Economic Growth and Poverty: Does Formalisation of Informal Enterprises Matter?
AbstractThe informal sector (IS) plays a significant role in developing countries viz. the provision of employment, income and supplying ignored markets. However, working and employment conditions within the sector are still poor. Its expansion and changing structures have thus drawn the attention of scholars and international policy makers to the factors hindering its formalisation. Among the factors addressed are the high costs of formalisation and the lack of incentives for operating in the formal sector. A variety of approaches have been adopted by different stakeholders to overcome these factors. This paper assesses these approaches along with the factors related to informality-formality trade-off and the issue of formalisation as a solution for firms’ growth. By focussing on the problems faced by informal enterprises and the literature which addresses the options for accelerating the formalisation of informal enterprises, the paper will briefly summarise the weaknesses of these approaches.
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Bibliographic InfoPaper provided by GIGA German Institute of Global and Area Studies in its series GIGA Working Paper Series with number 20.
Length: 39 pages
Date of creation: Apr 2006
Date of revision:
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Other versions of this item:
- Kappel, Robert & Ishengoma, Esther K., 2006. "Economic Growth and Poverty: Does Formalisation of Informal Enterprises Matter?," MPRA Paper 1456, University Library of Munich, Germany.
- L5 - Industrial Organization - - Regulation and Industrial Policy
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- D2 - Microeconomics - - Production and Organizations
- E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
- I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-05-13 (All new papers)
- NEP-DEV-2006-05-13 (Development)
- NEP-PKE-2006-05-13 (Post Keynesian Economics)
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