Brazil Drowning in Red Tape

    Brazilian bureaucracy and legislative complexities make the country one of the worst places in the world to open and run a business. But the country is also one of the most transparent of the emerging nations, at least with regard to corporate financial data, which is regularly made public.

    That pretty sums up the conclusions of a report by the
    International Finance Corporation which is housed in the World Bank. The IFC
    report is entitled “How to Make Brazil the Country of the Moment.”

    IFC report compares 145 countries with regard to the business climate and tries
    to explain why Brazil has not been growing recently.

    “Brazil has abundant resources and macroeconomic stability. But
    over the last five years per capita income growth has been less than 1
    percent annually””such growth rates are in the same category as countries
    racked by civil war. So, there have to be other reasons for such low growth,”
    says Simeon Djankov, the author of the World Bank report.

    “What happened to growth? Where did it go? Our report tries to
    answer those questions,” he explains.

    One problem cited is the fact that
    it takes an average of 152 days to open a business in Brazil. To put that in
    proper perspective, suffice it to say that only Haiti, Laos, Congo and
    Mozambique are worse. In Neighboring Argentina, it takes only 32 days to open a
    business. In England and the Scandinavian countries it can be done in 10 days.

    The red tape in hiring and firing employees is also monumental. On a
    scale of 0 to 100, the rigidity of Brazilian legislation came in at 72, just a
    little better than eleven African nations (Argentina is also rigid, coming in at
    51 in this category).

    The World Bank report did find some bright spots
    in Brazil. 

    “There are some islands of excellence where things really do
    work efficiently” says the report.

    There was praise for the private credit rating agency, Serasa.
    And for the stock market and corporate reporting, which were cited as among the
    best in Latin America. The report also cited improved property deed registration
    and the proposed new Bankruptcy Law.

    Agência Brasil
    Reporter: Mylena
    Translator: Allen Bennett


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