Entrepreneurship involves risk. According to a March 6th article in the Economist, “Betting the Fazenda,” Brazilian entrepreneurs are less willing to take risk than their Chinese and Russian counterparts. What could account for this? Well it doesn’t take long to figure out why once you look at the stats from the IFC’s “Doing Business” report. Here’s what the Economist points out:
Starting a business takes 152 days and requires 18 different procedures, according to the IFC’s annual worldwide “Doing Business” study. It takes 2,600 hours for a medium-sized business to keep up with its taxes each year. The same hypothetical business would pay 69% of its second-year profits in tax, if it played by the rules and did not receive special tax breaks.
Geez! Considering this, it makes me wonder why anyone would start a business in Brazil in the first place! These barriers are so onerous that it is no surprise corruption is so rampant. Overall, Brazil’s economy has been doing very well recently with a 5.1% increase in GDP in 2007 according to the IMF. Certainly, an increase in entrepreneurship would dramatically increase Brazil’s growth and further stabilize a country that has been on the brink of economic collapse in the recent past. This would bolster the positive democratic reforms that have been taking place. Let’s applaud Brazil’s success, but also recognize that if they want to compete globally, there’s a lot more to do.
Published Date: March 12, 2008