|Group|Variable|Beta|Standard<br>deviation|Transformation<br>sign|
|---|---|---|---|---|
|8|Profit tax (% of commercial profits)|3.817|0.523|-1|
|8|Total tax and contribution rate (% of commercial profits)|1.088|0.589|-1|
|8|Time to pay taxes (hrs/year)|1.030|0.314|-1|
|8|Registering property: Cost, % of property value|1.687|0.384|-1|
|8|Burden of government regulation, 1-7 (best)|2.154|0.417|1|
|9|Commencement of proceedings to resolve insolvency index (0-3)|1.369|0.402|1|
|9|Enforcing contracts: Cost, % of claim|1.310|0.349|-1|
|9|Resolving insolvency: Recovery rate, cents on the dollar|0.714|0.358|1|
|9|Strength of investor protection, 0-10 (best)|1.993|0.423|1|
|10|Cost to Export: Border Compliance (USD)|1.252|0.448|-1|
|10|Cost to Export: Documentary Compliance (USD)|0.753|0.274|-1|
|10|Extent of market dominance, 1-7 (best)|1.935|0.926|1|
|10|Tariff rate, most favored nation, weighted mean, manufactured products (%)|1.308|0.662|-1|
|10|Tariff rate, most favored nation, simple mean, all products (%)|2.258|0.693|-1|
|10|General government final consumption expenditure (% of GDP)|2.056|0.510|-1|
|11|Inflation, consumer prices (annual %)|-1.058|0.597|-1|
|11|General government net lending/borrowing, Percent of GDP|3.299|0.653|1|
|11|General government gross debt, Percent of GDP|1.723|0.433|-1|
|11|Voice and Accountability|2.181|0.540|1|
|11|Business costs of crime and violence, 1-7 (best)|2.161|0.389|1|
|11|Public trust in politicians, 1-7 (best)|2.243|0.470|1|
|12|Foreign Direct Investment: Inward stock (USD per capita)|1.862|0.701|1|
|12|FTA in % of world gdp|2.749|0.744|1|

Note: The table reports the results for variables with statistically significant estimated coefficients (at the 10% significance level). The first column profiles the variables with respect to groups outlined in Table 1. The results are obtained using the outlined methodology with country/sector panel data. The dependent variable is the binary indicator of RCA over 2015-19 period. The regressors are the policy indicators (average value over the 2010-14 period).

Lastly, one variable is significant but does not behave as expected: the level of inflation. As noted earlier, we assigned the model how to interpret each independent variable expected influence on the probability of success. In the case of inflation, this assumed that higher levels of inflation are a sign of macroeconomic imbalances which would tend to discourage investments (see for instance Schneider and Frey, 1985). It is possible that inflation relation to RCA success is non-linear. Moderately high level of inflation may be a sign of strong growth while higher levels betray deeper macroeconomic issues.

# Sector benchmarking: revealed constraints

A shortcoming of most measures of the trade and investment climate determinants is that they are available at the economy-wide level rather than at the industry or firm level. The reasons for this range from the nature of variables which are not necessarily sector specific to measurement limitations and data availability.

We build here on the approach of the constraints benchmarking tool to derive a country and sector specific performance metric for the significant variables identified by the model. Each variable for any 24