It's not just poor countries

Bad regulations are a huge brake on global growth

Overall, businesses in poor countries shoulder three times the administrative costs and have to struggle through twice as many bureaucratic procedures as their counterparts in rich countries. A popular myth holds that this does not matter, because the rules in poor countries are rarely enforced. Not so. Because it is so hard to obey all the rules, businesses in poor countries tend to remain informal. That is, they remain outside the law and pay no taxes. They stay small to avoid detection. They cannot raise credit from the formal banking system in any case.

Governments often try to make their people richer by fiat, for example by ordering firms to pay their workers more. This rarely works as intended. Minimum-wage laws, if set too high, destroy jobs. Poor countries, which tend to have the most unrealistic labour standards, accordingly suffer the most unintended consequences.