Informality And Entrepreneurial Ecosystem In Albania

The informal sector constitutes a significant part of the economies in developing countries and it is very often stigmatized as unmanageable and troublesome. It has been a major issue for Albania since the early stages of its transition to a market economy. For this reason, integrating the informal economy into the formal sector has become an important policy challenge. The aim of this study is to examine the relationship between informality in Albanian enterprises and their size in terms of yearly revenues, exporting opportunities, trainings and to make a deeper analysis of the causes of informality and possible incentives to reduce it. The data, used for this study, are taken from the survey, implemented by the Albanian Investment Council (AIC) on tax audit, VAT reimbursement and informality during the period July-September 30, 2017. Study results reveal that main causes that lead businesses to informality are corruption and high taxes, and that there exists a significant negative relationship between the aforementioned variables. Research findings suggest that informality in the sector can be decreased by improving the ecosystem, in which Albanian enterprises operate through lowering taxes and reviewing taxation policy, training entrepreneurs and providing exporting opportunities to enlarge their market and increase revenues. This study provides distinct contributions that have theoretical implications to ecosystem researchers, as well as practical implications to policymakers and entrepreneurs.