The Business Environment and Enterprise Performance Survey, known as BEEPS, is jointly conducted by the World Bank and the European Bank for Reconstruction and Development. The poll of business managers and enterprise owners has been conducted by the two institutions every three years since 1999.

According to the 2005 BEEPS, many of the reforms undertaken over the past three years are starting to pay dividends.  The latest round of the survey, which was first made public in EBRD’s 2005 Transition Report released on November 14, shows that firms across the region are benefiting from greater stability, both in the macroeconomic environment and with regard to regulatory policies.

The World Bank has prepared and posted online detailed BEEPS-at-a-glance notes for 27 transition countries.  These country summaries present simple statistics on firm perceptions and experiences in the context of government reforms and policies as they impact the investment climate.

By monitoring the pulse of the business community, the BEEPS provides a unique tool for comparing countries and for examining changes over time in how firms from all sectors perceive and experience their interactions with the state.  Understanding firms’ perspectives on the business environment helps clarify where reforms are working and where implementation may be lagging.

Notable improvements in many areas

In addition to improvements in macroeconomic stability, firms also report general improvements in the tax environment. 

According to firms in the survey, tax administration is less onerous than three years ago, and in 2005 they even complained less about tax rates, the bane of firms everywhere.  A side-benefit to this is that tax evasion has eased, and unofficial payments related to taxes have become less frequent.  

As a whole, firms complain less about both access to finance and the cost of finance than three years earlier. Although firms still use their own funds as the primary source of financing new investments, they are increasingly using formal borrowing and the capital markets and relying less on informal borrowing. 

Firms also say that crime and corruption, as well as the burden of red tape, have eased.

Room for improvement

Although much of the news from the survey is good, some aspects of the business environment are even more problematic than three years ago.  Firms report an increased burden of labor regulations, an effect especially pronounced in the more advanced transition countries.  In addition, firms are reporting that their employment levels are more distorted by labor regulations than had been the case in 2002.

Even among the areas that have improved, many firms continue to report a serious burden.  Half of the firms surveyed indicated that macroeconomic instability was a moderate or a major obstacle to the operation and growth of their firms, and more than 35 percent said the same of corruption.

Despite remaining challenges, continued improvements in the business environment show that reforms designed to support business development are generating real results.