One Day in the Life of a Business

"One day in the life of Ivan Denisovich" got Solzhenitsyn a Nobel Prize in literature. The book is dull: it describes a single day of an ordinary prisoner in a Soviet labor camp in the 1950s. However, it described a reality that few had imagined.

It would be useful to have a similar account of the life of an ordinary business in, say, Africa. Many efforts have gone into improving the environment for doing business in Africa. The Doing Business team now works in over 20 African countries. The Investment Climate Facility for Africa has even more ambitious plans.

A parallel effort exists. Abhijit Banerjee and Esther Duflo at MIT Economics have a 2006 Journal of Economic Prespectives paper on the economic lives of the poor. The authors document how the poor (those who have less than $1 a day) earn their income and how they spend it in 13, mostly African, countries.

The recently upgraded World Bank Enterprise Surveys can be used to do the same. In particular, one can show how the ordinary businesswoman in a poor country spends her time, where she sells her products, how she transports them, how often she needs to pay bribes, and what are the main preceived constraints to a more profitable enterprise. The "she" is because the surveys also contain information on who owns and runs businesses.

Augmenting these data with the Doing Business data, a researcher can also find what rules businesses live by. To return to Ivan Denisovich's gulag, the rule most intensely observed by prisoners is "if the thermometer reaches −41 degrees, then the workers are exempt from outdoor labor that day." A lower temperature is a cause for celebration.

A word of caution: people adjust to adverse conditions. Sometimes the answers in the enterprise surveys may suggest there is no problem. This is misleading: one just gets used to adversity. Solzhenitsyn's novel ends with: "Ivan Denisovich went to sleep fully content. He'd had many strokes of luck that day."