Barriers to Entrepreneurship - World Bank

Contribution• We first show that entry regulations do affect entry.• Next we study the consequences of preventing free entry for thegrowth of incumbent firms.• A cross-country regression of firm entry against regulations maysuffer from a causality problem – that in countries with generallylow entry, people are not sufficiently motivated to press for therepeal of regulations that impede entry.• To address this sort of problem, we focus on cross-industry, crosscountryinteraction effects. In particular, we test whether entry isrelatively lower in “naturally high entry” industries when they arein countries with high bureaucratic restrictions on entry.3