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Policy instability, corruption affect business in India
Business enterprises in India and Pakistan face serious obstacles brought on by instability in policies and corruption, and small firms are at a greater disadvantage compared to medium and large companies, the International Finance Corporation has said.
Business enterprises in India and Pakistan face serious obstacles brought on by instability in policies and corruption, and small firms are at a greater disadvantage compared to medium and large companies, the International Finance Corporation has said.
Policy instability and uncertainty coupled with taxes, regulations and inflation present hurdles to doing business in India, Pakistan and Bangladesh, it said in a paper titled 'Firm Size and the Business Environment.'
"(Obstacles due to) Inflation, exchange rate and infrastructure are highest for large firms, while small firms suffer mainly because of absence of competitive practices and organised crime," it said. The paper, authored by Mirjam Schiffer, Professor of Economics at Basel and Beatrice Weder, Professor of Economics at University at Mainz (Germany), covered 80 countries.
Stating functioning of judiciary and corruption as other factors, which affected businesses in these countries, the paper said large firms were more prone to falling prey to corruption, blackmail and influence-peddling.
But the obstacles may be particularly severe for small firms because they represent fixed costs that a large firm can absorb more easily. Government-induced difficulties could include bureaucratic discretion, since small firms may be unable to bribe their way through bureaucracy. One study revealed huge entry costs for such small entrepreneurs who lacked access to higher levels of the administration.
Bureau Report
"(Obstacles due to) Inflation, exchange rate and infrastructure are highest for large firms, while small firms suffer mainly because of absence of competitive practices and organised crime," it said. The paper, authored by Mirjam Schiffer, Professor of Economics at Basel and Beatrice Weder, Professor of Economics at University at Mainz (Germany), covered 80 countries.
Stating functioning of judiciary and corruption as other factors, which affected businesses in these countries, the paper said large firms were more prone to falling prey to corruption, blackmail and influence-peddling.
But the obstacles may be particularly severe for small firms because they represent fixed costs that a large firm can absorb more easily. Government-induced difficulties could include bureaucratic discretion, since small firms may be unable to bribe their way through bureaucracy. One study revealed huge entry costs for such small entrepreneurs who lacked access to higher levels of the administration.
Bureau Report