Recent evidence from Mexico based on a matched difference-in-difference evaluation - not too different from a randomized evaluation - has found that reducing the number of days to register a business does make a significant difference in the business environment.The results come from a recent World Bank study by Miriam Bruhn.* The results are summarized here. Employment increased by 2.8% in eligible industries after the reforms and incumbent firms, which had benefited from the barriers to entry, lowered their prices and saw their monopoly profits decline. More wage earners opened new businesses, but existing businesses outside the formal sector did not formally register with the government. The last point is a worrying sign in a generally upbeat report.
* Bruhn, Miriam (2008). “License to Sell: The Effect of Business Registration Reform on Entrepreneurial Activity in Mexico.” World Bank Policy Research Working Paper 4538.