This paper provides an overview and discusses key findings of the 2002 Business Environment and Enterprise Performance Survey (BEEPS), implemented jointly by the EBRD and the World Bank. (The first round of the BEEPS was implemented in 1999.) Four important conclusions arise from the analysis. First, qualitative measures of the business environment in the BEEPS appear to provide reasonably accurate measures, both across various business environment dimensions and countries and over time. These qualitative measures are compared with both objective statistical measures, where possible, and quantitative business environment measures from the BEEPS. Second, qualitative measures of the business environment show that in virtually all transition economies the business environment has improved significantly between 1999 and 2002. Third, the analysis of quantitative measures of the business environment shows a strong association between business obstacles, added costs and constraints on business, such as corruption, private security protection or obstacles, added costs and constraints on business, such as corruption, private security protection or reliance on internal sources of finance. However, evidence suggests that the nature of corruption in tax administration, which tends to be centralised, is less costly to firms than is corruption in business regulation, which is decentralised. Fourth, the analysis of firm investment and growth shows that the quality of the business environment in 1999 (based on qualitative measures) is significantly and positively associated with investment by firms in the period 1999 to 2001. It also shows that state capture significantly boosts the investment and real revenue growth rates of firms that engage in this activity, but holds back the growth performance of other firms.
