Ease of starting a business and poverty levels. A global comparative analysis before and during the covid-19 pandemic

Abstract

The study investigated the relationship between the Ease of starting a business and poverty levels before and during the COVID-19 pandemic. The study aimed at determining the relationship between the number of procedures to start a business, the time (number of days) taken to start a business, the cost of starting a business (%age of GNI per capita) in relation to poverty levels for all economies before and during the COVID-19 pandemic and moderating role of level of corruption. The study adopted a desktop cross-sectional correlational design using a triangulation of quantitative techniques to analyze freely accessible secondary data on 191 economies which had complete data on the units of inquiry for the year 2018 and 2020, from the World Bank and Transparency International databases. Results of the investigation revealed that the relationship between the indicators of ease of starting a business and poverty levels was inverse and statistically significant before the COVID-19 pandemic and did not significantly change even during the COVID-19 pandemic. On the other hand, the regression results indicated that it the cost of starting a business had the highest and most significant predictive power on poverty levels both before and during the COVID-19 pandemic than the influence of time taken and number of procedures involved in starting a business. The findings also show that the level of corruption in the public sector has a statistically significant moderating effect on the relationship between ease of starting a business and poverty levels. The study concludes that ease of business startup had a significant influence on poverty levels both before and during the COVID-19 pandemic. All the constructs defined in the World Bank ease of doing business (EODB) index including; the number of procedures in starting a business, the time taken in starting a business and the costs involved in starting a business were all statistically and significantly related with poverty levels before and during the COVID-19 pandemic. Therefore in economy with a highly corrupt public sector, level of corruption, there is need for economies to simplify regulation regarding starting a business while emphasizing corrupt free public sectors and keeping the costs of a business low and affordable to potential entrepreneurs in order to lift people out of poverty. The study recommends that economies should uphold regulations that make it easy to start businesses, ensure corruption free public sector; to reduce poverty despite the crises such as the COVID-19 pandemic.