Licensing Procedures in Developing Countries: Should They Be Part of the Set-up Process?

Abstract

Surveys have shown that, while many developing countries tend to integrate licensing requirements in the set-up process (“set-up licensing”), the more developed countries generally use licensing procedures independent of the set-up process (“independent licensing”). Set-up licensing may impose more compliance costs on entrepreneurs, more administrative costs on officials, and more welfare losses on consumers than independent licensing. In this article we explore the distinction to see whether the widespread preference for set-up licensing in developing countries can be justified on public interest grounds, or at least explained on private interest grounds.

Keywords:

• licensing procedures
• developing countries
• set-up process
• set-up licensing
• independent licensing

Acknowledgments

This article forms part of on-going research conducted under the auspices of the Centre for Regulation and Competition (CRC), University of Manchester and financed by DFID. A draft of this article was presented at the CRC 3rd Annual Conference (2004), Cape Town, South Africa and we acknowledge the helpful comments of participants there.

Notes

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