Are Managers' Perceptions of Constraints to Growth Reliable? Evidence from a Natural Experiment in South Africa

Abstract

During the World Bank’s 2007-2008 Enterprise Survey, a major power crisis hit South Africa. Not surprisingly, this affected managers’ perceptions about electricity—the percent saying power was a serious constraint increased from 11 to 49 percent. But managers’ perceptions about other areas of the investment climate such as taxation, finance and regulation also deteriorated significantly, suggesting that managers do not compartmentalize their responses to questions about constraints. Other than for electricity, however, relative rankings did not change significantly. This suggests that policymakers using the survey to identify the main constraints would have identified similar constraints before and after the crisis.