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The use of expert or qualitative surveys to rank countries' business investment conditions is widespread. However, within the economic literature there are concerns about measurement error and endogeneity based on characteristics of the respondents, raising questions about how well the data reflect the underlying reality they are trying to measure. This paper examines these concerns using data from 79,000 firms in 105 countries. The findings show that first, qualitative rankings correlate well with quantitative measures of the business environment, using both quantitative measures from within the survey and from external sources. Second, there are systematic variations in perceptions based on firm characteristics - focusing in particular on size and growth performance. However, it is not that an optimistic view of the business environment is simply the expression of a firm's own performance. Rather, firm size and performance affect the relative importance of certain constraints, particularly in areas such as finance, time with officials/inspectors, corruption, and access to reliable electricity. The results also show that much of the variation in subjective responses by firm types is largely due to differences in the objective conditions across firm types. There is little evidence that size and performance have non-linear effects in how constraining a given objective condition is reported to be. Overall, concerns about endogeneity remain in using business environment indicators to explain firm performance, but this stems primarily from the fact that who you are and how well you are doing can affect the conditions you face rather than whether the indicator used is qualitative or quantitative.

Access to Finance --- Access to finance --- Allocative efficiency --- Bribes --- Corruption --- E-Business --- Economic development --- Economic growth --- Empirical evidence --- Employment growth --- Environment --- Environmental Economics and Policies --- External finance --- Finance and Financial Sector Development --- International bank --- Lack of access --- Limited access --- Limited access to finance --- Metals --- Microfinance --- Multipliers --- Policy makers --- Private Sector Development --- Property rights --- Public goods --- Tax rates --- Transport --- Transport Economics, Policy and Planning --- Wages

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Using survey data from 86,000 enterprises in 104 countries, including 17,000 enterprises in 31 Sub-Saharan African countries, this paper finds that average enterprise-level employment growth rates are remarkably similar across regions. This is true despite significant differences in the quality of the investment climate in which these enterprises operate. Objective measures of investment climate conditions (including the number of outages, the share of firms with bank loans, and others) indicate that conditions are most challenging within Sub-Saharan Africa, as well as for smaller enterprises. However, enterprises' employment in Sub-Saharan Africa is less sensitive to changes in access to infrastructure and finance relative to other low-income regions. This can be understood by looking at non-linear effects by firm size - and the finding that these size effects are particularly strong within Sub-Saharan Africa. Although unreliable infrastructure services and inadequate access to finance generally hamper growth, in Sub-Saharan Africa they are actually associated with higher employment growth rates among micro enterprises. Although employment growth is good news in Sub-Saharan Africa, that much of the expanded employment is in small, labor-intensive, less productive enterprises raises longer-run concerns about the efficiency of the allocation of resources and aggregate productivity growth in the region.

Access to Finance --- Access to finance --- Access to formal finance --- Access to services --- Bank loans --- Banks & Banking Reform --- Bribes --- Corruption --- Economies of scale --- Employment growth --- Entrepreneurs --- Exclusion --- External financing --- Finance and Financial Sector Development --- Greater access --- International bank --- Investment and Investment Climate --- Labor markets --- Labor Policies --- Lack of access --- Macroeconomics and Economic Growth --- Micro enterprises --- Micro-enterprises --- Microfinance --- Property rights --- Red tape --- Small enterprises --- Social Protections and Labor