World development Report 2005: A better Investment climate for everyone

Everyday, firms around the world face important decisions. A rural microentrepreneur considers whether to open a small business to complement her family's farm income. A local manufacturing company ponders whether to expand its production line and hire more workers. A multinational enterprise evaluates alternative locations for its next global production facility. Their decisions have important implications for growth and poverty in each location. And their decisions will depend largely on the way government policies and behaviours shape the investment climate in those locations. A good investment climate provides opportunities and incentives for firms - from microenterprise to multinationals - to invest productively, create jobs, and expand. It thus plays a central role in growth and poverty reduction. Improving the investment climates of their societies is critical for governments in the developing world, where 1.2 billion people survive on less than $1 a day, where youths have more than double the average unemployment rare, and where populations are growing rapidly. Expanding jobs and other opportunities for young people is essential to create a more inclusive, balanced, and peaceful world. New data from the World Bank provide fresh insights into how investment climates vary around the world and how they influence growth and poverty. These include Investment Climate Surveys, which cover more thant 26.000 firms in 53 developing countries, and the Doing Business Project, which benchmarks regulatory regimes in more than 130 countries. World Development Report 2005 draws on those data, other new evidence, emerging lessons of international experience to look at what governments at all levels can do to create a better investment climate - an investment climate that benefits society as a whole, not just firms,; and one that embraces all firms, not just large or politically connected firms. In short, a better investment climate for everyone.