As foreign businesses keep looking to invest in Costa Rica, a new study shows that these businesses are doing their homework. Costa Rica is the best place in Latin America to start a new business, according to an analysis by the World Bank's Investing Across Borders 2010 program.
Costa Rica and Peru topped the list while Venezuela and Ecuador were considered the worst places to start a foreign subsidiary. The Latin Business Chronicle compiled and analyzed the research that originally looked at 87 countries, including 14 in Latin America. The report came from a survey of 2,350 experts from April to December 2009.
Costa Rica scored the highest in ease of establishment ratings. Costa Rica also received high marks in the two other factors looked at by the study: the number of procedures needed to start up a subsidiary and the number of days needed to go through the procedural steps. Costa Rica requires 14 procedures and 63 days to establish a basic foreign-owned company (limited-liability company or LLC). According to the Latin Business Chronicle, while this is shorter than Latin America's average, it is about even with the global average.
Peru ranked first in number of procedures (11), and Colombia finished first in time (27 days). Colombia was tied with Honduras as third best in Latin America. Meanwhile, Venezuela's score was the eighth worst worldwide. That country had by far the worst ease of establishment, required the most procedures (19) and took a massive number of days, 179, to finish the process. The Latin American average for time was 74 days.
However, other than Venezuela and a few other low-ranking countries ( Ecuador, Guatemala and Nicaragua ), Latin America has many factors making it beneficial to foreign investment.
“Countries in Eastern Europe and Central Asia and Latin America and the Caribbean have fewer equity restrictions on (foreign direct investment) ownership than economies in the other regions,” the bank wrote.
For more information on the World Bank Group's study on Costa Rica, click here.
Best and worst countries in Latin America for starting a foreign business
Ease of establishment index
Eastern Europe/Central Asia
Middle East/ North Africa
East Asia & Pacific
Sources: Investing Across Borders 2010/The World Bank; Latin Business Chronicle (ease of establishment index ranking)