# **Figure 1  The PMR indicator system**

**Figure 1. The PMR indicator System**<sup>**1**</sup>

|State control<br>Public ownership<br>(0.56)|(0.49)<br>Involvement in<br>business operation<br>(0.44)<br>Inward-orien|ted policies (0.59)<br>Regulatory and<br>administrative opacity<br>(0.48)|Barriers to<br>entrepreneurship<br>(0.51)<br>Product marke<br>Administrative<br>burdens on<br>startups (0.30)|Outward-<br>t regulation<br>Barriers to<br>competition<br>(0.22)<br>Explicit b<br>and invest|oriented policies<br>Barriers to trade a<br>(1.0<br>arriers to trade<br>ment (0.70)|(0.41)<br>nd investment<br>)<br>Other barriers<br>(0.30)|
|---|---|---|---|---|---|---|
|Scope of public<br>enterprise sector<br>(0.30)<br>Size of public<br>enterprise sector<br>(0.30)<br>Direct control over<br>business<br>enterprises<sup>2</sup><br>(0.40)|Price controls (0.45)<br>Use of command &<br>control regulation<br>(0.55)|Licenses and permits<br>system (0.55)<br>Communication and<br>simplification of rules<br>and procedures<br>(0.45)|Administrative burdens for<br>corporation (0.36)<br>Administrative burdens for<br>sole proprietor firms (0.30)<br>Sector specific administrative<br>burdens (0.34)|Legal barriers (0.30)<br>Discri<br>procedure<br>Foreign<br>barriers<br>Antitrust exemptions<br>(0.70)<br>Tariffs|minatory<br>s (0.24)<br>ownership<br>(0.45)<br>(0.31)|Regulatory barriers<br>(1.0)|
|Economic regulat<br>Administrative reg<br>{regulation data}|ion<br>ulation<br>{regulation data}|{regulation data}|{regulation data}|{regulation data}<br>{regula|tion data}|{regulation data}|

- 1.The numbers in brackets indicate the weight given to each lower level indicator in the calculation of the higher level indicator immediately above it. The weights were derived by applying principal components analysis to the set of indicators in each of the main regulatory domains (state control, barriers to

- entrepreneurship, barriers to trade and investment, economic regulation and administrative regulation). The same approach was used to derive the weights used to calculate the indicators of inward and outward-oriented policies and the overall PMR indicator. The principal components analysis was based on the original 1998 data.

2. Two indicators from the 1998 version of the PMR indicators ('Special voting rights' and 'Control of public enterprise by legislative bodies') have been combined into this indicator.

_Source:_ Conway et al. (2005)

# **Box 1. The low-level PMR indicators**

There are 16 low-level indicators in the PMR system. These indicators cover a wide range of product market policies and include:

# **INWARD-ORIENTED POLICIES**

# **<u>State control: Public ownership</u>**

**_Scope of public enterprises_** : this indicator measures the pervasiveness of state ownership across business sectors as the proportion of sectors in which the state has an equity stake in at least one firm.

**_Size of public enterprise_** : reflects the overall size of state-owned enterprises relative to the size of the economy.

**_Direct control over business enterprises_** : measures the existence of government special voting rights in privately-owned firms, constraints on the sale of state-owned equity stakes, and the extent to which legislative bodies control the strategic choices of public enterprises.

# **<u>State control: Involvement in business operations</u>**

**_Price controls_** : reflects the extent of price controls in specific sectors.

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