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Businesses in a smattering of Latin American cities, such as Tegucigalpas, Honduras, now enjoy a quick and simple registration process. Photo: Municipality of Honduras

Businesses in a smattering of Latin American cities now enjoy a quick and simple registration process. Many more municipalities are implementing simplification programs. A new body, the Business Regulation Evaluation Group, is evaluating what has been done and the impact that simpler regulations have on development.

A common feature in developing-country economies is the great number of businesses operating outside the law. Unregistered with authorities, they don't pay taxes and their employees are not enrolled in social security programs. Informal businesses such as restaurants and taxis don't hold the special operating licences that are designed to protect public health and safety.

Excessive regulation is often a key factor that keeps businesses in the underground economy. Dealing with authorities has traditionally involved daunting amounts of paperwork, multiple steps, and discouragingly long response times at every stage of the process.

Studies have shown that economies grow more when regulations ease the migration of businesses from the informal to the formal and lawful economy. As a result, more than 130 municipalities in 13 Latin American countries have made efforts to simplify business regulation over the last 10 years.

Some of these efforts are ready for evaluation. IDRC, the UK's Department for International Development, and the World Bank's International Finance Corporation funded the creation of a group that is spearheading the evaluation of business simplification programs in the region.

The Business Regulation Evaluation Group (BREG)'s secretariat is housed in Lima, Peru, with long-standing IDRC partner, the Economic and Social Research Consortium. The Canadian International Development Agency, Fundación para el desarrollo, the Inter-American Development Bank, and the State Secretariat for Economic Affairs of Switzerland are also members of BREG's steering committee.

BREG's first activities are to support the evaluation of registration simplification in Tegucigalpa, Honduras, and a tracer study of businesses to assess the impact registration has had on businesses in Lima.

Several research partners involved in this project attended the Growing Inclusive Markets Forum in Halifax, Canada, June 20 and 21, 2008 to discuss business simplification and its impact. They spoke with IDRC Senior Communications Advisor, Louise Guénette.

The Evaluation Coordinators

Alexandra Santillana, Associate Monitoring & Evaluation Officer with the International Finance Corporation, and Juan José Martínez, Executive Director of the Business Regulation Evaluation Group, explain why BREG was created, its objectives, and initial projects Listen to the 3-minute audio clip.

The Government Service Provider

Juan Diego Zelaya, General Manager with the Tegucigalpa Municipality in Honduras, explains how the city simplified business registration and why city officials are keen on evaluating the program's impact on businesses.   Listen to the 5-minute audio clip.

The Evaluator

Raul Andrade, Associate researcher at Grupo de Análisis para el Desarrollo (GRADE), describes how the Peruvian research centre is carrying out a tracer study to assess the impact that simplifying the registration process in Lima has had on businesses. Listen to the 4-minute audio clip.

2008-09

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