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Brazil Loses US$ 50 Billion Per Year Due to Bureaucracy to Open Businesses, Study Points Out. Slow Procedures and Municipal Requirements Weigh on Small Businesses and Reduce the Country’s Competitiveness
Brazil loses approximately US$ 50 billion annually due to bureaucracy to open businesses, equivalent to 13% of export value, according to the Bureaucracy Index 2024, presented by economist Sari Levi Carciente, a researcher at the Smith Center for Economic Freedom at Florida International University, in an interview with Canal Um Brasil (FecomercioSP).
The survey shows that, even after advances in digitalization, bureaucracy to open businesses still harms national productivity. The average time to open a business has dropped to 618 hours, well below the 1,500 hours recorded a few years ago, but the economic impact remains significant — especially for small and medium-sized enterprises, which account for 90% of productive activities in Latin America.
How Bureaucracy to Open Businesses Works in Brazil
Opening a business in Brazil requires going through federal, state, and municipal stages. Although digitalization has accelerated processes at the national level, bureaucracy to open businesses remains heavy at local instances, such as city halls and regulatory agencies. Among the main requirements are:
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- Fire Department permits and licenses
- Frequent document renewals
- Sector-specific certification requirements
According to Carciente, these procedures vary from city to city, creating disparities and hampering business expansion in different regions.
Billion-Dollar Impact of Bureaucracy to Open Businesses
The research indicates that bureaucracy to open businesses and keep them active consumes 13% of Brazilian exports, approximately US$ 50 billion per year. This figure reflects the time and resources entrepreneurs need to allocate to administrative processes instead of investing in production or customer service.
For small businesses, the effect is even heavier. Entrepreneurs end up dedicating hours to the bureaucracy to open businesses, while businesses in neighboring countries can operate more efficiently.
Why Bureaucracy to Open Businesses Weighs More at the Municipal Level
The study shows that the municipal level is now the main bottleneck of bureaucracy to open businesses in Brazil. Constant changes in local laws, shifts in document formats, and additional requirements increase costs and delay the operation of new businesses.
This overlapping of regulations results in greater expenses and uncertainties for entrepreneurs, in some cases requiring them to hire staff solely to handle bureaucratic obligations. This scenario is already observed in countries like Colombia and Peru, but also critically affects the Brazilian business environment.
Paths to Reduce Bureaucracy to Open Businesses
The economist argues that technology alone does not solve the problem of bureaucracy to open businesses, and it is necessary to eliminate unnecessary stages first. Among the solutions presented in the study are:
- Simplification of processes before digitalization
- Creation of accessible platforms with stage tracking
- Training of public servants and entrepreneurs
- National standardization to reduce regional disparities
According to Carciente, the excess of regulations, initially created to organize the relationship between the state and the citizen, has turned into a hindrance to development and competitiveness.
Bureaucracy to open businesses in Brazil still costs billions of dollars per year and reduces the ability of small entrepreneurs to compete on equal footing. Despite advances in digitalization, municipal bottlenecks remain one of the biggest challenges.
Have you faced difficulties with bureaucracy to open businesses in Brazil? Do you think this is one of the biggest obstacles to economic growth? Share your opinion in the comments — we want to hear your real experience.
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