Extortion and Informal Sector in a Small Open Economy
AbstractInformal economy involving unrecorded, unregistered, extra legal activities employs majority of the workforce in the developing world. Such extra legal existence of informal manufacturing and service sectors is facilitated through extortion by agents of political forces in power. Such extortion activities themselves constitute an informal segment. We develop a general equilibrium model to explore the possible consequences of a change in the degree of extortion, change in the quality of administration, tariff reform etc. Economic reform of various kinds has interesting effects on the size of the extortion sector. Various reformatory policies may actually lead to an expansion of the informal sector.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 25044.
Date of creation: 2010
Date of revision:
International Trade; Extortion; General Equilibrium.;
Find related papers by JEL classification:
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- D5 - Microeconomics - - General Equilibrium and Disequilibrium
- F1 - International Economics - - Trade
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-25 (All new papers)
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