Informal hubs, formal impacts: Spatial dynamics of parallel trade in Setif and El Eulma

Pôles informels, effets formels: les dynamiques spatiales du commerce parallèle à Sétif et El Eulma

Tahar Kharchi ()
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Tahar Kharchi: École Normale Supérieure de Sétif, LAGAM - Laboratoire de Géographie et d'Aménagement de Montpellier - UMPV - Université de Montpellier Paul-Valéry

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Abstract: This study examines the spatial and economic dimensions of parallel trade networks in Algeria's high plateau region, focusing on Setif and El Eulma as representative urban systems. Using spatial econometric methods and network analysis, we investigate how informal economic structures, particularly the "Doubaï markets," have reshaped urban hierarchies and regional economic integration. Our analysis reveals that El Eulma has emerged as a critical node in transnational informal trade, connecting North African markets with Mediterranean and Asian supply chains. The parallel economy, estimated at 33-45% of regional GDP, operates through sophisticated networks that bypass formal institutions while generating significant employment and commercial activity. We employ a mixed-methods approach combining MIMIC (Multiple Indicator Multiple Causes) models, spatial autoregressive specifications, and qualitative network mapping to quantify these relationships. Results demonstrate strong spatial spillovers between formal and informal sectors, with infrastructure development and institutional quality serving as key determinants of informal economy size. The study contributes to urban economics literature by documenting how second-tier cities in resource-dependent economies develop alternative growth pathways through informal trade networks. Policy implications suggest that integration strategies focusing on reduced transaction costs and simplified regulation may prove more effective than enforcement-based approaches.

Keywords: Urban economics; Transnational commerce; Regional development; Parallel trade; Spatial networks; Commerce parallèle; Développement régional; Échanges transnationaux; Économie urbaine; Réseaux spatiaux (search for similar items in EconPapers)
Date: 2025-01
New Economics Papers: this item is included in nep-ara and nep-iue
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Published in Tax Policy Journal, 2025, 21 (1), pp.51-78

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05626114

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