The Worldbank has just produced it new Doing Business report. There is clear evidence that economic freedom and commercial development have a high degree of correlation with human development. Have a look at William Easterly's work
The world bank puts out some data on the cost of business in various countries. I decided to "normalize" the data so that people could appreciate it more. Many people think that poor countries are poor due to apathy or cultural limits of their citizens. This is rarely the case. Government bureaucracy limiting property rights and the formation of business play a huge part.
I have taken the costs from the Worldbank database and adjusted them to US and other countries incomes. For this blog post, I will refer to US adjusted cost basis. In Ethiopia a small entrepreneur wanting to start up a business has to secure $26,951 just to set up a company versus $207 in the US. No surprise there aren't many small businesses registered in Ethiopia. It costs $32,005 just to fire someone in Ethiopia. Not surprising that many don't get hired in the formal economy. These costs have nothing to do with computers and technology, they are old fashioned red tape.
What ends up happening is that the black market or informal economy is 40% of the Ethiopian economy as a whole. That means 40% less taxes for the government and limitations to growth as "black market" companies can't scale, get capital and are subject to extortion.
I am also making the data available to anyone who wants to share quote or forward it.
If you do make improvements or have suggestions please contact me at nick (at) inclue (dot) com
Consider the document under a Creative Commons license.
This work is licensed under a Creative Commons Attribution-ShareAlike 2.5 License.