The Impact of Regulatory Constraints on the Performance of Private Enterprises Across Sectors in Tajikistan

Abstract

This study seeks to analyze the impact of regulatory constraints on the performance of private companies operating in different industries in Tajikistan. Although the private sector constitutes around 60% of GDP and 80% of employment in Tajikistan, there have been concerns over the complexity or burden caused by regulatory frameworks for private companies. The research will use Institution-Based View Theory in order to analyze how formal and informal institutions influence business performance. Based on firm-level data of the World Bank Enterprise Surveys of 2019 and 2024, the paper will use a pooled cross- sectional regression (OLS) approach to examine the relationship between business regulations and firm outcomes. Further to address endogeneity in firms’ self-reported perceptions of regulatory constraints, the study employs an instrumental variables approach estimated through two-stage least squares (2SLS). Business regulations are measured using both subjective perceptions for companies as well as objective criteria. This research paper contributes to existing literature by exploring sectoral dynamics for companies operating in Tajikistan, with a view to exploring how companies grow while impacted by regulatory conditions. The findings have important implications for policymakers and private sector enterprises who aim to support the development of the private sector and broader economic growth of Tajikistan.