Box 5.2 (continued)
Comparing constraints in transition (BEEPS 1999–2005) and nontransition (ICA) countries There are interesting differences between nontransition and transition countries. For example, electricity is viewed as much more problematic in nontransition countries. More generally, the scores across the infrastructure constraints and skills are much lower in transition economies: these elements of the business environment clearly are considerably less problematic for the transition countries. Corruption is in the top five constraints on the levels measures in nontransition countries but below this in transition countries. By contrast, transition countries complain more about the legal environment and attach a higher priority to it than do nontransition countries. For example, controlling for firm characteristics, the priority measure indicates that about one-third of firms in transition view the legal system as a constraint more severe than the average, as compared with one-quarter of firms in nontransition countries. Quantitative measures of the experience of firms regarding their environment tend to confirm the information in the evaluative questions (the lower panel of the box table). For example, consistent with the lower level of complaints about physical infrastructure in transition economies, power and water outages are much less prevalent. The prevalence of bribes is higher in transition economies. Underreporting to the tax authorities is somewhat more common outside than in the transition, and the opposite is so for gifts to tax officials.
Prioritizing structural reform
205