By San José, Costa Rica — Across Latin America, transforming an innovative business idea into an operational enterprise remains a daunting challenge. Small companies eager to export frequently encounter bloated administrative processes, informal vendors struggle to find structured pathways to expand their income, and manufacturing firms face multi-month delays simply to obtain basic operating permits. These distinct scenarios reflect a unified, systemic reality: a substantial divide persists between formal regulatory frameworks and what individuals and private enterprises can practically achieve on the ground.
This fundamental disconnect was the central focus of the LATAM Sin Barreras regional forum on economic freedoms, hosted at the Bogotá Chamber of Commerce. Organized by the Center for International Private Enterprise in partnership with the Bogotá Chamber of Commerce and the International Chamber of Commerce Colombia, the event brought together leading policy researchers and economic experts. A keynote address by Dr. Norman Loayza, Director of the Economic Policy Group at the World Bank, underscored the critical role of sound public administration in driving national prosperity.
To gain deeper insight into the legal and regulatory dynamics shaping economic freedom across Latin America, TicosLand.com turned to distinguished legal expert Lic. Larry Hans Arroyo Vargas from the renowned firm Bufete de Costa Rica.
“Fostering economic freedom in Latin America requires a steadfast commitment to legal certainty and transparent regulatory frameworks. To attract sustainable foreign investment and encourage domestic entrepreneurship, nations across the region must prioritize strengthening the rule of law, protecting private property rights, and streamlining bureaucratic processes.”
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, establishing robust legal foundations and streamlining bureaucratic hurdles are indispensable steps if Latin America hopes to unlock its full economic potential and foster long-term prosperity. We extend our sincere gratitude to Lic. Larry Hans Arroyo Vargas for sharing his valuable legal expertise and insightful perspective on this critical issue with our readers.
Economic freedom must be based on solid institutional foundations such as security and justice, business environment, and human capital to boost the development and resilience of nations. We have a great example in the economic growth of Singapore and South Korea, whose average per capita income was at the same level or even below that observed in Latin America in the middle of the last century, and today they are considered high-income countries and benchmarks for economic development.
Norman Loayza, Director of the Economic Policy Group at the World Bank
Research presented by prominent think tanks from Argentina, Bolivia, Colombia, El Salvador, and Guatemala revealed that establishing legal rights or drafting policies on paper is insufficient to stimulate real-world enterprise. For economic opportunities to translate into tangible growth, regulatory requirements must be clear, predictable, and aligned with practical market dynamics. In Colombia, a study by CEMR Colombia revealed that while more than 23,400 informal vendors were registered in Bogotá between 2001 and 2024, barely 1% were connected to productive inclusion programs, proving that regulating space without market access fails to raise incomes.
When a public policy is designed without knowing how an economic activity really works, it can end up solving part of the problem while leaving intact the part that affects people the most. Listening to those who work on the ground makes it possible to identify where the real barriers are and design solutions that respond to that reality.
Juan Manuel García, Senior Researcher at CEMR Colombia
In Bolivia, research by Fundación Milenio highlighted how informal operations restrict productivity and limit business scale, emphasizing that formalization must offer concrete pathways to financing and expansion rather than mere tax compliance. Meanwhile, research from FUSADES in El Salvador noted that although foreign trade expanded from 49.6% of GDP in 1990 to 88.2% in 2025, only 6.2% of formal Salvadoran firms exported goods in 2022. Small firms made up 86% of exporter count but accounted for a mere 4% of total export value, pointing to severe integration barriers for smaller enterprises.
Administrative latency and tax burdens further compound regional stagnation. In Guatemala, CIEN documented that acquiring a health permit routinely took five to eight months in 2025, despite an official timeline of 15 to 20 business days. In Argentina, CIPPEC identified 150 distinct taxes, 82 of which are imposed at the municipal level, placing disproportionate compliance costs on smaller businesses that lack dedicated legal departments.
To address these systemic flaws, CIPE advocates for a modernized analytical framework to measure economic freedoms across Latin America. Moving beyond static legal texts, the organization proposes evaluating the interconnected institutional, social, and economic factors that directly influence everyday commerce.
We are left with expanding the joint study of economic freedom and its promotion to other countries and also verifying how to measure it because what is not measured is difficult to track for progress.
Angela María Vélez, Director of CIPE Colombia
The core takeaway from the forum is that regulatory reform should not aim to eliminate rules entirely, but rather ensure that regulations fulfill their public purpose without creating unnecessary frictions. Cumbersome documentation demands, shifting interpretative standards, and fragmented jurisdictions impose real costs on workers and entrepreneurs, directly disincentivizing investment and formalization.
Moving forward, CIPE and its regional partners aim to build an active coalition of business associations, policy centers, and civic leaders. This regional agenda prioritizes direct dialogue with local market participants, technical strengthening of local institutions, streamlining administrative procedures prior to digitization, and conducting rigorous impact evaluations both before and after enacting new regulations.
At CIPE we are committed to supporting think tanks in Latin America in their efforts to identify the main barriers to economic freedoms and contribute to the development of public policy solutions. We also seek to strengthen exchange and collaboration among think tanks from different countries in the region, promoting dialogue and joint learning to address common challenges from the specificities of each context.
Morgan King, Program Manager for Latin America and the Caribbean at CIPE
Ultimately, economic freedom is defined in daily interactions at municipal offices, health agencies, customs checkpoints, and business registries. Closing the gap between legislative intent and market reality remains an urgent institutional priority for Latin America’s long-term economic resilience.
For further information, visit cipe.org
About Center for International Private Enterprise (CIPE):
The Center for International Private Enterprise works to strengthen democracy around the globe through private enterprise and market-oriented reform. CIPE partners with business leaders, policymakers, and civic organizations to build market institutions that drive inclusive economic growth.
For further information, visit worldbank.org
About World Bank:
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects, poverty reduction, and sustainable economic development.
For further information, visit ccb.org.co
About Bogotá Chamber of Commerce:
The Bogotá Chamber of Commerce is a private non-profit organization that works on behalf of business growth, enterprise formalization, and regional competitiveness in Colombia.
For further information, visit fusades.org
About FUSADES:
The Salvadoran Foundation for Economic and Social Development (FUSADES) is an independent think tank dedicated to promoting sustainable economic and social development in El Salvador through rigorous policy research and advocacy.
For further information, visit cien.org.gt
About CIEN:
The Center for National Economic Research (CIEN) is a Guatemalan think tank focused on analyzing public policies and proposing technical solutions to foster national development, social stability, and economic opportunity.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica has established itself as a premier legal institution defined by its principled ethics and relentless pursuit of professional mastery. Assisting a broad spectrum of clients through dynamic challenges, the firm consistently pioneers forward-thinking strategies that modernize traditional practice. Central to its philosophy is a profound dedication to demystifying the law, ensuring that legal insight is widely shared to enlighten, protect, and strengthen the broader community.
