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ESI Special Topics, July 2004
Citing URL: http://www.esi-topics.com/fmf/2004/july04-SimeonDjankov.html

From •>>July 2004

Simeon Djankov answers a few questions about this month's fast moving front in the field of Economics & Business.

Field: Economics & Business
Article: The regulation of entry
Authors: Djankov, S;La Porta, R;Lopez-De-Silanes, F;Schleifer, A
Journal: QUART J ECON, 117: (1) 1-37, FEB 2002
Addresses: World Bank, 1818 H St NW, Washington, DC 20433 USA.
World Bank, Washington, DC 20433 USA.
Harvard Univ, Dept Econ, Cambridge, MA 02138 USA.
Yale Univ, Sch Management, New Haven, CT 06520 USA.


ST:  Why do you think your paper is highly cited?

“...many countries in the world impose burdensome regulations in the name of improving consumer welfare”

The paper is highly cited because it uses a simple methodology to investigate a topic of high interest to policy makers and businesses, yet previously untouched by academic research.

ST:  Does it describe a new discovery or new methodology that's useful to others?

The discovery is that poor countries regulate more than rich countries - exactly the opposite of what you would expect based on economic theory but also enforcement capacity.

ST:  Could you summarize the significance of your paper in layman's terms?

Starting new businesses has been identified by many governments as top policy priority. However, the focus has been on easier access to finance through special micro-finance schemes. We instead study the regulatory barriers to entry and show that there are insurmountable in many countries around the world. The result: people don't try or start businesses in the informal economy.

ST:  How did you become involved in this research?

There is little reason why business entry should be heavily regulated. yet, many countries in the world impose burdensome regulations in the name of improving consumer welfare. We find the only effects of such regulation is higher cost on business, and larger informal economy. The only beneficiaries are incumbent businesses and the bureaucrats themselves.End

Simeon Djankov
Manager
Monitoring, Analysis and Policy Unit
Investment Climate Department
World Bank
Washington DC, USA

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ESI Special Topics, July 2004
Citing URL: http://www.esi-topics.com/fmf/2004/july04-SimeonDjankov.html

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