Barriers to Formal Entrepreneurship in Developing Countries
This paper explores new types of barriers to entrepreneurship and thus, to formal sector growth. The authors suggest that developing countries are characterized by a dual economy where a small modern industrialized sector co-exists with a large informal sector with little capital and low marginal productivity of labor. There are two main barriers to entrepreneurship in these instances: (1) administrative; and (2) social. Analysis concludes that tax reformers could widen their area of interest beyond the standard tax parameters by reducing market entry fees, while developing countries could enlarge their formal sectors and hence the tax base. Keeping firms in the informal sector exposes them to weakened property rights and hence increased risks. Taxing some sectors and not others distorts resource allocation. Eliminating such inefficiencies could provide a significant impetus to growth, and tax collection in the medium to long term.
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Format: | Working Paper biblioteca |
Language: | en_US |
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World Bank, Washington, DC
2013-11-11
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Subjects: | dual economy, informal sector, labor productivity, formality, administrative barriers, entrepreneurship, informality, shadow economy, market entry fees, credit constraints, social barriers, forced mutual help, social obligation, coping with risk, |
Online Access: | http://hdl.handle.net/10986/16364 |
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dig-okr-10986163642021-04-23T14:03:28Z Barriers to Formal Entrepreneurship in Developing Countries Auriol, Emmanuelle dual economy informal sector labor productivity formality administrative barriers entrepreneurship informality shadow economy market entry fees credit constraints social barriers forced mutual help social obligation coping with risk This paper explores new types of barriers to entrepreneurship and thus, to formal sector growth. The authors suggest that developing countries are characterized by a dual economy where a small modern industrialized sector co-exists with a large informal sector with little capital and low marginal productivity of labor. There are two main barriers to entrepreneurship in these instances: (1) administrative; and (2) social. Analysis concludes that tax reformers could widen their area of interest beyond the standard tax parameters by reducing market entry fees, while developing countries could enlarge their formal sectors and hence the tax base. Keeping firms in the informal sector exposes them to weakened property rights and hence increased risks. Taxing some sectors and not others distorts resource allocation. Eliminating such inefficiencies could provide a significant impetus to growth, and tax collection in the medium to long term. 2013-12-05T21:53:21Z 2013-12-05T21:53:21Z 2013-11-11 http://hdl.handle.net/10986/16364 en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research :: Working Paper Publications & Research Africa Sub-Saharan Africa |
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dual economy informal sector labor productivity formality administrative barriers entrepreneurship informality shadow economy market entry fees credit constraints social barriers forced mutual help social obligation coping with risk dual economy informal sector labor productivity formality administrative barriers entrepreneurship informality shadow economy market entry fees credit constraints social barriers forced mutual help social obligation coping with risk |
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dual economy informal sector labor productivity formality administrative barriers entrepreneurship informality shadow economy market entry fees credit constraints social barriers forced mutual help social obligation coping with risk dual economy informal sector labor productivity formality administrative barriers entrepreneurship informality shadow economy market entry fees credit constraints social barriers forced mutual help social obligation coping with risk Auriol, Emmanuelle Barriers to Formal Entrepreneurship in Developing Countries |
description |
This paper explores new types of barriers to entrepreneurship and thus, to formal sector growth. The authors suggest that developing countries are characterized by a dual economy where a small modern industrialized sector co-exists with a large informal sector with little capital and low marginal productivity of labor. There are two main barriers to entrepreneurship in these instances: (1) administrative; and (2) social. Analysis concludes that tax reformers could widen their area of interest beyond the standard tax parameters by reducing market entry fees, while developing countries could enlarge their formal sectors and hence the tax base. Keeping firms in the informal sector exposes them to weakened property rights and hence increased risks. Taxing some sectors and not others distorts resource allocation. Eliminating such inefficiencies could provide a significant impetus to growth, and tax collection in the medium to long term. |
format |
Publications & Research :: Working Paper |
topic_facet |
dual economy informal sector labor productivity formality administrative barriers entrepreneurship informality shadow economy market entry fees credit constraints social barriers forced mutual help social obligation coping with risk |
author |
Auriol, Emmanuelle |
author_facet |
Auriol, Emmanuelle |
author_sort |
Auriol, Emmanuelle |
title |
Barriers to Formal Entrepreneurship in Developing Countries |
title_short |
Barriers to Formal Entrepreneurship in Developing Countries |
title_full |
Barriers to Formal Entrepreneurship in Developing Countries |
title_fullStr |
Barriers to Formal Entrepreneurship in Developing Countries |
title_full_unstemmed |
Barriers to Formal Entrepreneurship in Developing Countries |
title_sort |
barriers to formal entrepreneurship in developing countries |
publisher |
World Bank, Washington, DC |
publishDate |
2013-11-11 |
url |
http://hdl.handle.net/10986/16364 |
work_keys_str_mv |
AT auriolemmanuelle barrierstoformalentrepreneurshipindevelopingcountries |
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