San Juan ranked as most difficult US city to do business in, study says

The report measures the ease of doing business in 83 major U.S. cities.

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The Center for the Study of Economic Liberty at Arizona State University published the Doing Business North America 2022 Report, which measures the ease of doing business in 83 major U.S. cities. As a result of the Puerto Rico Institute for Economic Liberty’s (ILE, in Spanish) collaboration with the Center, the fourth edition of this report includes San Juan for the first time.

According to the news release, the ease of doing business refers to “which the regulatory framework and public policy are favorable for business creation and operation in a given jurisdiction.”

The report scored and ranked cities in six categories including Starting a Business, Employing Workers, Getting Electricity, Paying Taxes, Land and Space Use and Resolving Insolvency, based on data for the calendar years 2019 and 2020. The study’s components are “2% federal, 70% state, 4% county and 24% municipal and “therefore, San Juan’s results could be considered a reflection of Puerto Rico,” said the news release.

The top five U.S. cities for ease of doing business in the report are Salt Lake City, with a score of 84.86 on a scale of 0 to 100, followed by Boise with 83.87, Raleigh with 83.22, Atlanta 82.37 and Charlotte with 81.87.

The top 18 cities in the rankings- located in 14 states- have a rating higher than 80.00 points. On the lower end, San Juan ranks last with 40.55, preceded by Los Angeles with 56.29, New York City with 61.39, Newark with 61.50 and Fresno with 61.53.

ILE’s Director of Research and Policy, Dr. Angel Carrión-Tavárez, explained that several components revealed contrasts that explained San Juan’s low score.

“For example, the number of electricity providers in San Juan is 1 while in 5 cities in Texas and Utah it is 68; and the cost to transfer title on immovable property in San Juan is $1,940.85 while in Charlotte, Durham, Greensboro, and Raleigh it is $26.00,” indicated Dr. Carrión-Tavárez.

The report explains that the importance of ease of doing business studies is that their analysis of indicators is used by the private sector to decide where to invest; this, in turn, can have an effect living standards in a jurisdiction, since private investment and the integration of people into productive activity—either by creating a business or working—have proven to be drivers of socioeconomic development.

“The ease of doing business is vital for small and medium-sized enterprises (SMEs), because they have less capital and resources. Large companies have the means to afford the costs of excessive regulations for doing business; but a business-friendly environment contributes to the creation of SMEs, with the benefit they bring to the community and society,” added doctor Carrión-Tavárez.

ILE’s objective to insert San Juan in the Doing Business North America 2022 Report is to include Puerto Rico in comparative studies that demonstrate the situation of the island with data, and to “help raise awareness of the public policy changes that are needed to make Puerto Rico competitive and boost socioeconomic development,” according to the news release.

For the founder and president of ILE, Jorge L. Rodríguez, “this report shows the hostile environment created by the government that entrepreneurs in Puerto Rico face, not only to start a business but to maintain it. The barriers properly quantified and qualified in the study limit the opportunities on the Island and promote dependency, low wages, economic inequality, and emigration.”

This article was originally published in The News Journal.

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