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A framework for thinking about enterprise formalization policies in developing countries

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  • Kenyon, Thomas
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    Abstract

    What policies encourage firms to become formal? The standard approach emphasizes reducing the costs of compliance with government regulation. This is unlikely to be sufficient. Instead we need to understand compliance as a function not only of firm-level costs and benefits but also in terms of the interaction between the firm and its competitors and between the firm and the state. This paper emphasizes the coordination and credibility issues involved in promoting formalization and discusses possible institutional solutions, among them business associations that make the benefits of membership dependent on compliance, information sharing arrangements among government agencies and improvements in the quality of public management.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4235.

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    Date of creation: 01 May 2007
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    Handle: RePEc:wbk:wbrwps:4235

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    Keywords: Microfinance; Small Scale Enterprise; Public Sector Economics&Finance; Economic Theory&Research; Public Sector Regulation;

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    1. Doner Richard F. & Schneider Ben Ross, 2000. "Business Associations and Economic Development: Why Some Associations Contribute More Than Others," Business and Politics, De Gruyter, vol. 2(3), pages 1-29, December.
    2. Jan Hanousek & Filip Palda, 2004. "Quality of Government Services and the Civic Duty to Pay Taxes in the Czech and Slovak Republics, and other Transition Countries," Kyklos, Wiley Blackwell, vol. 57(2), pages 237-252, 05.
    3. Arne Bigsten & Peter Kimuyu & Karl Lundvall, 2004. "What to Do with the Informal Sector?," Development Policy Review, Overseas Development Institute, vol. 22(6), pages 701-715, November.
    4. Palmade, Vincent, 2005. "Industry level analysis : the way to identify the binding constraints to economic growth," Policy Research Working Paper Series 3551, The World Bank.
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    Cited by:
    1. World Bank, 2012. "Ecuador : The Faces of Informality (Las Caras de La Informalidad)," World Bank Other Operational Studies 13252, The World Bank.
    2. Ana Maria Oviedo & Mark R. Thomas & Kamer Karakurum-Ozdemir, 2009. "Economic Informality : Causes, Costs, and Policies - A Literature Survey," World Bank Publications, The World Bank, number 5917, October.
    3. World Bank, 2009. "Gender in Bolivian Production : Reducing Differences in Formality and Productivity of Firms," World Bank Publications, The World Bank, number 2669, October.

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