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

The informal sector (IS) plays a significant role in developing countries viz. the provision of employment, income and supplying ignored markets. However, working and employment conditions within the sector are still poor. Its expansion and changing structures have thus drawn the attention of scholars and international policy makers to the factors hindering its formalisation. Among the factors addressed are the high costs of formalisation and the lack of incentives for operating in the formal sector. A variety of approaches have been adopted by different stakeholders to overcome these factors. This paper assesses these approaches along with the factors related to informality-formality trade-off and the issue of formalisation as a solution for firms’ growth. By focussing on the problems faced by informal enterprises and the literature which addresses the options for accelerating the formalisation of informal enterprises, the paper will briefly summarise the weaknesses of these approaches.Informal sector, small enterprises, formal and informal institution, cost of formalisation, informality, formality, poverty, economic growth

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

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.informal sector; small enterprises; formal and informal institutions; informality; poverty; economic growth

How Global Governance Structures Shape Economic Growth and Poverty Reduction: The Case of Textile and Apparel Value Chain

Given the increasing disintegration of production and integration of trade, the industrial cluster literature’s view that localised market linkages are important in enhancing the growth of small enterprises seems insufficient as it ignores global linkages and fails to differentiate different categories of linkages. The global value chain (GVC) literature stresses the insertion of developing countries' producers in GVCs as a precondition for upgrading/growth. However, GVCs are differently organised due to, among others, different structures governing them. Hence, producers/economies integrated into GVCs are likely to attain different levels of economic upgrading/downgrading and decreased/increased poverty. Based on previous findings, this paper explores how the interactions between governance structures within and outside the global textile and apparel chain shape producers' growth and poverty reduction. The paper proposes options for producers to earn a relatively more return from the GVCs and attain sustainable poverty reduction strategies

Business Environment and Growth Potential of Micro and Small Manufacturing Enterprises in Uganda

Since the 1990s, studies utilizing descriptive statistics have documented factors in the business environment, which hinder the performance of Ugandan micro and small enterprises (MSEs). Based on secondary data, this paper assesses the trend of critical factors since 1994 to 2010. The paper also utilizes the primary data from MSEs to examine the effects of these factors on the growth potential of MSEs, while controlling for the owner’s and the firm’s attributes. Results from the trend analysis reveal that the business environment has been deteriorating over time. Results from the regression analyses reveal that MSEs’ growth potential is negatively associated with limited access to productive resources, high taxes and lack of market access

Formalisation of Informal Enterprises: Economic Growth and Poverty

Several studies have reported on factors that impede the formalisation of the informal sector emphasising the high costs of formalisation and the lack of incentives for operating in the formal sector.Various approaches have been adopted by stakeholders in order to overcome these problems and this paper aims to assess these approaches and the factors related to informality-formality trade-off as well as the matter of formalisation as a solution for firms’ growth. By deliberating over the problems faced by informal enterprises and the literature addressing the options for accelerating the formalisation of informal enterprises, the paper will briefly summarise the weaknesses of these approaches

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

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

Business constraints and growth potential of micro and small manufacturing enterprises in Uganda

Ugandan micro and small enterprises (MSEs) still perform poorly. Studies associating poor performance of manufacturers with lack of finance and low investment ignore micro enterprises. Those focusing on MSEs are either exploratory in nature or employ a descriptive analysis, which cannot show the extent to which business constraints explain the performance of MSEs. Thus, this paper tries to examine the extent to which the growth of MSEs is associated with business constraints while controlling for owners’ attributes and firms’ characteristics. The results reveal that MSEs’ growth potential is negatively associated with limited access to productive resources (finance and business development services), high taxes and lack of market access

How does neopatrimonialism affect the African state? The case of tax collection in Zambia

Following the neopatrimonialism paradigm, it can be hypothesised that in African states informal politics of the rulers infringe on the collection of taxes and in turn reduce state revenue. This article tests this proposition for the case of Zambia. Neopatrimonial continuity in the country is evidenced by three factors : the concentration of political power, the award of personal favours, and the misuse of state resources. Despite this continuity, the revenue performance increased considerably with the creation of the semi-autonomous Zambia Revenue Authority. Donor pressure has been the most important intervening variable accounting for this improvement. Yet, strengthening the collection of central state revenue has been consistent with a neopatrimonial rationale, and may even have fed neopatrimonialism overall, by providing increased resources for particularistic expenditure