| By: |
Esther K. Ishengoma (Faculty of Commerce and Management, University of Dar es Salaam and GIGA German Institute of Global and Area Studies);
Robert Kappel (GIGA German Institute of Global and Area Studies) |
| Abstract: |
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. |
| Keywords: |
Informal sector, small enterprises, formal and informal institution, cost of formalisation, informality, formality, poverty, economic growth |
| JEL: |
L5 O17 O4 D2 I3 |
| Date: |
2006–04 |
| URL: |
http://d.repec.org/n?u=RePEc:gig:wpaper:20&r=pke |