Informal Sector Dynamics in Times of Fragile Growth: the Case of Madagascar

Michael Grimm, Jay Lann, François Roubaud and Julia Vaillant
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Jay Lann: GIGA German Institute of Global and Area Studies - GIGA German Institute of Global and Area Studies

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Abstract: This article examines the dynamics of the informal sector in Madagascar during the 1995-2004 period, which was characterized by sustained growth that ended due to a major political crisis. As conventionally assumed by simple dualistic models, the informal sector indeed fulfils a labor-absorbing function in times of crisis. However, informal business creation was also a major trend both during macroeconomic growth and during crisis and recovery. Growth in the informal sector was mostly extensive, with little job creation or capital accumulation. Although such a situation would be consistent with the existence of poverty traps, estimated marginal returns to capital are decreasing, which tends to reject this hypothesis.

Keywords: Firm growth; croissance des firmes; Capital returns; informal sector; rendement du capital; secteur informel; Microenterprise; Madagascar; micro-entreprises (search for similar items in EconPapers)
Date: 2014
Note: View the original document on HAL open archive server: https://hal.science/hal-01686685v1
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Citations: View citations in EconPapers (13)

Published in European Journal of Development Research, 2014, 26 (4), ⟨10.1057/ejdr.2014.29⟩

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Related works:
Journal Article: Informal sector dynamics in times of fragile growth: The case of Madagascar (2014)
Working Paper: Informal Sector Dynamics In Times Of Fragile Growth: The Case Of Madagascar (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01686685

DOI: 10.1057/ejdr.2014.29

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