Publication: Promoting Innovative Startups: Quasi-Experimental Evidence from Tunisia
Loading...
Date
2025-05-09
ISSN
Published
2025-05-09
Author(s)
Editor(s)
Abstract
This paper evaluates Tunisia’s “Startup Act,” a policy initiative to foster innovative firms through a “start-up” label and a bundle of incentives, including reduced social security contributions, corporate tax exemptions, easier access to foreign exchange, and simplified customs procedures. Detailed data on the program’s selection process allow identifying marginal entrants and rejects, and hence limit selection on unobservables. Using a difference-in-differences strategy, the program is shown to increase survival and promote job creation. A back-of-the-envelope cost-benefit calculation suggests that the program is cost effective.
Link to Data Set
Citation
“Ali, Nadia; Cali, Massimiliano; Rijkers, Bob. 2025. Promoting Innovative Startups: Quasi-Experimental Evidence from Tunisia. Policy Research Working Paper; 11117. © World Bank. http://hdl.handle.net/10986/43173 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication Geopolitics and the World Trading System(Washington, DC: World Bank, 2024-12-23)Until the beginning of this century, the GATT/WTO system worked. Economic research provided a compelling explanation. It showed that if governments maximize the well-being of their own countries broadly defined, GATT/WTO principles would facilitate mutually beneficial cooperation over their trade policy choices. Now heightened geopolitical rivalry seems to have undermined the WTO. A simple transposition of the previous rationalization suggests that geopolitics and trade cooperation are not compatible. The paper shows that this is only true if rivalry eclipses any consideration of own-country well-being. In all other circumstances, there are gains from trade cooperation even with geopolitics. Furthermore, the WTO’s relevance is in question only if it adheres too rigidly to its existing rules and norms. Through measured adaptation to the geopolitical imperative, the WTO can continue to thrive as a forum for multilateral trade cooperation in the age of geopolitics.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication Global Poverty Revisited Using 2021 PPPs and New Data on Consumption(Washington, DC: World Bank, 2025-06-05)Recent improvements in survey methodologies have increased measured consumption in many low- and lower-middle-income countries that now collect a more comprehensive measure of household consumption. Faced with such methodological changes, countries have frequently revised upward their national poverty lines to make them appropriate for the new measures of consumption. This in turn affects the World Bank’s global poverty lines when they are periodically revised. The international poverty line, which is based on the typical poverty line in low-income countries, increases by around 40 percent to $3.00 when the more recent national poverty lines as well as the 2021 purchasing power parities are incorporated. The net impact of the changes in international prices, the poverty line, and new survey data (including new data for India) is an increase in global extreme poverty by some 125 million people in 2022, and a significant shift of poverty away from South Asia and toward Sub-Saharan Africa. The changes at higher poverty lines, which are more relevant to middle-income countries, are mixed.Publication Global Socio-economic Resilience to Natural Disasters(Washington, DC: World Bank, 2025-05-22)Most disaster risk assessments use damages to physical assets as their central metric, often neglecting distributional impacts and the coping and recovery capacity of affected people. To address this shortcoming, the concepts of well-being losses and socio-economic resilience—the ability to experience asset losses without a decline in well-being—have been proposed. This paper uses microsimulations to produce a global estimate of well-being losses from, and socio-economic resilience to, natural disasters, covering 132 countries. On average, each $1 in disaster-related asset losses results in well-being losses equivalent to a $2 uniform national drop in consumption, with significant variation within and across countries. The poorest income quintile within each country incurs only 9% of national asset losses but accounts for 33% of well-being losses. Compared to high-income countries, low-income countries experience 67% greater well-being losses per dollar of asset losses and require 56% more time to recover. Socio-economic resilience is uncorrelated with exposure or vulnerability to natural hazards. However, a 10 percent increase in GDP per capita is associated with a 0.9 percentage point gain in resilience, but this benefit arises indirectly—such as through higher rate of formal employment, better financial inclusion, and broader social protection coverage—rather than from higher income itself. This paper assess ten policy options and finds that socio-economic and financial interventions (such as insurance and social protection) can effectively complement asset-focused measures (e.g., construction standards) and that interventions targeting low-income populations usually have higher returns in terms of avoided well-being losses per dollar invested.Publication From Patriarchy to Policy(Washington, DC: World Bank, 2025-05-29)Legal institutions play an important role in shaping gender equality in economic domains, from inheritance to labor markets. But where do gender equal laws come from? Using cross-country data on social norms and legal equality, this paper investigates the socio-cultural roots of gender inequity in the legal system and its implications for female labor force participation. To identify the impact of social norms, the analysis uses an empirical strategy that exploits pre-modern differences in ancestral patriarchal culture as an instrument for present-day gender norms. The findings show that ancestral patriarchal culture is a strong predictor of contemporary norms, and conservative social norms are associated with more gender inequality in the de jure legal framework, the de facto implementation of laws, and the labor market. The paper presents evidence for a political selection mechanism linking norms to laws: countries with more conservative norms elect political leaders who are more hostile to gender equality, who then pass less progressive legislation. The results highlight the cultural roots and political drivers of legalized gender inequality.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Enhancing Access to Finance for Technology Entrepreneurs : Analysis of Highly Innovative, High Growth Start-Ups in Vietnam, Cambodia, and Nepal(Washington, DC, 2014)The first part of the study provides contextual background to the financing gaps and associated barriers, which restrict access to finance for HI start-ups. These barriers are driven by both supply and demand sides of the financing equation. Supply side barriers include: high transaction costs associated with financing; high levels of credit risk associated with HI start-ups; high collateral required by financial institutions; non-conducive legal and regulatory environments for investment in HI start-ups; lack of start-up expertise and dedicated resources by financiers; and finance products that are not tailored to HI start-ups needs and circumstances. Demand side barriers include: reliance by HI start-ups on informal financing sources; lack of awareness on the process to apply for funding from formal financing sources; low levels of financial literacy by HI start-ups; and the fear of losing control by involving external investors. This section also contains a broad overview of the country frameworks governing the start-up sector, together with some of the initiatives relating to access to finance. The second part of the study covers the fieldwork undertaken in Vietnam, Cambodia, and Nepal. The fieldwork gathered views from investee firms (irrespective of whether they were successful in raising finance or not), investors, and other stakeholders. The fieldwork was aimed at understanding the severity of the financing gap for HI start-ups, the stage(s) of financing impacted by lack of access to finance, and the sources of financing for HI start-ups. Lastly, financing catalyst recommendations address non-financing impediments, which if overcome will have a positive impact on access to finance.Publication Chile : A Strategy to Promote Innovative Small and Medium Enterprises(World Bank, Washington, DC, 2008-02)With its strong export orientation and emphasis on competitiveness, the Chilean economic model has been the envy of its neighbors for more than a decade. However, there are underlying vulnerabilities. Historically, exports have been concentrated in mining and agriculture, sectors dominated by large firms that do not generate a large share of employment. Small and medium enterprises play a key role in employment generation and economic decentralization in Chile, yet their employment was stagnant between 2000 and 2004. Based on work completed in 2003, this study provides a review of the Chilean government's substantial investment in programs that support small and medium enterprises. This review of government programs confirms the importance of coordination and an overarching strategy, in the form of a National Innovation System, led by a single institution. The review also finds that demand-driven programs were more likely to be sustainable. Finally, the study demonstrates that Chile (and other countries with many support programs for small and medium enterprises in place) needs an integrated management information system to analyze, assess, coordinate, and streamline the program portfolio for small and medium enterprises in the future.Publication Labor Policy to Promote Good Jobs in Tunisia : Revisiting Labor Regulation, Social Security, and Active Labor Market Programs(Washington, DC: World Bank, 2015)Tunisians are striving for the opportunity to realize their potential and aspirations in a country that is rich in both human and physical capital, but whose recent economic growth has failed to create enough opportunities in the form of good and productive jobs. This report highlights the main barriers that hinder the Tunisian labor market from providing income, protection, and prosperity to its citizens and proposes a set of labor policies that could facilitate the creation of better, more inclusive, and more productive jobs. The weak economic performance and insufficient and low-quality job creation in Tunisia is primarily the result of an economic environment permeated by distortions, barriers to competition, and excessive red tape, including in the labor market. This has resulted in the creation of a insufficient number of jobs, especially in the formal sector. To change this situation, policy makers need to address five strategic directives that can promote long-term inclusive growth and formality: foster competition; realign incentives, pay, and benefit packages in the public sector; move toward labor regulations that promote labor mobility and provide support to workers in periods of transition; enhance the productivity of informal workers through training and skills building; and reform existing social insurance systems and introduce new instruments to attain broader coverage.Publication Financing Business Innovation(World Bank, Washington, DC, 2012)Innovation is the main driver of long-term economic growth. The accumulation of capital, whether in the form of physical assets such as plants and equipment, or through better human capital, cannot indefinitely sustain growth unless new products, services, processes, and/or business models are developed and implemented. This paper describes the actors involved and the types of funding available at different stages of the innovation process, the rationales for public intervention, and the advantages and disadvantages of some of the most commonly used policy instruments. Innovation activities are more difficult to finance than other types of investment for several reasons. Innovation produces an intangible asset that does not typically constitute accepted collateral to obtain external funding. Also, the technological and market uncertainty of innovation activities makes the returns to investment highly uncertain, creating significant problems for the standard risk adjustment methods used by providers of funds. This paper uses a streamlined version of an innovation process with three stages to categorize the different sources of finance available; in reality, considerable crossover takes places among instruments because innovation processes are not discrete.Publication Economic Informality : Causes, Costs, and Policies - A Literature Survey(World Bank, 2009-05-01)In this survey the author assemble recent theoretical and empirical advances in the literature on economic informality, analyzing the causes and costs of informality in developed and developing economies. In accordance with recent evidence, the author discusses the nature and the roots of informal economic activity across countries distinguishing between informality as the result of 'exclusion' and 'exit.' The author then provides an extensive review of recent international experience with policies aimed at reducing informality, in particular policies that facilitate the formalization process, create a framework for the transition from informality to formality, lend support to newly created firms, reduce or eliminate inconsistencies across regulation and government agencies, increase information flows, and increase enforcement.
Users also downloaded
Showing related downloaded files
Publication Europe and Central Asia Economic Update, Spring 2025: Accelerating Growth through Entrepreneurship, Technology Adoption, and Innovation(Washington, DC: World Bank, 2025-04-23)Business dynamism and economic growth in Europe and Central Asia have weakened since the late 2000s, with productivity growth driven largely by resource reallocation between firms and sectors rather than innovation. To move up the value chain, countries need to facilitate technology adoption, stronger domestic competition, and firm-level innovation to build a more dynamic private sector. Governments should move beyond broad support for small- and medium-sized enterprises and focus on enabling the most productive firms to expand and compete globally. Strengthening competition policies, reducing the presence of state-owned enterprises, and ensuring fair market access are crucial. Limited availability of long-term financing and risk capital hinders firm growth and innovation. Economic disruptions are a shock in the short term, but they provide an opportunity for implementing enterprise and structural reforms, all of which are essential for creating better-paying jobs and helping countries in the region to achieve high-income status.Publication Leveraging Immigration for Croatia’s Prosperity(Washington, DC: World Bank, 2025-04-11)Croatia is at a critical demographic crossroads. Against a backdrop of an aging and declining population, Croatia is transitioning from a country of emigration to one increasingly relying on foreign workers, with profound implications for the nation’s economic and social fabric. While recent reforms have strengthened the migration governance structure, significant challenges remain in the selection, employment, and integration of foreign workers. This report summarizes the report titled Leveraging Immigration for Croatia's Prosperity, which assesses Croatia’s migration system and presents strategic policy actions to maximize the positive impact of immigration while addressing key challenges for Croatia’s economy.Publication Morocco Economic Update, Winter 2025(Washington, DC: World Bank, 2025-04-03)Despite the drought causing a modest deceleration of overall GDP growth to 3.2 percent, the Moroccan economy has exhibited some encouraging trends in 2024. Non-agricultural growth has accelerated to an estimated 3.8 percent, driven by a revitalized industrial sector and a rebound in gross capital formation. Inflation has dropped below 1 percent, allowing Bank al-Maghrib to begin easing its monetary policy. While rural labor markets remain depressed, the economy has added close to 162,000 jobs in urban areas. Morocco’s external position remains strong overall, with a moderate current account deficit largely financed by growing foreign direct investment inflows, underpinned by solid investor confidence indicators. Despite significant spending pressures, the debt-to-GDP ratio is slowly declining.Publication Air Quality Management in Central Asia(Washington, DC: World Bank, 2025-05-02)This report aims to enhance the understanding of the priorities, needs, and solutions for improving air quality (AQ) in Central Asia (CA) through local action and regional collaboration. It focuses on key components of holistic air quality management (AQM): evidence-based analytics to identify the main sources of air pollution in CA, application of modern tools to assess the impact of cost-effective measures to improve AQ, assessment of the institutional and governance setup for AQM in CA with recommendations to strengthen it, and approaches to financing AQ improvement. Given the lack of comprehensive systematic and validated emission inventories of all PM2.5 precursor emissions, the technical assessment employs the regional emission inventory of the Greenhouse Gas - Air Pollution Interactions and Synergies (GAINS) model. Input data were updated for this study based on recent energy statistics and relevant national surveys. This report addresses emissions and the regional transboundary flows of pollution between Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan. Subsequently, the resulting PM2.5 concentrations in ambient air throughout CA were computed with the atmospheric chemistry and transport calculations of the GAINS model. Employing the source apportionment results of the GAINS model, the analysis then examines the contributions to PM2.5 population exposure. The report also presents source apportionment analyses for important air pollution hot spots in CA: Dushanbe (Tajikistan), Bishkek (the Kyrgyz Republic), Tashkent (Uzbekistan), Samarkand (Uzbekistan), Astana, and Almaty (Kazakhstan).Publication Cities’ Partnership Initiative(Washington, DC: World Bank, 2025-04-24)Sustainable urban development is one of the key areas of development policy in Poland, which is in line with global trends. Sustainable urban development requires an integrated approach that takes into account the complexity and dynamics of phenomena and processes taking place in the urban environment. Meeting the challenges of urban development requires, on the one hand, a steady increase in the capacity of cities to plan and implement development projects, and on the other hand, a favorable regulatory and financial framework and support instruments that are an adequate response to the needs of urban centers. The Cities’ Partnership Initiative (CPI) is a flagship project of the Ministry of Development Funds and Regional Policy of Poland (MDFRP) aimed at supporting sustainable urban development. This final report is the third product of the Reimbursable Advisory Service Agreement on Sustainable Urban Development - Cities’ Partnership Initiative concluded between the MDFRP and the World Bank on January 28, 2022. The report summarizes the project work, including the results of the work of 30 CPI-participating cities, and presents conclusions and recommendations on the three thematic networks and the CPI formula itself.