Mexico City, December 1, 2005—Mexican
cities vary significantly in the ease of doing business, according to the
Doing Business in Mexico
report. Launched in Mexico City today, it is the first sub-national report
of its kind to be issued in Latin America. It looks at regulations that
enhance business activity, as well as those that constrain it. It finds
that reforms increase the competitiveness of economies, allowing firms
to grow faster and create more jobs.
Cosponsored by COFEMER, USAID, and the World Bank Group, the report covers
four areas of regulation: starting a business, registering property, obtaining
credit, and enforcing a contract. The cities it covers are Aguascalientes,
Celaya, Ciudad Juarez, Guadalajara, Merida, Mexico City, Monterrey, Puebla,
Queretaro, San Luis Potosí, Tlalnepantla, Torreon, and Veracruz.
“Benchmarking the ease of business transactions allows government officials
to focus on removing the constraints to economic growth. The pressure
to reform is greater when comparisons are made within a country, contrasting
cities and states that implement identical national-level regulations,”
says Simeon Djankov, author of Doing Business in Mexico.
When compared, Mexico City and the 12 other cities differ dramatically
on the four indicators the report measures. An entrepreneur spends 29 days
to fulfill administrative requirements for starting a business in Celaya,
but 52 in Queretaro and 58 in Mexico City. The start-up cost is equivalent
to 7% of the average income per capita in Aguascalientes, but 36% in Veracruz
and 74% in Tlalnepantla. It takes 30 days to register commercial property
in Merida but 94 days in Queretaro. To recover debt, creditors pay 5% of
the debt value in Guadalajara but 33% in Merida.
If an entrepreneur wants to open a business in Aguascalientes, she will
have to wait a month and spend 7.3% of her annual income in taxes and fees.
This may actually make it the least expensive city in Mexico in which
to start a business, but it would rank 33rd globally, behind Tehran at
On the ease of doing business, the report finds Aguascalientes has the
most business-friendly environment, followed by Celaya. Businesses face
the most bureaucratic hurdles in Queretaro, followed by Puebla. Even Mexico’s
easiest cities in which to do business lag behind Bangkok, Santiago de
Chile, or Madrid. The report concludes that reform is sorely needed.
|Doing business in Mexico:
where is it easiest?
| Ciudad Juarez
| San Luis Potosí
| Mexico City
Mexico’s credit information system remains weak, despite significant improvements
in the past four years. Credit registries are not linked across states
and most are paper-based, making it difficult for banks to assess creditworthiness.
Even in Celaya, the least expensive city for property registration,
fees amount to 1.2% of the loan value, 100 times more than in New York
Court efficiency varies even more across Mexican cities. Aguascalientes
is the most efficient, at 184 days to enforce a contract; this ranks it
21st globally, on par with Berlin and Zurich. But it takes nearly
two years in Merida to enforce a contract, longer than in such other Latin
American cites as La Paz and Asuncion.
Earlier World Bank studies in China and Russia have shown the benefits
of state- and city-level benchmarking. Much of the opportunity for
improvement is in local administrative procedures, which can be changed
by a governor or a mayor. And as the news about reform and its benefits
spread, it is increasing interest in replicating success stories across
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For copies of the Doing Business in Mexico report, please visit: http://www.doingbusiness.org/mexico