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The Latin American Atlas Network and the Adam Smith Center for Economic Freedom at Florida International University (FIU) published the second edition of the Latin American Bureaucracy Index.
The 2022 version of the Index evaluates the impact of the expansion of administrative bureaucracy on the work of small businesses and microenterprises in the region, with a methodology that quantifies the time they must spend to comply with a growing and complex network of rules, permits and paperwork, simply to get ahead, as explained in a press release to which El American had access.
The Index measures the amount of time required to comply with rules and regulations imposed by public bureaucracies on small and microenterprises.
Bureaucracy Index
This new edition extends the universe of nations in Latin America, from the original six in 2021, with the participation of eleven Atlas Network network partners in the region.
-Peru – Asociación de Contribuyentes del Perú (Peruvian Taxpayers’ Association) -Venezuela – Centro de Divulgación y Conocimiento Económico, Cedice-Libertad (Center for Economic Dissemination and Knowledge, Cedice-Libertad) -Uruguay – Centro de Estudios para el Desarrollo (Center for Development Studies) -Argentina – Fundación Libertad -Costa Rica – IDEAS Labs -Colombia – Instituto de Ciencia Política Hernán Echavarría (Institute of Political Science Hernán Echavarría Olózaga) – Ecuador – Instituto Ecuatoriano de Economía Política (Ecuadorian Institute of Political Economy) -Brazil – Instituto Liberal (Liberal Institute) -Chile – Instituto Libertad y Desarrollo (Liberty and Development Institute) -Dominican Republic – Instituto OMG (OMG Institute) -Mexico – Mexico Evalúa
It was observed that the average number of hours per year spent by small and micro-businesses amounts to 548 hours in the annual working day -and in some cases to more than 1,000 hours-.
This means that small businesses, which account for more than 70 % of the sources of employment in the respective countries, must devote from 20 % to more than 40 % of their time in the work schedule to deal with the complicated bureaucratic maze simply to try to get ahead, trade, invest and work.
“These are very high opportunity costs, which also explain the expansion of alternative routes in the parallel economy, and the need to resort to bribery as extra-legal taxes in order to save time and capital, which highlights the urgent need to adopt regulatory reforms that facilitate work and entrepreneurship,” the organization highlights in the statement.
Brad Lips, CEO of Atlas Network, said that in order to “detonate the citizens’ creativity and improve living standards, governments must reduce obstacles that hinder the work of everyday people. Without a doubt, a legal framework is necessary, but intelligent regulation must be facilitating, and not generate an expansion of bureaucratic administration that ultimately punishes citizens who only seek to improve their environment”.
Carlos Diaz-Rosillo, founder and director of the Adam Smith Center for Economic Freedom at Florida International University, notes that “this important initiative, now presented as a joint collaboration between the Adam Smith Center for Economic Freedom and Atlas Network, emphasizes the bureaucratic burden that small businesses must face… just to get ahead.”
Finally, he said that the results of this study are “a useful tool to achieve one of the objectives that motivates the Adam Smith Center: the relationship between thinking and acting, diagnosing and proposing the necessary transformations.”
Williams Perdomo es periodista y escritor, especializado en las fuentes Política y Cultura.