Additional useful variables include (among others): (i) ownership: public ownership refers to whether the firm is at least partly owned by the government; (ii) Employment expansion: full-time employment increased in the previous three years.

# _Investment Climate Survey_

The Investment Climate Survey (ICS) has so far been carried out in 51 developing and transition economies. The aim of this survey is to provide quantitative data on investment climate which are comparable at the international and regional levels. The survey is normally carried out under the auspices of national stakeholders, which could be an employers association as in the case of India, a development research institution as in the case of China and Ethiopia, an indigenous development agency as in the case of Morocco and Pakistan, or the central statistical bureau as was the case in Bolivia.

Because the priorities of these surveys vary across countries, ICS are not all exactly the same. However, in order to make these as comparable as possible, a set of criteria were defined: (i) the survey sampling unit is the establishment;<sup>14</sup> (ii) interviews are carried out face to face by trained enumerators with establishments’ heads and accountants; (iii) a set of core questions – with the same wording - are asked in the same way in all countries;<sup>15</sup> (iv) there are common rules for sample design. This is the least standardized aspect of the surveys. The rules are the following: (i) each country survey contains a minimum set of sectors that are shared by a larger number of countries; (ii) major export and/or growth industries are adequately represented; (iii) for budget reasons, coverage is limited to areas of minimum concentration of activity; (iv) the sample should be representative of the sectors and regions it covers (and in particular of the main ones), i.e. each sector and region should contain at least 50-100 observations; (v) all samples must be stratified by size, sector and location. Depending on the country, the sample size for most recent ICS ranges from 200 to 1500 (depending on the size of the economy).

From the ICS database we have extracted responses on a specific question concerning labor regulations: “ _Please tell us if any of the following issues are a problem for the operation and growth of your business. If an issue poses a problem, please judge its severity on a four-point scale_<sup>_16_</sup> ”. Eighteen issues are proposed including labor regulations.<sup>17</sup>

> 14 In cases where firms with several establishment have consolidated accounts, every effort is made to disaggregate. If this is not possible, the unit of observation is the same throughout the questionnaire.

> 15 These common questions constitute a well-tested product of past surveys having been pooled and consolidated from instruments of FACS, WBES and RPED surveys. Together they constitute 50 to 60 percent of the full survey instrument, the rest being items generating information for analyzing more specialized policy issues.

> 16 Where 0 = no obstacle, 1 = minor obstacle, 2 = moderate obstacle, 3 = major obstacle, 4 = very severe obstacle. For our purpose and to make the variable consistent across WBES and ICS, we merge responses 3 and 4 into the category “major”. 17

Telecommunications, electricity, transportation, access to land, tax rates, tax administration, custom and trade regulations, labor regulations, skills and education of available workers, business licensing and operating permits, access to financing, cost of financing, economic and regulatory policy 14