and municipal procedures required for starting a business. These procedures typically varied from state to state and municipality to municipality. Having simpli...ed federal regulations, the COFEMER then approached state and municipal governments to suggest that they cut down on local regulations and that they implement one-stop-shop centers where entrepreneurs could take care of federal, state, and municipal procedures at the same time. The COFEMER’s goal was to create a Rapid Business Opening System (SARE) in Mexico’s most populous and economically important urban municipalities in order to quickly reach a large number of people and a large fraction of economic activity with the reform. However, the COFEMER was not able to bring a SARE to all those municipalities at the same time since it had limited resources. There were only four people within the COFEMER working on spreading the reform to local governments. Consequently, the SARE was implemented in di¤erent municipalities at di¤erent times, staring in May 2002. By September 2006, 103 municipalities had a SARE and another 13 municipalities were in the process of setting up a SARE<sup>7</sup> .

The SARE was successful in simplifying local business registration procedures. Table 1 shows summary statistics for business registration procedures before and after the reform for a sample of 32 municipalities from 17 di¤erent states. The averages for the number of days, procedures and o¢ ce visits required to register a business all decreased signi...cantly, falling from 30.1 to 1.4, from 7.9 to 2.7 and from 4.2 to 1, respectively<sup>8</sup> . The standard deviations of all three measures also became much smaller, implying relatively small di¤erences in business registration procedures across municipalities after the reform.

I have fairly detailed administrative data on licenses issued in 2004 from the registration center in one of the municipalities which adopted the reform in 2003, Guadalajara. Looking at these data provides an insight into what types of businesses registered after the reform. Guadalajara reports that a total of 16,631 businesses were created in 2004, corresponding to an investment of US$ 90,997,003 and to 21,170 new jobs created. The average investment was thus US$ 5,471 and the average employment per ...rm was 1.27. The most frequent business types were video game console rental, computer rental, small grocery stores, clothing stores, home-style food-to-go vendors, and beauty salons.

> 7 There are 2454 counties in Mexico, but 94 percent of the population and 98 percent of economic activity are concentrated in 450 counties. These 450 counties include 99 of the 103 counties which had a SARE by September 2006. The SARE counties contain 33 percent of the population and 47 percent of economic activity. The four counties which are not part of the 450 biggest counties, but have a SARE, implemented the reform when other counties in the same state implemented it.

> 8 These pre-reform data are di¤erent from the data in Djankov et al since the latter are for Mexico City only. The 32 counties for which COFEMER reports data don’t include any county from Mexico City since these counties have not implemented reforms.

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