Impact Evaluation of Business License Simplification in Peru : An Independent Assessment of an International Finance Corporation-Supported Project

Abstract

This evaluation assesses the impact of
 International Finance Corporation's (IFC's)
 Business License Simplification Project in the municipality
 of Lima, Peru. It reviews two previous evaluations sponsored
 by IFC and adds new evidence. Under the project, IFC's
 Foreign Investment Advisory Services (FIAS) worked with the
 municipality of Lima to reform the administrative process
 for obtaining a business license in Cercado de Lima, one of
 44 districts that comprise metropolitan Lima. According to
 the municipality, 64 percent of the businesses in this
 district lacked a business license in 2005, and most of them
 were microenterprises. The project was implemented from
 January 2005 to March 2007. The present evaluation conducted
 an independent review of both previous studies, collected
 additional data, verified the previous findings, and placed
 the findings in the context of related studies and
 evaluations. The goal was to take stock of the results,
 collect and use other evidence, and draw lessons for future
 IFC and World Bank operations. This chapter describes and
 compares the divergent evidence on which procedures were
 simplified by the license reform and by how much. A second
 chapter reviews existing evaluations and previous relevant
 findings from other countries; a third replicates and
 extends the regression evidence on the impact of license
 reform on critical business outcomes, such as revenues and
 employment. The fourth chapter, a cost-benefit assessment of
 the desirability of the whole program, reviews what the
 behavior of businesses and their own testimony reveals about
 the benefits of registration. The final chapter takes into
 account the findings reviewed in previous chapters, as well
 as new evidence in this study, and offers policy
 implications and recommendations for IFC.