Publication: Investment Climate Reforms and Job Creation in Developing Countries : What Do We Know and What Should We Do?
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Date
2014-09
ISSN
Published
2014-09
Author(s)
Abstract
This paper reviews the literature on the
role of the investment climate reforms in job creation. It
finds that the current landscape of employment and private
sector activity in developing countries indicates a number
of potential channels through which investment climate
reforms can positively affect job creation. However,
rigorous empirical evidence is scarce and most of the
relevant studies focus on business entry reforms with a few
focusing on business taxation and investment promotion
activities. Overall, there is evidence of job creation
through business entry, tax reforms, and investment
promotion activity in developing countries. Almost all of
these evidences are from quasi-experimental studies that are
significant improvements over conventional cross-country or
cross-section panel data analysis. Still, various
endogeneity concerns in these studies cannot be ruled out
completely. In assessing job effects, future research should
provide deeper insights on the gross versus net and
short-run versus long-run job effects and general
equilibrium effects of various investment climate reforms
related to jobs, productivity, competition, and other
developmental outcomes. Another critical agenda for future
research is to shed light on which investment climate
reforms matter most for spurring the employment and
productivity growth of firms in developing countries. The
World Bank Group, in partnership with development partners
and client government countries, can play a significant role
in bridging the current knowledge gap by integrating
rigorous evaluation as an integral part of project design
and implementation, and improving data quality, particularly
through its information and communication technologies-led
private sector development reform initiatives.
Link to Data Set
Citation
“Rahman, Aminur. 2014. Investment Climate Reforms and Job Creation in Developing Countries : What Do We Know and What Should We Do?. Policy Research Working Paper;No. 7025. © World Bank Group, Washington, DC. http://hdl.handle.net/10986/20335 License: CC BY 3.0 IGO.”
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