The legal, regulatory and tax framework and small enterprises
Enterprise dynamics have three dimensions: births, survival, and growth. This article argues that the policy environment affects enterprise growth differently in each of these dimensions. The principal problems small firms face at start-up concern access to working capital and to markets.Only in particular localities and sectors have government registration procedures significantly constrained new start-ups. With regard to survival, of those enterprises that closed as business failures, issues of access to credit and inputs were important parts of the explanation. In the case
of growth, again, issues of markets and demand, of credit and finance, and access to raw materials and machines were the main problems holding back more rapid expansion. Legal and regulatory reforms must address these constraints if they are to succeed in promoting small enterprise growth.
Only in particular localities and sectors have government registration procedures significantly constrained new start-ups. With regard to survival, of those enterprises that closed as business failures, issues of access to credit and inputs were important parts of the explanation. In the case
of growth, again, issues of markets and demand, of credit and finance, and access to raw materials and machines were the main problems holding back more rapid expansion. Legal and regulatory reforms must address these constraints if they are to succeed in promoting small enterprise growth.
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