Fact Sheet
Bureau of Western Hemisphere Affairs
Washington, DC
October 26, 2005
Summit of the Americas Update: Reducing the Time and Cost of Starting a Business
At the 2004 Special Summit of the Americas, our leaders committed to "take all necessary and feasible legal, regulatory, and institutional measures, by the next Summit of the Americas to be held in 2005, to simplify the procedures and significantly reduce the time and cost of establishing businesses in each country of the region."
Progress Update
The average time of starting a business in the Hemisphere has been reduced from 71 days in 2004 to 63 days in 2005, and the average cost was reduced from 67 percent of Gross National Income (GNI) in 2004 to 62 percent of GNI in 2005. These figures come from the World Bank's Doing Business 2006 data on 22 Western Hemisphere countries (excluding the U.S. and Canada).
Clearly, the region has made progress, but still has a long way to go. Consider that in the U.S. and Canada it only takes an average of 4 days and a cost equal to 0.8% of GNI to register a business. Even the Latin America and Caribbean's improved average time of 63 days is still only 3 days longer than the average for the sub-Saharan Africa region. Moreover, its average cost of 62% of GNI is 11% higher than the Middle East and Northern Africa Region. Significant progress should mean, at a minimum, halving the 2004 regional baseline. Ideally, it would mean achieving the OECD 2004 Average Baseline of a time of 25 days and a cost of 8% of GNI.
U.S. Objective
The U.S. Government is working to help reduce the time and cost of starting a business in the region's developing countries. We have as a goal halving the average regional time to 35 days. We seek to achieve this by providing assistance to priority countries in identifying and making changes needed to bring down the time and cost to start a business, and then using these countries' efforts to illustrate effective approaches to other countries.
Actions
- Since early 2005, USAID has been working closely with the Office of the President of Mexico and the World Bank's Doing Business Program to implement the Doing Business assessment of the time/cost necessary to start a business at the state level with the goal of generating competition between Mexico's states.
- In March 2005, USAID hosted a business registration reform roundtable with senior representatives of the Government of Paraguay to share country (Honduras, Jamaica, Peru) success stories about reducing the time and cost of starting a business. Paraguay is now, in part, focusing its MCC Threshold Program on improving the business registration process.
- In October 2004, USAID presented the Special Summit commitment during the SME Congress of the Americas in Chile. The SME Congress is a hemispheric network of micro, small and medium enterprise (SME) service providers created to enhance the ability of small business to effectively participate in and benefit from international trade.
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