The role of economic prosperity on informality in Africa: evidence of corruption thresholds from PSTR

Loudi Njoya, Ibrahim Ngouhouo, Simplice Asongu and Friedrich Schneider ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper is interested in explaining the causes of the simultaneous evolution between economic growth and informality. Using a large annual panel of African countries with a time series of 25 years, ours results show that when the corruption rate is above (below) a threshold of 1.3577, economic growth reduces (increases) informal economic sector. The corruption proxy is measured as a decreasing function of corruption such that higher levels of the corruption proxy translate lower levels of corruption. It is therefore desirable for policymakers to improve the transparency of interactions between firms, public and private agents to fight corruption, in view of decreasing the informal economic sector through economic growth.

Keywords: Informal sector; Growth; Corruption; African countries (search for similar items in EconPapers)
JEL-codes: D73 F47 J46 O10 O17 O47 (search for similar items in EconPapers)
Date: 2022-01
New Economics Papers: this item is included in nep-gro and nep-iue
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https://mpra.ub.uni-muenchen.de/119059/1/MPRA_paper_119059.pdf original version (application/pdf)

Related works:
Working Paper: The role of economic prosperity on informality in Africa: evidence of corruption thresholds from PSTR (2022)
Working Paper: The role of economic prosperity on informality in Africa: evidence of corruption thresholds from PSTR (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:119059

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