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IDB will finance eight projects aimed at improving the business environment

Eight organizations and researchers will receive financing from the Inter American Development Bank (IDB) to carry out activities and studies with the goal of improving registration procedures and management of businesses in several countries in Latin America and the Caribbean.

The organizations were selected after the first request for proposals by Better Conditions for Productivity (MAP, for its initials in Spanish). MAP uses  funds from IDB and the Fondo Fiduciario General de España (General Trust Fund of Spain), to finance activities and research that improve the business environment for micro, small- and medium-sized enterprises in the region and helps governments create public policy that encourages private sector competitiveness.

In its first call for proposals, open from December 12, 2009, through February 15, 2010, MAP received 199 projects from 17 different countries. The goal was to gather ideas for projects to simplify business registration, licensing and operations and for better tax and labor regulations. These proposals were also intended to help reduce the level of informality and boost business productivity.  

According to some estimates, in Latin America and the Caribbean more than 50 percent of economic activity is never accounted for in commercial registries, leading to evasion of tax and social security obligations. 

“Our principal intention is to aid projects that contribute to improve productivity of businesses and the design of public policy,” said Martin Chrisney from Better Conditions for Productivity, part of the Capital Markets and Financial Institutions Division of the IDB.   “We are very interested in promoting a rigorous evaluation of the impact of these policies to help show which is the best road to choose.”

The Winners 

Three of the eight proposals selected by the MAP committee to receive financing in 2010 are activity based; the remainder consist of research studies. The projects based on activities to improve the business climate will receive up to € 125,000 each; the research projects up to € 15,000 each.

Those selected to undertake activities are ECON Estudio, from Colombia; the FUNDES International organization, and the Guatemalan Managers Association which will undertake training workshops aimed at formalizing micro enterprises, and carry out a program to reduce the number of procedures that firms are required to complete. 

The five research projects will be carried out by CIESS-Econometrica (Bolivia); University of Colorado and the Planning Institute of Jamaica; the consulting firm Bonilla & Associates (Chile); investigators for the Institute for the Economic and Social Development of Argentina and Torcuato Di Tella University, also from Argentina; and the Polytechnic School of Litoral in alliance with the Center for Fiscal Studies in Ecuador.  

Among other objectives, these investigators will evaluate the impact of programs to simplify the process to register businesses and to pay taxes in countries like Argentina and Bolivia, and the impact of seed capital funding for enterprises in Chile. In Jamaica, the researchers will study the effects of different fiscal designs on the efficiency of collection of taxes, while in Ecuador they will evaluate a simplified tax regime.

The MAP initiative will launch a second request for proposals in June 2011.

About the MAP: 

The IDB’s Better Conditions for Productivity is a public/private initiative. It provides grants for projects that aim to reduce the impact that informality has on economic activity, improve access to financing and foster productive development policies and activities that improve the functioning and productivity of micro and small enterprises. 

For more information, visit the website of the MAP initiative.