IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this book or follow this series

Increasing Formality and Productivity of Bolivian Firms

  • World Bank
Registered author(s):

    Bolivia's informal sector is the largest in Latin America, by many definitions and measures. Bolivia's high informality rate has been blamed on many factors including the burden of regulation, the weakness of public institutions, and the lack of perceived benefits to being formal. The high level of informality has a number of negative implications related to for low productivity, low growth, and low quality of jobs. This study presents fresh qualitative and quantitative analyses to better understand the reasons why firms are informal and the impact of formalization on their profitability, in order to inform policy actions appropriate to the reality of Bolivia. The crucial finding of the analysis is that the impact of tax registration on profitability depends on firm size and the ability to issue tax receipts. The smallest and the largest firms in the sample have lower profits as a result of tax registration because their cost of formalizing exceeds benefits. Firms in the middle range (two to five employees) benefit from tax registration in large part due to increasing the customer base by issuing tax receipts. The study presents a set of prioritized policy implications for policy makers. In the short term, the first priority should be to increase the benefits of formalization through training, access to credit and markets, and business support. The second priority is to increase information on how to formalize and its benefits. In the medium term, the priority is to simplify formalization, regulatory, and taxation procedures and to reduce their costs. Increasing even-handed enforcement of taxation and regulation is also important but not a priority for micro and small firms. Measures to boost the productivity of micro and small firms in general will help overall economic growth, employment, and formalization.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: https://openknowledge.worldbank.org/bitstream/handle/10986/2675/503580PUB0Box3101OFFICIAL0USE0ONLY1.pdf?sequence=1
    Our checks indicate that this address may not be valid because: 500 Internal Server Error. If this is indeed the case, please notify (Thomas Breineder)


    Download Restriction: no

    as
    in new window

    This book is provided by The World Bank in its series World Bank Publications with number 2675 and published in 2009.
    ISBN: 978-0-8213-8023-9
    Handle: RePEc:wbk:wbpubs:2675
    Contact details of provider: Postal: 1818 H Street, N.W., Washington, DC 20433
    Phone: (202) 477-1234
    Web page: https://openknowledge.worldbank.org
    Email:


    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Henley, Andrew & Arabsheibani, Reza & Carneiro, Francisco G., 2006. "On Defining and Measuring the Informal Sector," IZA Discussion Papers 2473, Institute for the Study of Labor (IZA).
    2. Loayza, Norman V., 1996. "The economics of the informal sector: a simple model and some empirical evidence from Latin America," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 45(1), pages 129-162, December.
    3. Gasparini Leonardo & Leonardo Tornaroli, 2009. "Labor Informality in Latin America and the Caribbean: Patterns and Trends from Household Survey Microdata," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE.
    4. Friedrich Schneider & Dominik Enste, 1999. "Shadow Economies Around the World - Size, Causes, and Consequences," CESifo Working Paper Series 196, CESifo Group Munich.
    5. Martin Valdivia & Dean Karlan, 2006. "Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions," Working Papers 941, Economic Growth Center, Yale University.
    6. Dean Karlan & Martin Valdivia, 2007. "Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions," Working Papers 107, Center for Global Development.
    7. Pradhan, Menno & van Soest, Arthur, 1995. "Formal and informal sector employment in urban areas of Bolivia," Labour Economics, Elsevier, vol. 2(3), pages 275-297, September.
    8. Mercado, Alejandro F. & Ríos, Fernando, 2005. "Elasticidad Cruzada de la Oferta de Trabajo," Documentos de trabajo 7/2005, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
    9. Kikeri, Sunita & Kenyon,Thomas & Palmade, Vincent, 2006. "Reforming the investment climate : lessons for practitioners," Policy Research Working Paper Series 3986, The World Bank.
    10. Horacio Villegas & Javier Núñez, 2005. "Discriminación étnica en Bolivia: examinando diferencias regionales y por nivel de calificación," Estudios de Economia, University of Chile, Department of Economics, vol. 32(2 Year 20), pages 201-218, December.
    11. Lewis, William W., 2004. "The Power of Productivity," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226476766.
    12. Sunita Kikeri & Thomas Kenyon & Vincent Palmade, 2006. "Reforming the Investment Climate : Lessons for Practitioners," World Bank Publications, The World Bank, number 7096, June.
    13. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72, pages 584.
    14. Fajnzylber, Pablo & Maloney, William F. & Rojas, Gabriel V. Montes, 2006. "Releasing constraints to growth or pushing on a string ? the impact of credit, training, business associations, and taxes on the performance of Mexican micro-firms," Policy Research Working Paper Series 3807, The World Bank.
    15. Maria Tannuri-Pianto & Donald Pianto, 2004. "Informal employment in Bolivia: A lost proposition?," Econometric Society 2004 Latin American Meetings 149, Econometric Society.
    16. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2007. "Returns to Capital in Microenterprises: Evidence from a Field Experiment," IZA Discussion Papers 2934, Institute for the Study of Labor (IZA).
    17. Coco, Giuseppe, 2000. " On the Use of Collateral," Journal of Economic Surveys, Wiley Blackwell, vol. 14(2), pages 191-214, April.
    18. Katayama, Hajime & Lu, Shihua & Tybout, James R., 2009. "Firm-level productivity studies: Illusions and a solution," International Journal of Industrial Organization, Elsevier, vol. 27(3), pages 403-413, May.
    19. Loayza, Norman V. & Rigolini, Jamele, 2006. "Informality trends and cycles," Policy Research Working Paper Series 4078, The World Bank.
    20. Hallman, Kelly & Quisumbing, Agnes R. & Ruel, Marie T. & de la Briere, Benedicte, 2003. "Childcare and work," FCND briefs 151, International Food Policy Research Institute (IFPRI).
    21. Chen, Martha Alter, 2005. "Rethinking the Informal Economy: Linkages with the Formal Economy and the Formal Regulatory Environment," Working Paper Series RP2005/10, World Institute for Development Economic Research (UNU-WIDER).
    22. Mercado, Alejandro F. & Ríos, Fernando, 2005. "La Informalidad: ¿Estrategia de Sobrevivencia o Forma de Vida Alternativa?," Documentos de trabajo 4/2005, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
    23. John Gibson & David McKenzie, 2007. "Using the Global Positioning System (GPS) in Household Surveys For Better Economics and Better Policy," Working Papers in Economics 07/04, University of Waikato, Department of Economics.
    24. Almeida, Rita & Carneiro, Pedro, 2005. "Enforcement of labor regulation, informal labor, and firm performance," Policy Research Working Paper Series 3756, The World Bank.
    25. Rocío Ribero, 2003. "Gender Dimensions Of Non-Formal Employment In Colombia," DOCUMENTOS CEDE 002762, UNIVERSIDAD DE LOS ANDES-CEDE.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:wbk:wbpubs:2675. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Breineder)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.