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Monday, 14 November 2011

Is the U.S. Worsening as a Place to Start a Business?

By Scott Shane, Contributor from Forbes

While the United States remains a great place to do business, it’s been slipping as a place to start a business, according to the World Bank’s annual “Doing Business” publication.

In 2012, the U.S. was the fourth best country in the world to do business in, coming in behind Singapore, Hong Kong and New Zealand.  That’s only slightly worse than we were five years ago before the Great Recession hit.

As a place to start a business, things aren’t as good.  It now costs twice as much to start a company as five years ago – 1.4 percent of per capita income versus 0.7 percent.

We are also slipping in how easy it is to start a business as compared to other nations.  As the chart below shows, we were fourth in this category in 2007.  This year we were number 13.

Source: Created from Data from the World Bank’s “Doing Business” reports, various

The World Bank measures 184 countries, so we don’t need to get out the worry beads yet.  Scoring worse than Macedonia, Georgia, Rwanda, Belarus, Saudi Arabia and Armenia might be embarrassing, but few entrepreneurs will choose those countries over the United States. And few American entrepreneurs are moving elsewhere to start companies.

But remaining behind New Zealand, Australia, and Canada year after year should cause those in Washington to take notice.  Policies to bring more foreign entrepreneurs to the United States won’t work very well if those entrepreneurs find it easier and cheaper to start their businesses in countries like Australia and Canada.

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