Dollar, DavidHallward-Driemeier, MaryMengistae, Taye2013-06-192013-06-192004-06https://hdl.handle.net/10986/14008Drawing on recently completed firm-level surveys in Bangladesh, Brazil, China, Honduras, India, Nicaragua, Pakistan, and Peru, this paper investigates the relationship between investment climate and international integration. These standardized surveys of large, random samples of firms in common sectors reveal how firms experience bottlenecks and delays in hard infrastructure such as power and telecom as well as in soft infrastructure such as customs administration. The authors focus primarily on measures of the time or monetary cost of different bottlenecks (e.g., days to clear goods through customs, days to get a telephone line, sales lost to power outages). For many of these costs, the obstacles are lower in China than in the South Asian or Latin American countries. There is also systematic variation across cities within countries. The authors estimate a probit function for the probability that a randomly chosen firm is foreign-invested and a separate probit for the probability that a randomly chosen firm is an exporter. These measures of international integration are higher where investment climate is better. For locations to take advantage of opportunities in the international market, they need good infrastructure and a sound regulatory environment. The interaction of openness and sound investment climate creates a good environment for investment and production. This paper helps explain why China has been so successful over the past decade, both in terms of integration and of rapid growth, while other countries have had varied success.en-USCC BY 3.0 IGOAVERAGE LEVELAVERAGE PRODUCTIVITYAVERAGE TARIFFAVERAGE TARIFF RATESBANKING SECTORBENCHMARKBUREAUCRACYBUSINESS COMMUNITYBUSINESS SERVICESCAPITAL ACCUMULATIONCITIESCOMPARATIVE ADVANTAGECOMPARATIVE DEVELOPMENTCONSUMER GOODSCORRUPTIONCOUNTRY GROWTHCUSTOMSCUSTOMS ADMINISTRATIONCUSTOMS CLEARANCECUSTOMS DELAYSDEVELOPMENT ECONOMICSDIRECT INVESTMENTDOMESTIC FIRMSDYNAMIC GROWTHECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC INTEGRATIONECONOMIC PERFORMANCEEMPIRICAL ANALYSISEMPIRICAL STUDIESEMPLOYMENTEXPORT OPPORTUNITIESEXPORTSFARMSFINANCIAL SERVICESFINANCIAL SUPPORTFINANCIAL SYSTEMFOREIGN EQUITY PARTICIPATIONFOREIGN FIRMSFOREIGN INVESTMENTFOREIGN INVESTORSFOREIGN TRADEFORMAL TRADEGDPGLOBAL ECONOMYGLOBAL PRODUCTIONGOVERNMENT EFFECTIVENESSGROWTH RATESINTERNATIONAL DEVELOPMENTINTERNATIONAL MARKETSINTERNATIONAL TRADEINVESTMENT CLIMATESINVESTMENT POLICIESLOCAL GOVERNANCELOCAL MARKETMARGINAL EFFECTMONETARY ECONOMICSNATIONAL LEVELNATIONAL MARKETOPEN TRADEPHONE LINEPHONESPOLITICAL STABILITYPRODUCERSPRODUCTIVITYPRODUCTIVITY GROWTHPROPERTY RIGHTSPUBLIC SECTORPUBLIC SERVICESREGIONAL DEVELOPMENTREGULATORY FRAMEWORKRULE OF LAWSOCIAL INSTITUTIONSSTANDARD ERRORSTECHNOLOGY TRANSFERTELECOM SERVICESTELEPHONE CONNECTIVITYTRADE INTEGRATIONTRADE POLICIESTRADE POLICYWAGESWORLD ECONOMY INVESTMENT CLIMATEINTERNATIONAL INTEGRATIONTELEPHONE LINESPOWER OUTAGESINTERNATIONAL MARKETREGULATORY ENVIRONMENTECONOMIC GROWTHECONOMIC DEVELOPMENTGLOBALIZATIONFOREIGN DIRECT INVESTMENTTRADE POLICYAGGREGATE PRODUCTION FUNCTIONSWorld Bank10.1596/1813-9450-3323