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A framework for thinking about enterprise formalization policies in developing countries

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  • Kenyon, Thomas

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.

Suggested Citation

  • Kenyon, Thomas, 2007. "A framework for thinking about enterprise formalization policies in developing countries," Policy Research Working Paper Series 4235, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4235
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    References listed on IDEAS

    as
    1. 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.
    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, May.
    3. Doner, Richard F. & Schneider, Ben Ross, 2000. "Business Associations and Economic Development: Why Some Associations Contribute More Than Others," Business and Politics, Cambridge University Press, vol. 2(03), pages 261-288, 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.
    5. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. 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.
    2. World Bank, 2009. "Gender in Bolivian Production : Reducing Differences in Formality and Productivity of Firms," World Bank Publications, The World Bank, number 2669.
    3. World Bank, 2012. "Ecuador : The Faces of Informality (Las Caras de La Informalidad)
      [Ecuador - Las caras de la informalidad]
      ," World Bank Other Operational Studies 13252, The World Bank.

    More about this item

    Keywords

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

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