Williams, C.C. orcid.org/0000-0002-3610-1933 and Liu, B. (2019) Explaining variations in the commonality of informal sector competition across Latin American and the Caribbean countries. Journal of Developmental Entrepreneurship, 24 (01). 1950002. ISSN 1084-9467
Abstract
To advance understanding of the relationship between entrepreneurship and the informal sector, the aim of this paper is to evaluate and explain variations in the extent to which formal enterprises witness competition from unregistered or informal enterprises across Latin American and Caribbean countries. Reporting World Bank Enterprise Survey (WBES) data on 31 Latin American and Caribbean countries, this reveals that two-thirds (65.5 percent) of formal enterprises witness competition from informal sector enterprise. To explain the cross-country variations, four competing theories are evaluated, which variously view the prevalence of the informal sector to be determined by either: economic under-development (modernization theory); high taxes and state over-interference (neo-liberal theory); too little state intervention (political economy theory), or an asymmetry between the laws and regulations of formal institutions and the unwritten socially shared rules of informal institutions (institutional theory). A probit regression analysis confirms the modernization, political economy and institutional theories, but not the neo-liberal theory. Beyond economic under-development, therefore, it is too little state intervention and whether the laws and regulations developed by governments are in symmetry with the norms, values and beliefs of entrepreneurs. The paper concludes by discussing the theoretical and policy implications of these findings.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2019 World Scientific Publishing Company. This is an author-produced version of a paper subsequently published in Journal of Developmental Entrepreneurship. Uploaded in accordance with the publisher's self-archiving policy. |
Keywords: | Entrepreneurship; informal sector; economic development; development economics; Latin American and Caribbean |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Management School (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 25 Mar 2020 12:51 |
Last Modified: | 25 Mar 2020 12:51 |
Status: | Published |
Publisher: | World Scientific Publishing |
Refereed: | Yes |
Identification Number: | 10.1142/s108494671950002x |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:158736 |