Sunday, October 24, 2010

Barriers to business in Latin America

Gallup has an interesting poll on perceived barriers to business in Latin America, where the belief that paperwork is too onerous is higher than anywhere else in the world.  What I find particularly notable is that within Latin America this does not correlate to ideology.  For example, Venezuela ranks very high, second only to Uruguay in positive terms of whether governments make paperwork and permits easy enough.  Venezuelans also feel very confident that their government will allow them to make a lot of money.  Argentines, meanwhile, have almost no such confidence at all.

Strangely, though, the Gallup report comes to the following illogical conclusion:

In Latin America, the relatively high "no" percentages may reflect a broad set of issues that the public may perceive as tension between government and private businesses, including the wave of company nationalizations, tougher labor regulations, and even business confiscations in recent years.

But this makes no sense.  If it were true, then Mexico and Venezuela should be inverted.


boz 9:58 AM  

I'm not saying I agree with the following, but just to throw a hypothesis out there, you could argue that based on their votes for the PSUV, a large portion of the Venezuelan public supports heavy regulations on businesses and wants the government to take more steps to prevent businesses from making too much money. That helps explain the responses in the poll.

These questions only work on the assumption that the respondent wants a business friendly environment. But if you think that the publics of Venezuela, Bolivia and Nicaragua want business regulations and vote that way, then their poll numbers should come in as more satisfied with the current government regulations than the "pro-market" publics of Mexico and Colombia, who want less regulation.

The above paragraphs are a vast, vast simplification of the issue, but it starts to get to the complexities of asking a question like this. A question asking whether govt regulations are too onerous is simultaneously measuring the current level of regulation and the public's desire/tolerance for regulation. That makes the simple yes/no too hard.

An explanation like that certainly does a better job than Gallup's terrible attempt to claim that nationalizations in Bolivia and Venezuela have made Mexico and Colombia less business friendly.

Greg Weeks 4:03 PM  

A problem with that is that if we assume we can understand popular opinion by who is voted into office, then we should see clear ideological clusters. But if Argentina and Venezuela are on totally opposite sides, while Chile and Ecuador are essentially the same, then we need to find other variables to explain it.

Tambopaxi 10:50 PM  

There's another interesting set of anomalies over in LAPOP's 2010 survey on democracy in Ecuador which Mitch Seligson and crew recently presented here in Quito. The subtitle to the report, "Consolidation of Democracy in the Americas in Difficult Times", refers to a heavy comparative analysis, in the same report of democracy and its condition (and perceptions) in all LA countries.

One of the key questions asked in all countries was, is there an identifiable correlation between satisfaction with democracy and economic growth/development?

Oddly enough, the results seem to indicate that there's no clear relationship between the two concepts. Two quick (and perhaps, extreme) examples are Ecuador and Peru. In Ecuador, there's a great deal of satisfaction with democracy but economic performance has been poor over the last year and a half. In Peru, it's the converse: econ performance has been strong, but satisfaction with democracy is not high.

I haven't gone through the 300+ page report (too lazy), so it may be that factors such as poverty trends and/or distribution of income impinge on satisfaction with democracy as such, but still, it's interesting that growth per se does not automatically mean that there'll be satisfaction with democracy...

I should note that the Vanderbilt presentation of the report was done two weeks after September 30. One can only wonder what the report would have looked like if...

Unknown 2:53 AM  

Barriers to the Latino's Businesses would be a big problem, otherwise the business will go down. But as the time goes by many ways to move on like Paginas Amarillas that helps to include the business to be rank on the top.

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