The formalization of enterprises directly impacts the economic and social development of countries. Formal enterprises create jobs under favorable conditions for workers (e.g., health and pension coverage), contribute to GDP growth, and strengthen the social fabric. However, in many countries, particularly developing countries, a high percentage of enterprises operate informally due to several barriers. Identifying these barriers is the first step in designing public policies and targeted programs to facilitate the transition to formality. This paper presents an index of barriers to business formalization and the results of this index for a sample of 12 OECD countries: Austria, Colombia, Costa Rica, Estonia, France, Germany, Greece, Hungary, Mexico, New Zealand, Portugal, and Spain. The results of the index show that Costa Rica and Colombia are the countries in the sample that face the most barriers to business formalization. In contrast, Germany and Austria face fewer barriers.
