Ease of Starting a Business in Latin America

Entrepreneurship is essential for a country’s economic success, so studying how easy it is to start and run your own business can be a useful metric for whether a country is headed in the right direction.

In yesterday’s WSJ ($), Mary O’Grady points out that the picture in Latin America is grim:

The World Bank’s annual "Doing Business" survey, released last week, demonstrates the point. The 2008 survey, which evaluates the regulatory climate for entrepreneurs in 178 countries, finds that Latin America and the Caribbean was the slowest reforming region this year and that it "is falling further behind other regions in the pace" of reform.

In many Latin American countries it can take months to file the paperwork to start a business; hiring and firing employees at will is severely restricted; paying taxes is a nightmare.

As someone with a growing interest in the region, I hope this trend can be reversed. If it’s not, a talented young entrepreneur will leave the region and start his/her business elsewhere, a brain drain that most of those economies cannot afford.

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On a somewhat related note, my older brother John just re-located to Quito, Ecuador where he will be teaching English for the next 8 months or so. If you live in Ecuador and want to introduce him to the culture, drop me a note and I’ll connect you two. John is a 2006 graduate of Amherst College, athletic stand-out (nominated for California Mr. Basketball in high school), and he worked for a year at Skadden, Arps, the prestigious New York law firm out of their Palo Alto office. I’m excited and proud that he’s chosen to embark on what will almost surely be a life changing experience.

In the weeks after Christmas I plan to visit Ecuador and hopefully some neighboring countries like Chile, Peru, and Bolivia. Details will be posted as I know them.

2 Responses to Ease of Starting a Business in Latin America

  1. Andromeda says:

    You’ve read Hernando de Soto’s The Mystery of Capital, right?

  2. Travis says:

    That’s certainly disappointing to hear. Perhaps that’s a trend that can be reversed before too much damage is done.

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