Tackling informal employment in developing and transition economies: a critical evaluation of the neo-liberal approach

Abstract

This paper evaluates critically the argument of neo-liberals that informal employment is a result of high taxes, public sector corruption and too much state interference in the free market and that the consequent solution is to reduce taxes, public sector corruption and the regulatory burden via minimal state intervention. Comparing International Labour Organization data on the cross-national variations in the prevalence of informal employment with the variables levels of tax rates, corruption and state intervention across 41 developing and transition economies, little support is found for the neo-liberal approach. Instead, lower (not higher) levels of informal employment are found to be associated with higher levels of regulation and state intervention, resulting in a call for more, rather than less, regulation and state intervention to protect workers in developing and transition economies. The theoretical and policy implications are discussed.

Entrepreneurial education and internationalisation of firms in transition economies: a conceptual framework from the case of Croatia

“…Transition economies are a particularly good context of analysis when it comes to entrepreneurship and internationalisation. Indeed, in such economies entrepreneurship left the informal and, sometimes illegal, arena of the pre-transition era and flourished thanks to the opening of such economies, which transitioned from socialism to capitalism (e.g., Ratten, 2014;Williams, 2011Williams, , 2015.…”

“…Firstly, "entrepreneurs" operating in a parallel, mostly illegal or informal, economy appeared (e.g. Williams, 2015). Secondly, "regular entrepreneurs" started doing business after wars.…”

Beyond the marginalisation thesis: evaluating participation in informal sector entrepreneurship

“…This was first recognised in emerging economies (Cross, 2000;Cross and Morales, 2007;De Soto, 1989, 2001ILO, 2002a;Khan and Quaddus, 2015;Williams, 2015c;Williams and Shahid, 2014;Williams and Gurtoo, 2013). As the ILO (2002) find, in sub-Saharan Africa 70 per cent of those operating in the informal sector are doing so on a self-employed basis, 62 per cent in North Africa, 60 per cent in Latin America and 59 per cent in Asia.…”

Why do Informal Sector Competitors Hinder Formal Entrepreneurs More in Some Countries?

“…No entanto, recentemente, uma pequena parcela da literatura começou a questionar se essas teorias são concorrentes. A revisão das correlações bivariadas entre as condições estruturais associadas com cada teoria e as variações na prevalência do setor informal entre países em toda a União Europeia (Williams, 2014a), Centro-Leste Europeu (Williams, 2015a,c), América Latina (Williams & Youssef, 2013, 2014) e de modo mais amplo no mundo em desenvolvimento (Williams, 2015b), estudos confirmaram a teoria da modernização, da política economica e a teoria institucional e refutaram a teoria neoliberal. Ao mesmo tempo, análises de regressão multivariada da variação de tamanho do setor informal no Centro-leste Europeu (Williams & Horodnic, 2015a), nos países Bálticos (Williams & Horodnic, 2015b,c) Latina e Caribe e como as variações internacionais dessa tendência podem ser explicadas.…”