Measuring the start up costs in Brazilian small firms

Abstract

This study measures the costs to obtain legal permission to operate small firms in Brazil. Small garment businesses have been chosen due to their relevance for developing countries, and also because the same sector has been studied elsewhere. One hundred firms have been surveyed using the costs of exchange survey instrument, as developed by the Ronald Coase Institute. The results show that the average cost to obtain the legal permission was 10,9% of the GDP per capita, that 30% of firms took less than 30 days and 60% took up to 60 days to complete the procedures and that on the average it took 74 days to follow the process. The results differ substantially from the results published by the World Bank which was based in methodology less accurate. Previous experience in the activity and income level are negatively correlated to the length. No gender or ethnic group effect was found.