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September 21, 2004
More Evidence of Red Tape Slowing the Entrepreneurial Economic Engine World Wide
The National Dialoge on Entrepreneurship has provided a link to a new report from the World Bank, Doing Business in 2005, which offers some dramatic evidence of the need to get government out of the way of business start-up.
"The report's premise is compelling: poor countries worsen their economic situations through heavy regulation and weak property rights. Poor nations desperately need new businesses, but cumbersome rules and regulations make it almost impossible for residents to legally start new ventures. In rich countries, starting a new business takes an average of 27 days, and requires six procedures and 8% of average annual per capita income. In poor countries, aspiring entrepreneurs must take an average of 59 days to leap through 11 procedures and invest an average of 129% of annual per capital income. The report also notes that regulatory reform generates quick and extensive payoffs. Countries that improve business regulation see significant increases in business starts and overall economic activity."
The expense, confusing processes and wasted time created by government regulations is a world-wide problem. It inhibits entrepreneurial aspirations from the very poorest countries to the very largest. It is no surprise that the US, which is one of the most entrepreneurial countries, has much fewer governmental barriers. From the World Bank report:
"Entrepreneurs (in the United States) can expect to go through 5 steps to launch a business over 5 days on average, at a cost equal to 0.6% of gross national income (GNI) per capita. There is no minimum deposit requirement to obtain a business registration number, compared with the regional average of 44.1% of GNI and the OECD average of 44.1% of GNI."
Posted September 21, 2004 06:22 AM
at Belmont University in Nashville, Tennessee. He consults with a variety of businesses on start-up and growth related issues, and with larger corporations on re-establishing entrepreneurial cultures within their organizations. Dr. Cornwall's current research interests include entrepreneurial finance and entrepreneurial ethics. He has authored or co-authored four books.
