scholarly journals Formal Female Entrepreneurship and the Shadow Economy

2021 ◽  
Vol 13 (5(J)) ◽  
pp. 63-72
Author(s):  
Cassandra E. DiRienzo ◽  
Jayoti Das
Keyword(s):  
Informal Sector ◽  
Informal Economy ◽  
Business Models ◽  
Primary Objective ◽  
National Accounts ◽  
Formal Sector ◽  
Female Entrepreneurship ◽  
Data Set ◽  
Formal Economy ◽  
Barrier To Entry

Although female entrepreneurship yields products, markets, and business models that might not exist otherwise and are relevant to economic growth and development as well as issues related to gender equality, the factors that drive female entrepreneurship is largely understudied. The primary objective of this study is to examine the relationship between the size of a country’s informal sector and the prevalence of female entrepreneurship in the formal economy. This relationship is empirically tested using a regression analysis that employs a cross-country data set of 70 countries. The analysis results indicate a significant inverse relationship between the size of the informal sector and the prevalence of formal sector female entrepreneurship. It is argued that a larger informal economy implies a greater number of women working in the informal sector due to discriminatory barriers to the formal economy. Both formal sector entrepreneurship and work in the informal economy can lessen the barrier to entry women face related to work-life balance by allowing greater flexibility in work hours; however, employment in the informal sector is a relatively poor substitute to formal sector employment as informal sector work does not include benefits, nor is it taxed or included in official statistics. Policy recommendations for encouraging formal female entrepreneurship are made. Promoting female entrepreneurship in the formal sector not only helps to close gender, inequality gaps, but also serves to improve tax systems, lessen distortions in national accounts and official indicators, and improve the provision of public goods.

INFORMAL ECONOMY IN A DYNAMIC POLITICAL FRAMEWORK

2013 ◽  
Vol 19 (3) ◽  
pp. 578-617 ◽  
Author(s):  
Ceyhun Elgin
Keyword(s):  
Political Parties ◽  
Informal Sector ◽  
Political Party ◽  
Informal Economy ◽  
Public Capital ◽  
Formal Sector ◽  
Economy Model ◽  
Tax Rate ◽  
Formal Economy ◽  
Office Rent

I develop a dynamic political economy model with an informal sector and two political parties alternating in office. In equilibrium, if the incumbent political party faces a higher probability of staying in office, it sets a higher tax rate on the formal economy to invest more in productive public capital, while spending less for current office rent. Moreover, I argue that public capital is mainly utilized by the formal sector, and this implies that countries in which incumbent parties are more likely to stay in power have a higher tax burden but a smaller informal sector. I also present some empirical evidence that supports the main results of the model.

ICTs and the informal economy: mobile and broadband roles

2017 ◽  
Vol 19 (1) ◽  
pp. 58-76 ◽  
Author(s):  
Martha Garcia-Murillo ◽  
Jorge Andres Velez-Ospina
Keyword(s):  
Information And Communication Technologies ◽  
Informal Sector ◽  
Informal Economy ◽  
Policy Decision ◽  
Policy Implications ◽  
Formal Sector ◽  
Data Set ◽  
Content Type ◽  
Additional Tool ◽  
The Impact

Purpose The purpose of this paper is to explore whether information and communication technologies (ICTs) can move people from the informal to the formal sector. ICTs being multipurpose technologies can provide people with information about education, employment opportunities and government services that may potentially allow them to migrate to the formal sector. Design/methodology/approach The model includes variables that researchers have found to contribute to the growth of informality, such as the state of the economy, the impact of excessive taxes, the impact of regulation, the level of poverty and, of course, ICT metrics, specifically access to both cell phones and broadband as the main two mechanisms through which individuals in the informal sector can obtain information. The analysis relies on a multiple indicators and multiple causes statistical model, to evaluate the hard-to-measure informal economy. A panel data set of 170 countries covering a period of five years was used. Findings It was found that ICTs empower people, but such empowerment is not always positive for society. So, while mobile phones reduce transaction costs of informal business, this leads to their growth, as they are only a coordination technology. The empowerment that comes from broadband, meaning greater and deeper access to information and resources, can help reduce this sector of the economy and potentially improve these individuals’ lives as well. Research limitations/implications Measurement of the informal sector is a challenge to researchers precisely because it is hidden. This, like other work in this area, relies on estimates from indirect measures of the informal sector. The results are to be interpreted with caution. In addition, given that this research relies on country-level data, any specific policy decision will have to take particular circumstances into consideration to adapt these results to a specific context. Practical implications This study is important because of the more nuanced effect found between narrow and broadband technologies with respect to the informal economy and because of its policy implications. Given the results, governments should consider broadband as an additional tool to help individuals make the transition from the informal to the formal sector. Social implications Once an individual who works in the informal sector begins to realize the advantages of moving to the formal sector, it with the help of ICTs. This awareness could potentially lead to a slow but steady migration away from the informal economy that can improve the economic conditions of the population in these countries. Originality/value Scholars up to this point have been quite enthusiastic about the benefits of ICTs. In this paper, it was found that the effects are not always positive; a mobile does not help people move away from poverty and, in fact, supports the informal sector. It was found that only broadband can help these entrepreneurs move into the formal sector.

scholarly journals Informality and Economic Growth in Nigeria: 1980-2014

2017 ◽  
Vol 3 (3) ◽  
pp. 405 ◽  
Author(s):  
Mohammed Yelwa ◽  
A. J. Adam
Keyword(s):  
Economic Growth ◽  
Informal Sector ◽  
Informal Economy ◽  
Data Series ◽  
Formal Sector ◽  
Female Population ◽  
Demand Deposit ◽  
The Impact ◽  
Adf Test ◽  
The Relationship

<p><em>The paper examines the impact of informal sector activities on economic growth in Nigeria between 1980-2014. The contributions of informal sector activities to the growth of Nigerian economy cannot be over emphasized. It is the source of livelihood to the majority of poor, unskilled, socially marginalized and female population and is the vital means of survival for the people in the country lacking proper safety nets and unemployment insurance especially those lacking skills from formal sector jobs. The relationship between informality and economic growth is not clear because the sector is not regulated by the law also there is no concrete evidence that this sector enhances growth because the sector’s contributions to growth is not measured. The use of endogenous growth model becomes relevant in this study. The theory emphasizes the role of production on the long-run via a higher rate of technological innovation. The variables that were tested are official economy nominal GDP, informal economy nominal GDP, currency in circulation, demand deposit, ratio of currency in circulation to demand deposit, narrow money, informal economy as percentage of official economy. ADF test was conducted to establish that the data series of all variables are stationary t levels. Having established the stationarity test we also, conducted causality test of the response of official economy nominal GDP to informal economy nominal GDP. In conclusion, the impact of informal sector economy on economic growth in Nigeria is quiet commendable. Even though, the relationship between informality and economic growth is not straight. The paper recommended thus, the need for the government to integrate the activities of the informal economy into formal sector and size of the sector is measured and regulated because their roles are commendable. As it will improve tax collection and enhance fiscal policy.</em></p>

Neo-Dualism: Accumulation, Distress, and Proliferation of a Fissured Informality

2021 ◽  
pp. 048661342110121
Author(s):  
Kasturi Sadhu ◽  
Saumya Chakrabarti
Keyword(s):  
Informal Sector ◽  
Informal Economy ◽  
Growth Process ◽  
Jel Classification ◽  
Formal Sector ◽  
Firm Level ◽  
Macro Model ◽  
Long Run ◽  
Level Data ◽  
Firm Level Data

A dominant strand of orthodoxy argues that the problem of the informal sector could be mitigated through the capitalistic growth process. But our observations on India are different—with an expansion of the capitalistic formal sector, as the economy grows, there is a proliferation of fissured informality. Using a structuralist macro-model, we provide certain explanations for this phenomenon, which are also tested empirically using Indian subnational-state and firm-level data. Thus, we explore both the short- and long-run effects of the expansion of the formal sector on the heterogeneous informal economy. While a section of the population is pulled into the advanced informal activities, a vast segment is pushed to petty production. Accordingly, the orthodox transition narrative is questioned and alternative policy and political possibilities are introduced. JEL Classification: O11, O13, O17, P48

Expanding East African tax base will face resistance

2016 ◽  
Keyword(s):  
Informal Sector ◽  
Informal Economy ◽  
Essential Role ◽  
Budget Deficits ◽  
Formal Sector ◽  
East African ◽  
Efficient Manner ◽  
Tax Base ◽  
Member States ◽  
Content Type

Significance Member states' national budgets include plans to increase taxation of the informal economy. Governments have several reasons for broadening tax bases: budget deficits, increasing debts, donor dependency, declining revenue from the formal sector and a desire to improve services and infrastructure. Impacts Limited state resources will hinder attempts to formalise economies through enforcement alone. Incentives will play an essential role in any attempt to expand the tax base. Unless implemented in an efficient manner, taxation of the informal economy could drain government funds and hurt informal businesses. Successful taxation of the informal sector will fail unless businesses see returns in services or infrastructure.

To What Extent Can the Informal Economy Concept Adequately Explain the Dynamism of the Non-Formal Sector in Developing Countries?

2009 ◽  
Vol 10 (1) ◽  
pp. 1-19 ◽  
Author(s):  
Nazia Habib-Mintz
Keyword(s):  
Developing Countries ◽  
Informal Economy ◽  
Academic Discourse ◽  
Formal Sector ◽  
Formal Economy ◽  
Income Generating Activities ◽  
Developed Nations ◽  
Economic Income

The informal economy exists in both developing and developed nations, though it is most often associated as an engine of economic dynamism in developing countries. The concept is generally defined as the sum of economic income generating activities outside of the formal economy, which are registered, tax paying and legal. Since the 1970s when the term first entered academic discourse, the informal economy conceptually evolved through several distinct phases starting with neoliberal, then to reformist and next structuralist ideology before the term outgrew its usefulness in the 1990s and turned into operate outside of the formal economy. This paper argues that the discourse of the informal economy remains inadequate and ill-defined lemma on mainstreaming the informal economy.

Informal Economies

2021 ◽  
Author(s):  
Ernest Aryeetey
Keyword(s):  
Informal Sector ◽  
Informal Economy ◽  
Poverty Reduction ◽  
New Technologies ◽  
Informal Employment ◽  
Policy Response ◽  
Economic Activities ◽  
Formal Economy ◽  
The Future ◽  
Informal Economies

The expressions, “informal economy,” “informal sector,” and “informal employment” reflect statistical terms and definitions used to describe various aspects of informality. They are the result of several decades of work to develop a framework that adequately represents the multifaceted nature of informality as it applies not only to developing countries, but also to other transition and developed economies. The informal sector is generally viewed as the set of activities of small unregistered enterprises, while informal employment refers to employment within the formal or informal sector that lacks any form of protection, whether legal or social.1 The informal economy is a broader concept that encompasses all of these elements in their different forms, including their outputs and outcomes. The many different views about the drivers and composition of the informal economy in Africa have influenced various prescriptions and policy responses. On the one hand, some have viewed informality as being inimical to investment and growth, given that the activities undertaken usually fall outside of official regulation and control. The policy response has, therefore, often been to clamp down on or formalize the activities and relationships within the informal economy. On the other hand, informality is sometimes viewed as critical for growth and poverty reduction, given that the informal economy is inextricably linked to the formal economy while also serving as an important source of livelihood for millions of people. As a result of this, some effort has recently gone into providing a more supportive environment to enhance productivity within the informal economy and minimize its inherent vulnerabilities in the last decade. In the face of increasing globalization and access to new technologies that will drive the future of work, there is concern about the future of informal economic activities. Whether new technologies lead to a decline or upscaling of the informal economy in Africa will depend on several elements. Technology will not only shape how informality in Africa is viewed, but will influence the kind of activities undertaken, its links with the formal economy, and ultimately, the public policy response, which will itself be shaped by advances in technology.

SOCIAL RESPONSIBILITY AMONG INFORMAL ENTREPRENEURS: EVIDENCE FROM MEXICO

2020 ◽  
Vol 25 (03) ◽  
pp. 2050021
Author(s):  
CRISTIAN E. VILLANUEVA ◽  
ADRIANELA ANGELES ◽  
LUZ CECILIA REVILLA
Keyword(s):  
Developing Countries ◽  
Social Responsibility ◽  
Mexico City ◽  
Informal Sector ◽  
Informal Economy ◽  
Developed Countries ◽  
Structured Interviews ◽  
Face To Face ◽  
Formal Economy ◽  
Formal Organizations

Social responsibility (SR) has been widely studied within formal organizations, especially in large companies in developed countries. However, studies about SR in the informal sector is still insufficient. Addressing this gap is relevant for developing countries where informality is becoming extensive and is growing faster than the formal economy. This research has two main objectives: (1) determine whether in an informal economy context, entrepreneurs could perform SR and (2) if it is possible to have SR, to examine critically the way informal entrepreneurs perform it. To achieve these objectives, this study conducted 50 face-to-face, semi-structured interviews with informal entrepreneurs (IEs) in Mexico City. The outcome of this research shows evidence that IEs can perform SR in an implicit form, despite their adverse and vulnerable conditions.

Business models sustaining subsistence economies: evidence from India

2017 ◽  
Vol 12 (3) ◽  
pp. 302-316 ◽  
Author(s):  
Bhavani Shankar Saripalli ◽  
Vinaysingh Chawan
Keyword(s):  
Conceptual Framework ◽  
Business Model ◽  
Informal Economy ◽  
Customer Value ◽  
Business Models ◽  
Content Type ◽  
Organisational Form ◽  
Subsistence Economies ◽  
Formal Economy ◽  
Long Run

Purpose The purpose of this paper is to analyse interventions of various forms of organisations operating with the objective of connecting subsistence entrepreneurs (SEs) with the formal economy. This work also attempts to understand and analyse the transformational role played by these organisations. Finally, the paper aims to arrive at a conceptual framework for organisations interested in playing a transformational role. Design/methodology/approach The paper deals with subsistence entrepreneurship and business models for subsistence economies. It draws from case studies of six organisations operating with the objective to connect subsistence entrepreneurs with formal economy. Each case chosen is unique with respect to the organisational form it takes to achieve the objective. However, a lot of similarity can be seen in the components of the business model adopted by these organisations. Findings Organisations which emerge keeping the context of rural producers in mind survive and support SEs in the long run. SEs need not always get converted into transformational entrepreneurs. However, with the help of organisations which collectivise SEs, they can interact with formal economy. Such organisations help large numbers of SEs to sustain and possibly move out of subsistence status over a period of time. These organisations have to fill the voids left by government or market institutions so as to create enabling conditions for SEs to thrive. Despite the efforts of the organisations, it is not possible for all SEs to move out of their subsistence status and existence in informal markets. However, it is possible in case of some SEs at least, as the institutional support gives them more certainty in incomes. Research limitations/ implications The paper does not take a business model adopted by government institution for the purpose of analysis. Practical implications The paper offers practical suggestions for organisations interested in collectivising SEs with the aim to improve their returns from market transactions. Originality/value The paper offers a conceptual framework to enrich the understanding of role played by organisations working towards collectivising SEs. It adds to the debate of subsistence entrepreneurship and transformational entrepreneurship. It elaborates the elements of social capital created by these organisations at the meso level. Finally, it re-emphasises the strengths of informal economy to support the customer value proposition for formal markets.

Natural resource wealth and the informal economy

2021 ◽  
pp. 019251212199197
Author(s):  
Robert G Blanton ◽  
Dursun Peksen
Keyword(s):  
Natural Resource ◽  
Informal Sector ◽  
Informal Economy ◽  
Economic Activity ◽  
Resource Curse ◽  
Multiple Model ◽  
Formal Sector ◽  
Spending Patterns ◽  
Resource Wealth ◽  
Natural Resource Wealth

The ‘resource curse’ associated with natural resource abundance has long been a subject of study across multiple disciplines. Though much research has focused on possible effects of resource wealth on the formal economy, little is known about how such wealth affects the informal sector, a substantial portion of global economic activity. We posit that resource windfalls directly contribute to growth in the informal economy, as investment and spending patterns associated with such revenues limit opportunities within the formal sector and thus channel more labor and businesses into the informal sector. We test these claims across a panel of over 120 countries for the period 1985 to 2012. Across multiple model specifications, we find that resource wealth growth is associated with increased informal economic activity.

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