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Investment Climate and Business Performance: An Empirical Analysis of Latin America

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dc.description.abstract Productivity in Latin America and the Caribbean (LAC) is low compared to other growing regions and its improvement has been modest at best. This study proposes that a streamlined investment climate can contribute to private sector development through improved productivity, average wage rates, and gross profits per employee. With a firm level sample—panel data—of eight LAC countries, this study analyzes the relationship of selected performance indicators with investment climate variables along with firms and owners’ characteristics among others. For the performance indicators, productivity is estimated by several methods considering only one sector at the four digit level ISIC code. Investment climate variables are calculated as city averages, across 30 cities, to account for potential simultaneity bias. Labor, tax, and trade regulations along with availability of financial capital are associated with higher productivity at the firm level. In addition to regulations of trade and market entry, stability, safety and less corruption are related to higher average wages and gross profits per employee. Finally, firm characteristics such as experience in the market, larger size, a better educated workforce and better capacity utilization consistently appear as significant throughout the models. Overall, results suggest that the investment climate matters. en
dc.title Investment Climate and Business Performance: An Empirical Analysis of Latin America en
dc.contributor.author Gonzales, Erick
dc.date.accessioned 2017-04-28T20:02:57Z
dc.date.available 2017-04-28T20:02:57Z
dc.date.issued 2017-04-28
dc.identifier.uri http://lacer.lacea.org/handle/123456789/61391
lacea.language.supported en
dc.description Working paper
dc.language.iso en
dc.subject Investment Climate
dc.subject Productivity
dc.subject Latin America
dc.subject Firm-Performance
dc.type Working Paper


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