Does the informal sector thrive under democracy or autocracy? the case of Nepal

Offiong Helen Solomon () and Sibhaa Shrestha
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Offiong Helen Solomon: De Montfort University, UK
Sibhaa Shrestha: London Metropolitan University, UK

Journal of Developing Areas, 2014, vol. 48, issue 3, 245-267

Abstract: Our paper investigates the size and development of the informal sector in Nepal using aggregate data over the period 1991 to 2009. Our estimation using the Multiple Indicator Multiple Cause (MIMIC) model shows that the average size of the informal sector has been about 44%. Nepal has been classified as having a hybrid political regime, so we show the effect that autocracy and democracy has had on the growth of the informal sector. Our results shows that a high degree of autocracy reduced the size of the informal sector by about 2% while greater direct democracy reduced the informal sector by about 10%.

Keywords: Autocracy; Democracy; Informal Sector; MIMIC; Nepal (search for similar items in EconPapers)
JEL-codes: C2 E26 O17 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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