Tax regimes differentiated by company size harm productivity.
Latin American companies must dedicate an average of 320 hours a year to preparing their tax returns compared to an average of 177 hours in developed countries. Colombian firms are relatively fortunate, spending less time on these tasks than their other Latin American counterparts; even so, companies dedicate an average of 208 hours annually to tax procedures. Brazil, Bolivia, Ecuador and Venezuela are at the other extreme: between 600 and 2,600 working hours are wasted per company.
Instead of supporting small firms, governments should encourage large firms to absorb the resources which small firms are using badly.
It is frequently said that Latin America is the region of the world with the greatest income inequalities. But these extreme levels of inequality are not limited to people: they also exist between firms and are a serious problem for productivity.
An expanding supply of credit is a powerful incentive for productivity, but expansions of credit can be counterproductive if they are not sustainable.
Latin American financial systems have managed to correct many of their old problems of inefficiency, which stemmed from governments which intervened too much, regulated badly and neglected oversight. Evidence of these improvements is that Latin American banks have come out of the world financial crisis unscathed. However, the depth of the Latin American credit systems continues to be very shallow by international standards, and in many countries, they have not regained the levels achieved in the early 1980s.
Overconfidence may put at risk the stability of Latin American economies. The medicine is taking effect. The rescue packages and the stress tests applied to the financial sector in the United States have resuscitated confidence among the banks: interbank rates have returned to totally normal levels. Despite the rise in unemployment to 9.4%, confidence among […]
The world crisis will strengthen the competitive advantages of China over Latin America. While the Mexican peso, the Brazilian real and the Colombian peso have depreciated about 30% since the middle of last year, the Chinese renminbi has continued its gradual appreciation, unscathed by external volatility. Since June last the Chinese currency has gained 16.6% […]
Progress is not only economic growth. Measuring progress requires taking people’s opinions seriously This year marks the fourth consecutive year of rapid growth in Latin America. The average Latin American’s productivity is now 16% higher and purchasing capacity is 24% higher than four years ago. With currencies appreciating in most countries, purchases of automobiles […]
In a menu of philanthropic projects, early childcare programs come out on top If you or your company would like to support a good philanthropic cause with the greatest possible impact, it would help a great deal if you had a menu of good projects, prepared on the basis of all the international experiences […]