Economic Growth and Poverty: Does Formalisation of Informal Enterprises Matter?
AbstractThe informal sector (IS) in developing countries plays significant roles viz., the provision of employment, incomes and supplying ignored markets. However, the working and employment conditions in the sector are still poor. Thus, its expansion and changing structures have drawn the attention of scholars and international policy makers on factors hindering its formalisation. Among the addressed factors include high costs of formalisation and lack of incentives to operate in the formal sector. To overcome these factors, various approaches have been adopted by different stakeholders. The paper assesses these approaches, factors related to informality-formality trade-off and the question of formalisation as a solution for firms’ growth. Looking at the problems faced by informal enterprises and the literature addressing options to accelerate the formalisation of informal enterprises, the paper briefly summarises the weaknesses of these approaches.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 1456.
Date of creation: 2006
Date of revision:
informal sector; small enterprises; formal and informal institutions; informality; poverty; economic growth;
Other versions of this item:
- Esther K. Ishengoma & Robert Kappel, 2006. "Economic Growth and Poverty: Does Formalisation of Informal Enterprises Matter?," GIGA Working Paper Series 20, GIGA German Institute of Global and Area Studies.
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- L5 - Industrial Organization - - Regulation and Industrial Policy
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- I3 - Health, Education, and Welfare - - Welfare and Poverty
- E26 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
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