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Is Social Capital Important In Formal-Informal Sector Linkages?

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  • PROSPER SENYO KOTO

    (Department of Economics, Dalhousie University, 6214 University Avenue, Halifax, NS B3H 4R2, UK)

Abstract

Is social capital important in formal-informal sector linkages? Previous research focused on the role of the productive capacities of the enterprises in the informal sector as determining factors. This paper aims to uncover, at least in part, whether or not social capital is important in facilitating the linkages between enterprises in the formal and informal sectors. As a novelty, having linkages with the formal sector is treated as a rare event. Consequently, the analysis involves flexible binary generalized extreme value models using data from the World Bank Informal Sector Surveys. The scope is thirteen countries from sub-Saharan Africa. The results are indicative that social capital has significantly positive, real effects on the likelihood of linkages. If one sees the informal sector as a source of jobs and as a stepping-stone to the formal sector, there is a case for the recognition of the role of informal social networks in the design of entrepreneurial policy.

Suggested Citation

  • Prosper Senyo Koto, 2017. "Is Social Capital Important In Formal-Informal Sector Linkages?," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 22(02), pages 1-16, June.
    • Handle: RePEc:wsi:jdexxx:v:22:y:2017:i:02:n:s108494671750008x
    DOI: 10.1142/S108494671750008X
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