# **Box 1. The 16 low-level PMR indicators**

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.

- **_Use of command and control regulation_** : indicates the extent to which government uses coercive (as opposed to incentivebased) regulation in general and in specific service sectors.

**<u>Barriers to entrepreneurship: Regulatory and administrative opacity</u>** **_Licenses and permits systems_** : reflects the use of ‘one-stop shops’ and ‘silence is consent’ rules for getting information on and issuing licenses and permits.

**_Communication and simplification of rules and procedures_** : reflects aspects of government’s communication strategy and efforts to reduce and simplify the administrative burden of interacting with government.

**<u>Barriers to entrepreneurship: Administrative burden on corporations</u>** **_Administrative burdens for corporations_** : measures the administrative burdens on the creation of corporations.<sup>2</sup> **_Administrative burdens for sole proprietors_** : measures the administrative burdens on the creation of sole proprietor firms.<sup>3</sup> **_Sector-specific administrative burdens_** : reflects administrative burdens in the road transport and retail distribution sectors. **<u>Barriers to entrepreneurship: Barriers to competition</u>** **_Legal barriers_** : measures the scope of explicit legal limitations on the number of competitors allowed in a wide range of business sectors. **_Antitrust exemptions_** : measures the scope of exemptions to competition law for public enterprises.

**OUTWARD ORIENTED POLICIES**

**<u>Barriers to trade and investment: Explicit barriers</u>** **_Foreign Ownership barriers_** : reflects legal restrictions on foreign acquisition of equity in public and private firms and in the telecommunications and airlines sectors.

**_Tariffs_** : reflects the (simple) average of most-favoured-nation tariffs. **_Discriminatory procedures_** : reflects the extent of discrimination against foreign firms at the procedural level. **<u>Barriers to trade and investment: Regulatory barriers</u>** **_Regulatory barriers_** : reflects other barriers to international trade ( _e.g._ international harmonisation, mutual recognition agreements).

_______________________________ Source: reproduced from Conway, Janod and Nicoletti, 2005

> 2 Data from Doing Business in 2005 was used to construct this indicator.

> 3 This indicator is not available for Romania as information about it was not included in the adapted questionnaire for Romania.

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