Entrepreneurship is so critical to economic growth, standards of living and reducing poverty that the World Bank performs a study every year on impediments to starting businesses in various countries around the world.

In recent years several emerging nations have followed economic advice and opened their markets. Many have yet to see the economic growth that economists promised. The World Bank has performed studies to determine the key reasons why growth has not occurred as forecast. Usually the reason lies in the regulatory processes.

The surprising fact is that many of the processes were implemented to help protect workers. But the result has been fewer jobs and poverty.

The first issue the World Bank investigated was the cost of starting a business. A recent Wall Street Journal article reported that 70 percent of Brazilian entrepreneurs who try to start a business never finish the process, which requires about 100 different documents. The article notes long lines that start forming at midnight to get an opportunity to talk with a tax official.

Many Brazilians are questioning free market reforms that don't seem to be creating the desired growth. Perhaps they should look closer at the 17 procedures and 152 days required to start a business.

The countries needing new businesses most had the greatest costs. In the United States it takes five procedures, five days and less than 1 percent of the average income to start a business. In sub-Saharan Africa it takes 11 procedures, 60 days and more than twice the average income.

Many of the procedures are implemented to ensure that new businesses pay all required taxes. But many businesses never complete the regulatory process, opting instead to operate in the black market. Black market businesses don't pay taxes, which means legal businesses must pay higher taxes to compensate. This puts legal businesses at a competitive disadvantage and results in more workers in black market businesses with no protection from abuse.

A second issue the World Bank studied was the difficulty of hiring and firing workers. The simple but paradoxical result is that if it is easier to fire workers, new businesses hire more workers because they can fire them if things don't work out. If it is difficult to fire workers, businesses do not hire as many workers because the risk is too great if things don't work out.

A third critical issue is the difficulty in registering property. In some economies poor people build small squatter huts near cities where the jobs are. Some families have lived in those huts for several generations. However, because they can never get property rights, they cannot borrow against the property to get the capital to start a business.

Laws intended to protect local workers from foreign employers resulted in lower foreign investment, fewer jobs and lower standards of living. Some in Brazil feared that dropping restrictions on foreign businesses pulling money out of the country would prompt companies to take money home. They found the opposite to be true. When investors know they can get their money out of a country easily, they are more willing to leave it there.

The difficulty in getting credit was another issue studied. Many laws have been instituted to protect poor people from creditors. Unfortunately, one effect of these laws is to make creditors less willing to lend.

A closely related issue was the lack of laws protecting investors. Laws allowing management to unilaterally make decisions that hurt investors tend to discourage investments. Again, some of these laws were instituted to allow management to keep unprofitable plants running and avoid layoffs. Often, these laws only delayed closings.

Finally, lengthy and costly bankruptcy and legal proceedings also discouraged investors, especially for risky entrepreneurial ventures needed the most.

All of which suggests this regulatory truth: Sometimes the best of regulatory intentions turn out for the worst.