Economic Growth and Poverty: Does Formalisation of Informal Enterprises Matter?

Robert Kappel () and Esther K. Ishengoma

MPRA Paper from University Library of Munich, Germany

Abstract: The informal sector (IS) in developing countries plays significant roles viz., the provision of employment, incomes and supplying ignored markets. However, the working and employment conditions in the sector are still poor. Thus, its expansion and changing structures have drawn the attention of scholars and international policy makers on factors hindering its formalisation. Among the addressed factors include high costs of formalisation and lack of incentives to operate in the formal sector. To overcome these factors, various approaches have been adopted by different stakeholders. The paper assesses these approaches, factors related to informality-formality trade-off and the question of formalisation as a solution for firms’ growth. Looking at the problems faced by informal enterprises and the literature addressing options to accelerate the formalisation of informal enterprises, the paper briefly summarises the weaknesses of these approaches.

Keywords: informal sector; small enterprises; formal and informal institutions; informality; poverty; economic growth (search for similar items in EconPapers)
JEL-codes: D21 E26 I3 L5 O17 O4 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:1456

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