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When the World Bank surveyed the regulations governing businesses in 181 economies around the world, it detailed many reductions in regulation worldwide, particularly in many developing countries. But it also uncovered the how much many governments continue to make it difficult and costly to do business. Regulations that make it difficult or impossible to register a business, or to have land titles recognized and contracts enforced, mean that millions of people must operate outside the legal economy to earn their livings.
The World Bank’s report, Doing Business, 2009, looked at an array of regulations. In AIER posts covering the report, we are examining sets of rules covering business start-ups, property registration, and business closings. Thus far, we have looked at regulations in selected countries in the West, Asia, and Africa. This final post of the series addresses business regulation in Latin America. | | Business Start-Up | Property Registration | Business Closing | | | Procedures | Time | Costs | Procedures | Times | Costs | Time | Costs | | | (Steps) | (Days) | (% of per capita income)
| (Steps) | (Days) | (% of Property Value) | (Years) | (% of Estate) | | Latin America | | Argentina | 15 | 32 | 9 | 5 | 51 | 7.5 | 2.8 | 12 | | Bolivia | 15 | 50 | 112.4 | 7 | 92 | 4.9 | 1.8 | 15 | | Brazil | 18 | 152 | 8.2 | 14 | 42 | 2.7 | 4 | 12 | | Chile | 9 | 27 | 7.5 | 6 | 31 | 1.3 | 4.5 | 15 | | Columbia | 9 | 36 | 14.1 | 9 | 23 | 2.4 | 3 | 1 | | Costa Rica | 12 | 60 | 20.5 | 6 | 21 | 3.4 | 3.5 | 15 | | Guatemala | 11 | 26 | 50.6 | 5 | 30 | 1.1 | 3.8 | 8 | | Mexico | 9 | 28 | 12.5 | 5 | 74 | 4.8 | 1.8 | 18 | | Nicaragua | 6 | 39 | 12.1 | 8 | 124 | 3.5 | 2.2 | 15 | | Panama | 7 | 13 | 19.6 | 7 | 44 | 2.4 | 2.5 | 18 | | Peru | 10 | 65 | 25.7 | 5 | 33 | 3.3 | 3.1 | 7 | | Venezuela | 16 | 141 | 26.8 | 8 | 47 | 2.2 | 4 | 38 | | Source: World Bank Group, Doing Business 2009 | As the table shows, the costs of starting a business are high in all the Latin American countries selected when compared to the Western economies. But Bolivia, Guatemala, Venezuela, Peru, and Costa Rica top this list in terms of the cost of opening a business as a percentage of per capita national income. These regulated costs, however, are not as high as those in the some of the African countries. Start-up costs in Bolivia of 112.4 percent of per capita income, for example, are the most expensive in Latin America. But the costs are roughly a quarter below those in the African nations of Congo and Zimbabwe. On the other hand, Guatemala and Chile are, in general, the least expensive in which to register a business with the government, weighing in at levels comparable to the business-friendly governments of the West. Bolivia, Nicaragua, and Venezuela are the most expensive in which to register a business, but even these are on par with expenses in the developed West. When a business closes down, Venezuela makes it extremely costly in terms of the time a closing requires and the amount of the company’s net estate value that is taken in taxes – 38 percent. Only Liberia taxes more heavily, taking 43 percent of the net value of a business property upon closing. The least expensive by this latter category is Columbia, taking only 1 percent of the estate’s value, a rate it shares with the most business-friendly nation of the world, Singapore.
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