Growth-stifling regulation in Mexico

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In the latest issue of his magazine, Steve Forbes wonders why Mexico’s growth rate is such a disappointment. His answer: unnecessary and burdensome regulation.

"Mexico still hobbles its economy with excessive, growth-stifling regulation. If we want to reduce the flow of illegal immigrants from our southern neighbor, we should be strongly urging its government to enact institutional reforms that would unshackle its economy and quickly put Mexico in the forefront of fast-growth nations… In Mexico, for instance, it takes at least 58 days to start a business, compared with 5 in the U.S., 3 in Canada and 27 in Chile…The cost of starting a business as a percent of per capita income is even more startling--16.7% in Mexico versus 11.7% in Brazil, 10% in Chile and 0.6% in the U.S."

Forbes also discusses other constraints such as rigid labor laws, and a flawed monetary policy and tax system – not to mention improvements that could be made to the country’s telecom and energy regulation.

The data he cites for Mexico is available online, where other countries can also be compared. For those who want more, here are two concise case studies which look at the Mexico’s regulatory improvement program and the institution building process they have gone through.

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