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Hallward-Driemeier, Mary

Equitable Growth, Finance, and Institutions
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Private sector development, Firm dynamics, Firm Productivity, Entrepreneurship, Women's economic empowerment, Investment climate, Gender, Development Economics
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Equitable Growth, Finance, and Institutions
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Last updated: January 31, 2023
Biography
Mary Hallward-Driemeier is Senior Economic Adviser in the Equitable Growth, Finance and Institutions Vice Presidency at the World Bank, overseeing its analytical agenda on private sector development. She joined the World Bank in 1997 as a Young Professional. She has published widely on firm productivity, the economics of technological change and the impact of crises. She leads the Jobs and Economic Transformation special theme for the International Development Association (IDA). She has served as advisor to two World Bank’s Chief Economists, co-manager of the Jobs Group, and Deputy Director for the World Development Report 2005: A Better Investment Climate for Everyone. Her previous books include Trouble in the Making? The Future of Manufacturing-Led Development (with Gaurav Nayyar) and Enterprising Women: Expanding Economic Opportunities in Africa. Mary received her AB from Harvard, her MSc in Development Economics from Oxford as a Rhodes Scholar, and her PhD in Economics from MIT.
Citations 31 Scopus

Publication Search Results

Now showing 1 - 10 of 32
  • Publication
    Deals versus Rules : Policy Implementation Uncertainty and Why Firms Hate It
    (2010-05-01) Hallward-Driemeier, Mary; Pritchett, Lant
    Firms in Africa report "regulatory and economic policy uncertainty" as a top constraint to their growth. This paper argues that often firms in Africa do not cope with policy rules, rather they face deals: firm-specific policy actions that can be influenced by firm actions (such as bribes) and characteristics (such as political connections). Using Enterprise Survey data, the paper demonstrates huge variability in reported policy actions across firms notionally facing the same policy. The within-country dispersion in firm-specific policy actions is larger than the cross-national differences in average policy. The analysis shows that variability in this policy implementation uncertainty within location-sector-size cells is correlated with firm growth rates. These measures of implementation variability are more strongly related to lower firm employment growth than are measures of "average" policy action. The paper shows that the de jure measures such as Doing Business indicators are virtually uncorrelated with ex-post firm-level responses, further evidence that deals rather than rules prevail in Africa. Strikingly, the gap between de jure and de facto conditions grows with the formal regulatory burden. The evidence also shows more burdensome processes open up more space for making deals; firms may not incur the official costs of compliance, but they still pay to avoid them. Finally, measures of institutional capacity and better governance are closely associated with perceived consistency in implementation.
  • Publication
    Who Survives? The Impact of Corruption, Competition and Property Rights across Firms
    (2009-10-01) Hallward-Driemeier, Mary
    Size, age, sector, and productivity are commonly cited as factors determining a firm s survival. However, there are several dimensions of the investment climate in which the firm operates that affect whether it continues in business or exits. This paper uses new panel data from 27 Eastern European and Central Asian countries to test the importance of five areas of the business climate on firm exit: the efficiency of government services, access to finance, the extent of corruption or cronyism, the strength of property rights, and the degree of competition. The paper finds that weaknesses in these areas do affect the probability of firm exit largely in ways that undermine the Schumpeterian cleansing role of exit in raising overall productivity. Greater costs and regulatory burdens raise the probability that more productive firms exit, while less developed financial and legal institutions mitigate forces that would otherwise push less productive firms to exit. Thus, the more productive firms stand to gain the most from improvements in the investment climate, whether that is lowering transaction costs or improving market mechanisms. This holds both within countries and across countries. The impact of a particular investment climate measure can also differ significantly by type of firm, with the focus given to firm size. The differential impact on size can be significant at a size cutoff of 10 or more employees. As these are the firms that are near the threshold of many regulatory requirements, the implications are not just with regard to whether a firm remains in operation, but whether it does so in the formal sector.
  • Publication
    Can Minimum Wages Close the Gender Wage Gap?: Evidence From Indonesia
    (Wiley, 2015-11-18) Hallward-Driemeier, Mary; Rijkers, Bob
    Using manufacturing plant-level census data, this paper demonstrates that minimum wage increases in Indonesia reduced gender wage gaps among production workers, with heterogeneous impacts by level of education and position of the firm in the wage distribution. Paradoxically, educated women appear to have benefitted the most, particularly in the lower half of the firm average earnings distribution. By contrast, women who did not complete primary education did not benefit on average, and even lost ground in the upper end of the earnings distribution. Minimum wage increases were thus associated with exacerbated gender pay gaps among the least educated, and reduced gender gaps among the best educated production workers. Unconditional quantile regression analysis attests to wage compression and lighthouse effects. Changes in relative employment prospects were limited. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions. http://olabout.wiley.com/WileyCDA/Section/id-820227.html
  • Publication
    Big Constraints to Small Firms’ Growth? Business Environment and Employment Growth across Firms
    (2009-08-01) Aterido, Reyes; Hallward-Driemeier, Mary; Pages, Carmen
    Using data on more than 56,000 enterprises in 90 countries, this paper finds that objective conditions in the business environment vary substantially across firms of different sizes and that there are important non-linearities in their impact on employment growth. The paper focuses on four areas: access to finance, business regulations, corruption, and infrastructure. The results, particularly on the impacts of finance and corruption on growth, depend on whether and how the analysis accounts for the possible endogeneity of the business environment. Controlling for endogeneity revises the finding that small firms benefit most from access to finance, particularly for sources of finance associated with investment and growth. The findings are also sensitive to how small is defined. Differentiating micro (less than 10 employees) from other small firms shows that, while small firms can be disadvantaged in such an environment, micro firms tend to be proportionally less affected by a weak business climate and, on occasion, it can help them to grow. Overall, allowing different size classifications provides insights into the impact of the business environment that are lost in more aggregate analyses.
  • Publication
    How Business Is Done and the ‘Doing Business’ Indicators : The Investment Climate When Firms Have Climate Control
    (2011-02-01) Hallward-Driemeier, Mary
    This paper examines de jure and de facto measures of regulations, finding the relationship between them is neither one for one, nor linear. "Doing Business" provides indicators of the formal time and costs associated with fully complying with regulations. Enterprise Surveys report the actual experiences of a wide range of firms. First, there are significant variations in reported times to complete the same transaction by firms facing the same formal policy. Second, regulatory compliance appears "under water" as firms report actual times much less than the Doing Business reported days. Third, the data reveal substantial differences between favored and disfavored firms in the same location. Favored firms show minimal variation, so Doing Business has little predictive power for the times they report. For disfavored firms, the variation is greater, although still not significantly correlated with Doing Business. Fourth, where multiple Enterprise Surveys are available, there is little association over time, with reductions in Doing Business days as likely to be accompanied by increases in Enterprise Surveys days. Comparing these two types of measures suggests very different ways of thinking about policy versus policy implementation, what "a climate" for firms in a country might mean, and what the options for "policy reform" really are.
  • Publication
    Ladies First? Firm-level Evidence on the Labor Impacts of the East Asian Crisis
    (2011-09-01) Hallward-Driemeier, Mary; Rijkers, Bob
    In a crisis, do employers place the burden of adjustment disproportionately on female employees? Relying on household and labor force data, existing studies of the distributional impact of crises have not been able to address this question. This paper uses Indonesia's census of manufacturing firms to analyze employer responses and to identify mechanisms by which gender differences in impact may arise, notably differential treatment of men and women within firms as well as gender sorting across firms that varied in their exposure to the crisis. On average, women experienced higher job losses than their male colleagues within the same firm. However, the aggregate adverse effect of such differential treatment was more than offset by women being disproportionately employed in firms hit relatively less hard by the crisis. The 0 hypothesis that there were no gender differences in wage adjustment is not rejected. Analyzing how employer characteristics impact labor market adjustment patterns contributes to the understanding of who is vulnerable in volatile times.
  • Publication
    Have Robots Grounded the Flying Geese? Evidence from Greenfield FDI in Manufacturing
    (World Bank, Washington, DC, 2019-12) Hallward-Driemeier, Mary; Nayyar, Gaurav
    For decades, manufacturers around the world have outsourced production to countries with lower labor costs. However, there is a concern that robotization in high-income countries will challenge this shifting international division of labor known as the "flying geese" paradigm. Greenfield foreign direct investment decisions constitute a forward-looking indicator of where production is expected, rather than trade flows that reflect past investment decisions. Exploiting differences across countries and industries, the intensity of robot use in high-income countries has a positive impact on foreign direct investment growth from high-income countries to low- and middle-income countries over 2004-15. Past a threshold, however, increased robotization in high-income countries has a negative impact on foreign direct investment growth. Only 3 percent of the sample exceeds the threshold level beyond which further automation results in negative foreign direct investment growth and is consistent with re-shoring. For another 25 percent of the sample, the impact of robotization on the growth of foreign direct investment is positive, but at a rate that is declining. So, although these are early warning signs, automation in high-income countries has resulted in growing foreign direct investment for more than two-thirds of the sample under consideration. Some geese may be slowing, but for now, most continue to fly.
  • Publication
    Enterprising Women : Expanding Economic Opportunities in Africa
    (Washington, DC: Agence Française de Développement and the World Bank, 2013-06-05) Hallward-Driemeier, Mary
    This book brings together new household and enterprise data from 41 countries in Sub-Saharan Africa to inform policy makers and practitioners on ways to expand women entrepreneurs’ economic opportunities. Sub-Saharan Africa boasts the highest share of women entrepreneurs, but they are disproportionately concentrated among the self-employed rather than employers. Relative to men, women are pursuing lower opportunity activities, with their enterprises more likely to be smaller, informal, and in low value-added lines of business. The challenge in expanding opportunities is not helping more women become entrepreneurs but enabling them to shift to higher return activities. A central question addressed in the book is what explains the gender sorting in the types of enterprises that women and men run? The analysis shows that many Sub-Saharan countries present a challenging environment for women. Four key areas of the agenda for expanding women’s economic opportunities in Africa are analyzed: strengthening women’s property rights and their ability to control assets; improving women’s access to finance; building human capital in business skills and networks; and strengthening women’s voices in business environment reform. These areas are important both because they have wide gender gaps and because they help explain gender differences in entrepreneurial activities. It is particularly striking that while gender gaps in education tend to close with higher incomes, gaps in women’s property rights and in women’s participation in reform processes do not. As simply raising a country’s income is unlikely to be sufficient to give women equal ability to control assets or have greater voice, more proactive steps will be needed. Practical guidelines to move the agenda forward are discussed for each of these key areas.
  • Publication
    Does Expanding Health Insurance beyond Formal-Sector Workers Encourage Informality? Measuring the Impact of Mexico’s Seguro Popular
    (2011-08-01) Aterido, Reyes; Hallward-Driemeier, Mary; Pages, Carmen
    Seguro Popular was introduced in 2002 to provide health insurance to the 50 million Mexicans without Social Security. This paper tests whether the program has had unintended consequences, distorting workers' incentives to operate in the informal sector. The analysis examines the impact of Seguro Popular on disaggregated labor market decisions, taking into account that program coverage depends not only on the individual's employment status, but also that of other household members. The identification strategy relies on the variation in Seguro Popular's rollout across municipalities and time, with the difference-in-difference estimation controlling for household fixed effects. The paper finds that Seguro Popular lowers formality by 0.4-0.7 percentage points, with adjustments largely occurring within a few years of the program's introduction. Rather than encouraging exit from the formal sector, Seguro Popular is associated with a 3.1 percentage point reduction (a 20 percent decline) in the inflow of workers into formality. Income effects are also apparent, with significantly decreased flows out of unemployment and lower labor force participation. The impact is larger for those with less education, in larger households, and with someone else in the household guaranteeing Social Security coverage. However, workers pay for part of these benefits with lower wages in the informal sector.
  • Publication
    Deals and Delays: Firm-level Evidence on Corruption and Policy Implementation Times
    (Published by Oxford University Press on behalf of the World Bank, 2016-07-01) Freund, Caroline; Hallward-Driemeier, Mary; Rijkers, Bob
    Whether demands for bribes for particular government services are associated with expedited or delayed policy implementation underlies debates around the role of corruption in private sector development. The “grease the wheels” hypothesis, which contends that bribes act as speed money, implies three testable predictions. First, on average, bribe requests should be negatively correlated with wait times. Second, this relationship should vary across firms, with those with the highest opportunity cost of waiting being more likely to pay and facing shorter delays. Third, the role of grease should vary across countries, with benefits larger where regulatory burdens are greatest. The data are inconsistent with all three predictions. According to the preferred specifications, ceteris paribus, firms confronted with demands for bribes take approximately 1.5 times longer to get a construction permit, operating license, or electrical connection than firms that did not have to pay bribes and, respectively, 1.2 and 1.4 times longer to clear customs when exporting and importing. The results are robust to controlling for firm fixed effects and at odds with the notion that corruption enhances efficiency.