50 Journal of Applied Business and Economics Vol. 25(1) 2023 Business Environment and Sectoral Productivity in Côte d'Ivoire Kouakou Germain Kramo Félix Houphouët-Boigny University Mamadou Koné Félix Houphouët-Boigny University Improving the business environment is a priority for countries seeking to create an attractive framework for private investment and foster private sector competitiveness. This paper investigates the effect of business environment on sectoral productivity in Côte d'Ivoire. We use sectoral Productivity per worker as measure of productivity and the Economic Freedom of the World index of Fraser Institute as measure of business environment in this study. Using data for the period 1991-2018 and the Fully Modified Ordinary Least Square (FMOLS) and Dynamic Ordinary Least Square (DOLS) estimation methods, the results indicate that improvement in the business environment in Cote d'Ivoire has a positive effect on productivity in agricultural, industry and services sectors. However, the effect is much stronger in the services and industrial sectors. Keywords: business environment, productivity, sector, agriculture, industry, services INTRODUCTION Strengthening the attractiveness to investors has become a priority for countries. Since 2012, the government of Côte d'Ivoire has undertaken numerous reforms to improve the business environment. The government of Côte d’Ivoire worked to lower regulatory barriers and implement new policies and procedures that promote the private sector. Thus, these initiatives have enabled the country to be ranked among the 10 most reforming countries worldwide in 2014, 2015 and 2018. At the same time, foreign direct investment (FDI) flows to Côte d'Ivoire have substantially increased. They increased from $407 million in 2013 to $913 million in 2018 (UNCTAD, 2019). In addition, the government's ambition is to make Côte d'Ivoire an emerging country by accelerating the structural transformation of the economy. The structural transformation of the economy cannot be done without an improvement of the productivity. Since 2012, total factor productivity of Côte d’Ivoire has followed an upward trend. On the same period the country has improved its business environment. This study seeks to determine whether improving the business environment contributes to improving productivity. Productivity is generally defined as a relationship between a volume measure of output and a volume measure of input used. In this study, we analyze the relationship between labor productivity and the improvement of the business environment in Côte d'Ivoire. Labor productivity in a sector is defined as the ratio of the value added of the sector to the number of workers in the sector.