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The Unofficial Economy in Africa
Rafael La Porta,Andrei Shleifer +1 more
TLDR
In this article, the authors examine the productivity of informal firms (those that are not registered with the government) in 24 African countries using field work and World Bank firm level data, and find that productivity jumps sharply if they compare small formal firms to informal firms, and rises rapidly with the size of formal firms.Abstract:
We examine the productivity of informal firms (those that are not registered with the government) in 24 African countries using field work and World Bank firm level data. We find that productivity jumps sharply if we compare small formal firms to informal firms, and rises rapidly with the size of formal firms. Critically, informal firms appear to be qualitatively different than formal firms: they are smaller in size, produce to order, are run by managers with low human capital, do not have access to external finance, do not advertise their products, and sell to largely informal clients for cash. Informal firms thus occupy a very different market niche than formal firms do, and rarely become formal because there is very little demand for their products from the formal sector.read more
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Constrained gazelles : high potentials in West Africa's informal economy
TL;DR: In this article, the authors combine these findings and develop an innovative approach to identify what is called constrained gazelles, next to the well-known survivalists in the lower tier and growth-oriented top-performers in the upper tier.
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A tale of two species: Revisiting the effect of registration reform on informal business owners in Mexico
TL;DR: In this article, the author uses discriminant analysis to separate informal business owners into two groups: those with personal characteristics similar to wage workers, and those with traits similar to formal-business owners.
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Does inducing informal firms to formalize make sense? Experimental evidence from Benin
TL;DR: In this paper, a randomized experiment based on the introduction of the entreprenant legal status in Benin is used to test these assumptions, along with supplementary efforts to enhance the presumed benefits of formalizing to firms.
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Managing innovation under competitive pressure from informal producers
Pedro Mendi,Rodrigo Costamagna +1 more
TL;DR: The authors found that the marginal impact of informality on innovation by formal firms decreases with the intensity of competitive pressure from informal firms, consistent with an inverted-U relationship between propensity to innovate and competitive pressure in the informal sector.
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The Entrepreneur Makes a Difference: Evidence on MSE Upgrading Factors from Egypt, India, and the Philippines
TL;DR: In this paper, the authors argue that the entrepreneur and the entrepreneur's coping strategies matter much more than what the recent literature on Doing Business indicators and the business environment would lead us to believe.