Business and Bureaucracy

In an article on Business and Bureaucracy, The Economist notes the roadblocks that corruption puts in the way of innovation and entrepreneurial ventures.

“In Mexico, the proliferation of trámites, as pettifogging rules and paperwork are collectively known, has spawned a breed of middlemen called tramitadores, who deal with greasy-palmed bureaucrats on behalf of harassed businesspeople. Brazil’s equivalents, despachantes, also get official documents pushed through suspiciously quickly, for a fee. It is an extra cost, but at least it gets things done. In recent years Mexico has staged a bonfire of the trámites. In the bank’s latest report, it has overtaken Colombia to become the most straightforward country in Latin America in which to do business, and the 35th easiest in the world, up from 41st last year. That puts it far ahead of its much-hyped rival, Brazil, which slipped three places to 127th. It has taken a global financial crisis to get some countries to revamp their bankruptcy laws, but Mexico did so ten years ago. As a result, creditors of bust firms there typically get back 67 cents on the dollar, close to the rich-country average. Brazil’s cumbersome insolvency system consumes much of a failed business’s assets in costs, typically leaving just 17 cents on the dollar.”

This is part of my survey of the 30 best articles from The Economist over the past two years to gain insight into whether Brazilian attitudes towards America have declined, and global attitudes towards Brazil — comments welcome!

Published by Janar Wasito

Janar Wasito is the manager of Magis Capital in San Diego, CA. He is a graduate of Harvard and Stanford Law School, and a former Marine Officer.

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