The Case for Business Registration Reform in Latin America

This paper states that whilst streamlining the process of business registration may not radically alter the overall regulatory context for private enterprise in a country, it constitutes a reasonable and rational first step in any serious reform effort. Essentially, it makes a case for why particular attention should be paid to the process of initial registration of businesses and why this is a promising area for improvement and reform. The paper proposes a conceptual framework for understanding and analysing how business regulations affect small and micro enterprises. To show what has been done and what can be done in this area, the paper explores the experiences of various countries around the world that have made efforts to streamline the often lengthy and complicated business registration process. Drawing from various experiences, the paper:

• Outlines a number of concrete guidelines for how to go about such an undertaking and brings the topic down to the operational level by describing a recently approved IDB project in Costa Rica;
• Argues that the effort will create a self-sustainable one-stop-shop for business registration by involving the private sector and employing widely available technology in a new way;
• Highlights the benefits to micro enterprises, governments, consumers, employees and society.

Based on the costs and benefits of formality/informality as well as the behavior of entrepreneurs, the paper concludes that business regulations do matter to small and micro entrepreneurs, even to those who operate in complete or partial informality.