939
Iteration 0: log pseudolikelihood = -24876.052
. probit c6 fragile [pw=wmedian], cluster(a1)
Water supply shortages
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.0724254 .10647 -0.68 0.496 -.281094 .136243 .594446
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .18333916
y = Pr(c15) (predict)
Marginal effects after probit
. mfx
_cons -.7440062 .2920059 -2.55 0.011 -1.316327 -.1716852
fragile -.2669823 .3833502 -0.70 0.486 -1.018335 .4843702
c15 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 18 clusters in a1)
Log pseudolikelihood = -3518.1207 Pseudo R2 = 0.0086
Prob > chi2 = 0.4862
Wald chi2(1) = 0.49
Probit regression Number of obs = 1925
Iteration 3: log pseudolikelihood = -3518.1207
Iteration 2: log pseudolikelihood = -3518.1207
Iteration 1: log pseudolikelihood = -3518.1478
Iteration 0: log pseudolikelihood = -3548.6889
. probit c15 fragile [pw=wmedian], cluster(a1)
Asia
Power outages
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .1961503 .10264 1.91 0.056 -.005022 .397322 .052689
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .50466832
y = Pr(c6) (predict)
Marginal effects after probit
. mfx
_cons -.0152376 .067231 -0.23 0.821 -.1470079 .1165328
fragile .5112909 .2887935 1.77 0.077 -.054734 1.077316
c6 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -294807.63 Pseudo R2 = 0.0057
Prob > chi2 = 0.0767
Wald chi2(1) = 3.13
Probit regression Number of obs = 5902
Iteration 3: log pseudolikelihood = -294807.63
Iteration 2: log pseudolikelihood = -294807.63
Iteration 1: log pseudolikelihood = -294809.99
Iteration 0: log pseudolikelihood = -296492.3
. probit c6 fragile [pw=wmedian], cluster(a1)
Water supply shortages
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .1019981 .00513 19.89 0.000 .091948 .112048 .035185
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .04051565
y = Pr(c15) (predict)
Marginal effects after probit
. mfx
_cons -1.769036 .061458 -28.78 0.000 -1.889491 -1.64858
fragile .6907004 .061458 11.24 0.000 .570245 .8111558
c15 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 6 clusters in a1)
Log pseudolikelihood = -51318.276 Pseudo R2 = 0.0163
Prob > chi2 = .
Wald chi2(0) = .
Probit regression Number of obs = 3533
Iteration 4: log pseudolikelihood = -51318.276
Iteration 3: log pseudolikelihood = -51318.276
Iteration 2: log pseudolikelihood = -51318.394
Iteration 1: log pseudolikelihood = -51381.006
Iteration 0: log pseudolikelihood = -52168.505
. probit c15 fragile [pw=wmedian], cluster(a1)
Access to electricity
Sub-Saharan Africa
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .2772607 .10872 2.55 0.011 .064174 .490347 .630572
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .45079663
y = Pr(c10) (predict)
Marginal effects after probit
. mfx
_cons -.5819059 .0576226 -10.10 0.000 -.6948442 -.4689676
fragile .7267316 .2770282 2.62 0.009 .1837663 1.269697
c10 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 24 clusters in a1)
Log pseudolikelihood = -12230.249 Pseudo R2 = 0.0538
Prob > chi2 = 0.0087
Wald chi2(1) = 6.88
Probit regression Number of obs = 4037
Iteration 3: log pseudolikelihood = -12230.249
Iteration 2: log pseudolikelihood = -12230.249
Iteration 1: log pseudolikelihood = -12231.212
Iteration 0: log pseudolikelihood = -12925.473
. probit c10 fragile [pw=wmedian], cluster(a1)
Access to general purpose technology
ECA
Communication with clients/suppliers via email
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.4507686 .15425 -2.92 0.003 -.753099 -.148439 .051973
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .80095088
y = Pr(c22a) (predict)
Marginal effects after probit
. mfx
_cons .9098639 .1191029 7.64 0.000 .6764264 1.143301
fragile -1.247591 .4180935 -2.98 0.003 -2.06704 -.4281433
c22a Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -288630.14 Pseudo R2 = 0.0472
Prob > chi2 = 0.0028
Wald chi2(1) = 8.90
Probit regression Number of obs = 11102
Iteration 3: log pseudolikelihood = -288630.14
Iteration 2: log pseudolikelihood = -288630.14
Iteration 1: log pseudolikelihood = -288631.83
Iteration 0: log pseudolikelihood = -302927.64
. probit c22a fragile [pw=wmedian], cluster(a1)
Own website
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.3405246 .12901 -2.64 0.008 -.59337 -.087679 .052148
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .5412328
y = Pr(c22b) (predict)
Marginal effects after probit
. mfx
_cons .1517594 .1094478 1.39 0.166 -.0627543 .3662731
fragile -.9246721 .4251374 -2.17 0.030 -1.757926 -.0914181
c22b Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -403354.24 Pseudo R2 = 0.0174
Prob > chi2 = 0.0296
Wald chi2(1) = 4.73
Probit regression Number of obs = 11055
Iteration 3: log pseudolikelihood = -403354.24
Iteration 2: log pseudolikelihood = -403354.24
Iteration 1: log pseudolikelihood = -403361.35
Iteration 0: log pseudolikelihood = -410479.75
. probit c22b fragile [pw=wmedian], cluster(a1)
High-speed Internet on premises
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.497724 .07803 -6.38 0.000 -.650653 -.344795 .061698
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .63187249
y = Pr(c23) (predict)
Marginal effects after probit
. mfx
_cons .422744 .088907 4.75 0.000 .2484894 .5969986
fragile -1.392697 .2982823 -4.67 0.000 -1.97732 -.8080746
c23 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -141690.22 Pseudo R2 = 0.0463
Prob > chi2 = 0.0000
Wald chi2(1) = 21.80
Probit regression Number of obs = 3551
Iteration 3: log pseudolikelihood = -141690.22
Iteration 2: log pseudolikelihood = -141690.22
Iteration 1: log pseudolikelihood = -141706.22
Iteration 0: log pseudolikelihood = -148575.4
. probit c23 fragile [pw=wmedian], cluster(a1)
Sub-Saharan Africa
Communication with clients/suppliers via email
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.1873402 .09993 -1.87 0.061 -.3832 .00852 .581967
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .49400276
y = Pr(c22a) (predict)
Marginal effects after probit
. mfx
_cons .2608926 .1145184 2.28 0.023 .0364406 .4853446
fragile -.4741269 .2568193 -1.85 0.065 -.9774836 .0292298
c22a Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 24 clusters in a1)
Log pseudolikelihood = -27450.807 Pseudo R2 = 0.0248
Prob > chi2 = 0.0649
Wald chi2(1) = 3.41
Probit regression Number of obs = 6163
Iteration 3: log pseudolikelihood = -27450.807
Iteration 2: log pseudolikelihood = -27450.807
Iteration 1: log pseudolikelihood = -27450.877
Iteration 0: log pseudolikelihood = -28148.562
. probit c22a fragile [pw=wmedian], cluster(a1)
Own website
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.0880111 .04776 -1.84 0.065 -.181623 .005601 .580441
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .19582478
y = Pr(c22b) (predict)
Marginal effects after probit
. mfx
_cons -.6754651 .1149863 -5.87 0.000 -.9008341 -.450096
fragile -.3121154 .1703391 -1.83 0.067 -.6459739 .0217431
c22b Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 24 clusters in a1)
Log pseudolikelihood = -19909.023 Pseudo R2 = 0.0118
Prob > chi2 = 0.0669
Wald chi2(1) = 3.36
Probit regression Number of obs = 6138
Iteration 3: log pseudolikelihood = -19909.023
Iteration 2: log pseudolikelihood = -19909.023
Iteration 1: log pseudolikelihood = -19909.269
Iteration 0: log pseudolikelihood = -20145.862
. probit c22b fragile [pw=wmedian], cluster(a1)
High-speed Internet on premises
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.1129652 .13312 -0.85 0.396 -.373884 .147953 .611331
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .37185022
y = Pr(c23) (predict)
Marginal effects after probit
. mfx
_cons -.1456041 .1935968 -0.75 0.452 -.5250468 .2338386
fragile -.2966525 .3581412 -0.83 0.407 -.9985963 .4052913
c23 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 10 clusters in a1)
Log pseudolikelihood = -7017.7573 Pseudo R2 = 0.0098
Prob > chi2 = 0.4075
Wald chi2(1) = 0.69
Probit regression Number of obs = 2491
Iteration 3: log pseudolikelihood = -7017.7573
Iteration 2: log pseudolikelihood = -7017.7573
Iteration 1: log pseudolikelihood = -7017.7634
Iteration 0: log pseudolikelihood = -7086.8889
. probit c23 fragile [pw=wmedian], cluster(a1)
Asia
Communication with clients/suppliers via email
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0390175 .14215 0.27 0.784 -.239595 .31763 .054395
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .26827641
y = Pr(c22a) (predict)
Marginal effects after probit
. mfx
_cons -.6242836 .4329415 -1.44 0.149 -1.472833 .2242662
fragile .11489 .4329787 0.27 0.791 -.7337326 .9635127
c22a Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -245120.44 Pseudo R2 = 0.0003
Prob > chi2 = 0.7907
Wald chi2(1) = 0.07
Probit regression Number of obs = 5901
Iteration 2: log pseudolikelihood = -245120.44
Iteration 1: log pseudolikelihood = -245120.46
Iteration 0: log pseudolikelihood = -245202.39
. probit c22a fragile [pw=wmedian], cluster(a1)
Own website
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .0504549 .08432 0.60 0.550 -.114809 .215718 .054468
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .14110631
y = Pr(c22b) (predict)
Marginal effects after probit
. mfx
_cons -1.08654 .3809544 -2.85 0.004 -1.833197 -.3398836
fragile .2052297 .3812494 0.54 0.590 -.5420054 .9524649
c22b Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -171335.81 Pseudo R2 = 0.0012
Prob > chi2 = 0.5904
Wald chi2(1) = 0.29
Probit regression Number of obs = 5892
Iteration 3: log pseudolikelihood = -171335.81
Iteration 2: log pseudolikelihood = -171335.81
Iteration 1: log pseudolikelihood = -171336.28
Iteration 0: log pseudolikelihood = -171545.99
. probit c22b fragile [pw=wmedian], cluster(a1)
Security
ECA
Sub-Saharan Africa
Asia
_cons 3.524432 .289584 12.17 0.000 2.930255 4.11861
fragile 1.016677 1.147383 0.89 0.383 -1.337558 3.370912
i2a Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Root MSE = 6.3545
R-squared = 0.0010
Prob > F = 0.3834
F( 1, 27) = 0.79
Linear regression Number of obs = 3259
(sum of wgt is 1.7396e+05)
. reg i2a fragile [aw=wmedian], cluster(a1)
_cons 6.701966 1.068797 6.27 0.000 4.485417 8.918515
fragile -.4077894 1.871493 -0.22 0.830 -4.289028 3.47345
i2a Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 23 clusters in a1)
Root MSE = 9.2767
R-squared = 0.0005
Prob > F = 0.8295
F( 1, 22) = 0.05
Linear regression Number of obs = 2033
(sum of wgt is 9.7531e+03)
. reg i2a fragile [aw=wmedian], cluster(a1)
_cons 4.461478 .3116388 14.32 0.000 3.742838 5.180118
fragile -1.709061 .5066049 -3.37 0.010 -2.877294 -.5408283
i2a Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Root MSE = 8.4303
R-squared = 0.0043
Prob > F = 0.0097
F( 1, 8) = 11.38
Linear regression Number of obs = 825
(sum of wgt is 2.8698e+04)
. reg i2a fragile [aw=wmedian], cluster(a1)
ECA
Sub-Saharan Africa
Asia
_cons 3.532645 .2144435 16.47 0.000 3.092643 3.972647
fragile 10.1916 3.68681 2.76 0.010 2.62689 17.75631
i4a Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Root MSE = 5.6589
R-squared = 0.0491
Prob > F = 0.0102
F( 1, 27) = 7.64
Linear regression Number of obs = 985
(sum of wgt is 6.7563e+04)
. reg i4a fragile [aw=wmedian], cluster(a1)
_cons 9.728118 1.353562 7.19 0.000 6.921003 12.53523
fragile 4.819766 4.112298 1.17 0.254 -3.708617 13.34815
i4a Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 23 clusters in a1)
Root MSE = 16.666
R-squared = 0.0200
Prob > F = 0.2537
F( 1, 22) = 1.37
Linear regression Number of obs = 911
(sum of wgt is 5.5126e+03)
. reg i4a fragile [aw=wmedian], cluster(a1)
_cons 12.54239 2.779559 4.51 0.002 6.132719 18.95207
fragile -9.909536 2.809668 -3.53 0.008 -16.38864 -3.43043
i4a Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Root MSE = 17.058
R-squared = 0.0240
Prob > F = 0.0078
F( 1, 8) = 12.44
Linear regression Number of obs = 431
(sum of wgt is 1.4959e+04)
. reg i4a fragile [aw=wmedian], cluster(a1)
Role of women
ECA
All other sectors
Manufacturing: production employee
Manufacturing: non-production employee
_cons 20.02959 5.347821 3.75 0.001 9.056769 31.00241
fragile -11.04925 5.933726 -1.86 0.074 -23.22426 1.125747
l5 Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Root MSE = 123.52
R-squared = 0.0004
Prob > F = 0.0735
F( 1, 27) = 3.47
Linear regression Number of obs = 6230
(sum of wgt is 4.3229e+05)
. reg l5 fragile [aw=wmedian], cluster(a1)
_cons 24.21054 4.084549 5.93 0.000 15.82974 32.59135
fragile -10.88405 4.93811 -2.20 0.036 -21.01621 -.7518842
l5a Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Root MSE = 97.923
R-squared = 0.0007
Prob > F = 0.0362
F( 1, 27) = 4.86
Linear regression Number of obs = 4474
(sum of wgt is 1.4920e+05)
. reg l5a fragile [aw=wmedian], cluster(a1)
_cons 7.939076 1.462294 5.43 0.000 4.938696 10.93946
fragile -3.775553 1.910538 -1.98 0.058 -7.695652 .1445468
l5b Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Root MSE = 28.632
R-squared = 0.0010
Prob > F = 0.0584
F( 1, 27) = 3.91
Linear regression Number of obs = 4466
(sum of wgt is 1.4915e+05)
. reg l5b fragile [aw=wmedian], cluster(a1)
Female as owner
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.032038 .03355 -0.95 0.340 -.0978 .033724 .052591
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .39854299
y = Pr(b4) (predict)
Marginal effects after probit
. mfx
. do "C:\Users\wb417696\AppData\Local\Temp\STD00000000.tmp"
end of do-file
.
_cons -.2527082 .0603825 -4.19 0.000 -.3710557 -.1343607
fragile -.0838928 .0879614 -0.95 0.340 -.2562939 .0885083
b4 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -393261.17 Pseudo R2 = 0.0002
Prob > chi2 = 0.3402
Wald chi2(1) = 0.91
Probit regression Number of obs = 10876
Iteration 2: log pseudolikelihood = -393261.17
Iteration 1: log pseudolikelihood = -393261.17
Iteration 0: log pseudolikelihood = -393324.12
. probit b4 fragile [pw=wmedian], cluster(a1)
Top manager
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.0917377 .02371 -3.87 0.000 -.138209 -.045266 .051878
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .20857468
y = Pr(ECAb7a) (predict)
Marginal effects after probit
. mfx
_cons -.7921339 .0710512 -11.15 0.000 -.9313918 -.6528761
fragile -.3709212 .0910218 -4.08 0.000 -.5493206 -.1925217
ECAb7a Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 28 clusters in a1)
Log pseudolikelihood = -305771.55 Pseudo R2 = 0.0027
Prob > chi2 = 0.0000
Wald chi2(1) = 16.61
Probit regression Number of obs = 11097
Iteration 3: log pseudolikelihood = -305771.55
Iteration 2: log pseudolikelihood = -305771.55
Iteration 1: log pseudolikelihood = -305772.54
Iteration 0: log pseudolikelihood = -306612.51
. probit ECAb7a fragile [pw=wmedian], cluster(a1)
Sub-Saharan Africa
All other sectors
Manufacturing: Production employee
Manufacturing: Non-production employee
_cons 15.98477 7.402937 2.16 0.042 .6706322 31.29892
fragile -11.61689 7.436407 -1.56 0.132 -27.00027 3.76649
l5 Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 24 clusters in a1)
Root MSE = 313.02
R-squared = 0.0003
Prob > F = 0.1319
F( 1, 23) = 2.44
Linear regression Number of obs = 4507
(sum of wgt is 3.3216e+04)
. reg l5 fragile [aw=wmedian], cluster(a1)
_cons 24.26389 10.12763 2.40 0.040 1.353605 47.17418
fragile -20.26315 10.24511 -1.98 0.079 -43.4392 2.912888
l5a Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 10 clusters in a1)
Root MSE = 69.672
R-squared = 0.0195
Prob > F = 0.0793
F( 1, 9) = 3.91
Linear regression Number of obs = 1566
(sum of wgt is 6.4016e+03)
. reg l5a fragile [aw=wmedian], cluster(a1)
_cons 4.664696 .9430354 4.95 0.001 2.531402 6.79799
fragile -1.96577 1.698779 -1.16 0.277 -5.808674 1.877135
l5b Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 10 clusters in a1)
Root MSE = 12.632
R-squared = 0.0056
Prob > F = 0.2770
F( 1, 9) = 1.34
Linear regression Number of obs = 1494
(sum of wgt is 6.1360e+03)
. reg l5b fragile [aw=wmedian], cluster(a1)
Owner
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* .3197753 .06356 5.03 0.000 .195203 .444348 .760595
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .45546914
y = Pr(b4) (predict)
Marginal effects after probit
. mfx
_cons -.7758502 .1379622 -5.62 0.000 -1.046251 -.5054492
fragile .8729943 .1847484 4.73 0.000 .5108942 1.235094
b4 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 7 clusters in a1)
Log pseudolikelihood = -3305.3449 Pseudo R2 = 0.0573
Prob > chi2 = 0.0000
Wald chi2(1) = 22.33
Probit regression Number of obs = 963
Iteration 3: log pseudolikelihood = -3305.3449
Iteration 2: log pseudolikelihood = -3305.3449
Iteration 1: log pseudolikelihood = -3306.1417
Iteration 0: log pseudolikelihood = -3506.1677
. probit b4 fragile [pw=wmedian], cluster(a1)
Top manager
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.0506948 .02997 -1.69 0.091 -.109433 .008044 .53474
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .15281543
y = Pr(b7a) (predict)
Marginal effects after probit
. mfx
_cons -.9104672 .1012781 -8.99 0.000 -1.108969 -.7119659
fragile -.2131236 .1199067 -1.78 0.076 -.4481365 .0218893
b7a Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 15 clusters in a1)
Log pseudolikelihood = -7309.6592 Pseudo R2 = 0.0057
Prob > chi2 = 0.0755
Wald chi2(1) = 3.16
Probit regression Number of obs = 3927
Iteration 3: log pseudolikelihood = -7309.6592
Iteration 2: log pseudolikelihood = -7309.6592
Iteration 1: log pseudolikelihood = -7309.6931
Iteration 0: log pseudolikelihood = -7351.481
. probit b7a fragile [pw=wmedian], cluster(a1)
Asia
Other sectors
Manufacturing: Production employee
Manufacturing: Non-production employee
_cons 9.168064 3.516592 2.61 0.031 1.058787 17.27734
fragile -3.567259 3.900031 -0.91 0.387 -12.56075 5.426229
l5 Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Root MSE = 35.231
R-squared = 0.0008
Prob > F = 0.3871
F( 1, 8) = 0.84
Linear regression Number of obs = 2359
(sum of wgt is 1.4440e+05)
. reg l5 fragile [aw=wmedian], cluster(a1)
_cons 12.8743 7.085205 1.82 0.129 -5.338803 31.0874
fragile 7.833397 7.085205 1.11 0.319 -10.3797 26.0465
l5a Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 6 clusters in a1)
Root MSE = 156.12
R-squared = 0.0001
Prob > F = .
F( 0, 5) = .
Linear regression Number of obs = 3619
(sum of wgt is 3.0524e+05)
. reg l5a fragile [aw=wmedian], cluster(a1)
_cons 2.183231 1.474348 1.48 0.199 -1.606702 5.973164
fragile .3631945 1.474348 0.25 0.815 -3.426738 4.153127
l5b Coef. Std. Err. t P>|t| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 6 clusters in a1)
Root MSE = 22.633
R-squared = 0.0000
Prob > F = .
F( 0, 5) = .
Linear regression Number of obs = 3617
(sum of wgt is 3.0435e+05)
. reg l5b fragile [aw=wmedian], cluster(a1)
Owner
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.1534754 .05351 -2.87 0.004 -.258343 -.048607 .053217
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .41984824
y = Pr(b4) (predict)
Marginal effects after probit
. mfx
_cons -.1800654 .1280206 -1.41 0.160 -.4309812 .0708504
fragile -.4174693 .1393574 -3.00 0.003 -.6906048 -.1443338
b4 Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 9 clusters in a1)
Log pseudolikelihood = -288573.29 Pseudo R2 = 0.0037
Prob > chi2 = 0.0027
Wald chi2(1) = 8.97
Probit regression Number of obs = 5864
Iteration 3: log pseudolikelihood = -288573.29
Iteration 2: log pseudolikelihood = -288573.29
Iteration 1: log pseudolikelihood = -288575.18
Iteration 0: log pseudolikelihood = -289659.18
. probit b4 fragile [pw=wmedian], cluster(a1)
Top manager
Source: Authors’ calculations based on World Bank Enterprise Surveys 2009–11 (accessed in April, 2012).
(*) dy/dx is for discrete change of dummy variable from 0 to 1
fragile* -.1941858 .00766 -25.34 0.000 -.209208 -.179164 .048694
variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X
= .26940319
y = Pr(b7a) (predict)
Marginal effects after probit
. mfx
_cons -.5767708 .0226889 -25.42 0.000 -.6212403 -.5323014
fragile -.7772722 .0226889 -34.26 0.000 -.8217417 -.7328028
b7a Coef. Std. Err. z P>|z| [95% Conf. Interval]
Robust
(Std. Err. adjusted for 5 clusters in a1)
Log pseudolikelihood = -244729.49 Pseudo R2 = 0.0093
Prob > chi2 = 0.0000
Wald chi2(1) = 1173.60
Probit regression Number of obs = 4786
Iteration 3: log pseudolikelihood = -244729.49
Iteration 2: log pseudolikelihood = -244729.5
Iteration 1: log pseudolikelihood = -244744.43
Iteration 0: log pseudolikelihood = -247015.04
. probit b7a fragile [pw=wmedian], cluster(a1)