How to Start a Business

Transparency International has just released new data for Corruption Perception levels for 2009.  From a scale of 1 – 10, 1 being most corrupt, and 10 being the cleanest, here are how some of the countries fared in the report:

• India – 3.4
• USA – 7.5
• China – 3.6
• Iraq – 1.5
• Sweden – 9.2
• Mexico – 3.3
• Japan – 7.7

Click here to see the full map.  Click here to see the countries listed in order of least to most corrupt.

As an entrepreneur, these numbers offer a good indication of the level of trouble you will have in trying to do business in these specific countries.  The level of corruption in a country is directly related to the cost of doing business as well as the expected time frame of doing business in a country.  Transparency International also found a strong correlation this year between high levels of corruption and poverty.  Corruption also deeply affects the levels of entrepreneurship in a country.  If red tape exists in the form of bureaucracy and bribes, this prolongs the time to start a new business.

This is not to say that business cannot be done in countries with high corruption levels.  But in countries with high levels of corruption, you may need to spend more time and money using local business partners who have expertise in dealing with the system.  This is definitely the case in China where business relationships (guanxi) determine levels of influence to move business licenses along.

You must also be very aware of US laws while doing business in other countries.  For example, the Foreign Corrupt Practices Act (FCPA) outlaws bribes by US citizens to public officials in another country.  Bribery may be an easy shortcut to expedite business in a foreign country, but it is illegal and you could wind up in jail.