Who Fears Competition from Informal Firms? Evidence from Latin America
This paper investigates who is most affected by informal competition and how regulation and enforcement affect the extent and nature of this competition. Using newly-collected enterprise data for 6,466 manufacturing formal firms across 14 countries in Latin America, the authors show that formal firms affected by head-to-head competition with informal firms largely resemble them. They are small credit constrained, underutilize their productive capacity, serve smaller customers, and are in markets with low entry costs. In countries where the government is effective and business regulations onerous, formal firms in industries characterized by low costs to entry feel the sting of informal competition more than in other business environments. Finally, the analysis finds that in an economy with relatively onerous tax regulations and a government that poorly enforces its tax code, the percentage of firms adversely affected by informal competition will be reduced from 38.8 to 37.7 percent when the government increases enforcement to cover all firms.
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dig-okr-109867258 |
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dig-okr-1098672582024-08-08T16:55:27Z Who Fears Competition from Informal Firms? Evidence from Latin America González, Alvaro S. Lamanna, Francesca ACCOUNTABILITY ACCOUNTING ADVERSE EFFECTS BENCHMARK BUSINESS ACTIVITIES BUSINESS ENTRY BUSINESS ENVIRONMENT BUSINESS ENVIRONMENTS BUSINESS INDICATOR BUSINESS INDICATORS BUSINESS REGULATIONS BUSINESS RELATIONSHIPS BUSINESS TO BUSINESS BUSINESSES BUYER BUYERS CAPITAL INTENSITY CAPITAL REQUIREMENT CENTRAL AMERICA COMMERCIAL BUSINESS COMMERCIAL CREDIT COMMERCIAL OPERATIONS COMPANY COMPETITIVENESS COMPETITORS CORRELATION MATRIX COST DIFFERENTIALS COST OF ENTRY COUNTRY COMPARISONS COUNTRY FIXED EFFECTS CREDIT CONSTRAINT CREDIT LINES CUSTOMS DEPOSIT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GEOGRAPHY ECONOMIC PERFORMANCE ECONOMIES OF SCALE ELECTRICITY EMAILS EMPLOYMENT ENTERPRISE SURVEY ENTERPRISE SURVEYS ENTREPRENEUR EQUIPMENT EXPORT MARKETS EXPORTS EXTERNAL FINANCE EXTERNAL FINANCING FINANCIAL INSTITUTION FINANCIAL MARKETS FINANCIAL SERVICES FIRM PERFORMANCE FIRM SIZE FIRMS FIXED COST FIXED COSTS GDP GOVERNANCE INDICATOR GOVERNANCE INDICATORS GOVERNMENT REGULATION INCOME LEVELS INCOME TAX INFORMAL ECONOMY INSTITUTIONAL FRAMEWORK INVESTMENT CLIMATE JOB CREATION LATIN AMERICAN LAWS LEGAL PROTECTION LESS DEVELOPED COUNTRIES LICENSE LICENSES LICENSING LIMITED ACCESS LINE OF CREDIT LINES OF CREDIT LOAN LOW-INCOME COUNTRIES MANUFACTURERS MANUFACTURING MANUFACTURING INDUSTRIES MARKET OPPORTUNITIES MENU MIDDLE INCOME COUNTRY NATIONAL INCOME OUTPUT OUTPUTS PER CAPITA INCOME POLICY FORMULATION POLITICAL STABILITY POWER OUTAGES PRICE COMPETITION PRIVATE ENTITIES PRIVATE SECTOR PRIVATE SECTOR DEVELOPMENT PRODUCTIVITY PRODUCTIVITY GROWTH QUALITY OF SERVICES RADIO RED TAPE REGULATORY BURDENS REGULATORY ENVIRONMENT REGULATORY REQUIREMENTS RESULT RESULTS SAVINGS SMALL FIRMS SOUTH AMERICA SOUTH AMERICAN STARTUP SUPPLIERS TAX TAX ADMINISTRATION TAX CODE TAX RATE TAX RATES TAX_RATE TAXATION TELEVISION THIRD WORLD TRANSPORT USERS VENDORS VERIFICATIONS WEB WORLD ECONOMY This paper investigates who is most affected by informal competition and how regulation and enforcement affect the extent and nature of this competition. Using newly-collected enterprise data for 6,466 manufacturing formal firms across 14 countries in Latin America, the authors show that formal firms affected by head-to-head competition with informal firms largely resemble them. They are small credit constrained, underutilize their productive capacity, serve smaller customers, and are in markets with low entry costs. In countries where the government is effective and business regulations onerous, formal firms in industries characterized by low costs to entry feel the sting of informal competition more than in other business environments. Finally, the analysis finds that in an economy with relatively onerous tax regulations and a government that poorly enforces its tax code, the percentage of firms adversely affected by informal competition will be reduced from 38.8 to 37.7 percent when the government increases enforcement to cover all firms. 2012-06-06T15:55:47Z 2012-06-06T15:55:47Z 2007-08 http://documents.worldbank.org/curated/en/2007/08/8091496/fears-competition-informal-firms-evidence-latin-america https://hdl.handle.net/10986/7258 English Policy Research Working Paper; No. 4316 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank application/pdf text/plain World Bank, Washington, DC |
| institution |
Banco Mundial |
| collection |
DSpace |
| country |
Estados Unidos |
| countrycode |
US |
| component |
Bibliográfico |
| access |
En linea |
| databasecode |
dig-okr |
| tag |
biblioteca |
| region |
America del Norte |
| libraryname |
Biblioteca del Banco Mundial |
| language |
English |
| topic |
ACCOUNTABILITY ACCOUNTING ADVERSE EFFECTS BENCHMARK BUSINESS ACTIVITIES BUSINESS ENTRY BUSINESS ENVIRONMENT BUSINESS ENVIRONMENTS BUSINESS INDICATOR BUSINESS INDICATORS BUSINESS REGULATIONS BUSINESS RELATIONSHIPS BUSINESS TO BUSINESS BUSINESSES BUYER BUYERS CAPITAL INTENSITY CAPITAL REQUIREMENT CENTRAL AMERICA COMMERCIAL BUSINESS COMMERCIAL CREDIT COMMERCIAL OPERATIONS COMPANY COMPETITIVENESS COMPETITORS CORRELATION MATRIX COST DIFFERENTIALS COST OF ENTRY COUNTRY COMPARISONS COUNTRY FIXED EFFECTS CREDIT CONSTRAINT CREDIT LINES CUSTOMS DEPOSIT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GEOGRAPHY ECONOMIC PERFORMANCE ECONOMIES OF SCALE ELECTRICITY EMAILS EMPLOYMENT ENTERPRISE SURVEY ENTERPRISE SURVEYS ENTREPRENEUR EQUIPMENT EXPORT MARKETS EXPORTS EXTERNAL FINANCE EXTERNAL FINANCING FINANCIAL INSTITUTION FINANCIAL MARKETS FINANCIAL SERVICES FIRM PERFORMANCE FIRM SIZE FIRMS FIXED COST FIXED COSTS GDP GOVERNANCE INDICATOR GOVERNANCE INDICATORS GOVERNMENT REGULATION INCOME LEVELS INCOME TAX INFORMAL ECONOMY INSTITUTIONAL FRAMEWORK INVESTMENT CLIMATE JOB CREATION LATIN AMERICAN LAWS LEGAL PROTECTION LESS DEVELOPED COUNTRIES LICENSE LICENSES LICENSING LIMITED ACCESS LINE OF CREDIT LINES OF CREDIT LOAN LOW-INCOME COUNTRIES MANUFACTURERS MANUFACTURING MANUFACTURING INDUSTRIES MARKET OPPORTUNITIES MENU MIDDLE INCOME COUNTRY NATIONAL INCOME OUTPUT OUTPUTS PER CAPITA INCOME POLICY FORMULATION POLITICAL STABILITY POWER OUTAGES PRICE COMPETITION PRIVATE ENTITIES PRIVATE SECTOR PRIVATE SECTOR DEVELOPMENT PRODUCTIVITY PRODUCTIVITY GROWTH QUALITY OF SERVICES RADIO RED TAPE REGULATORY BURDENS REGULATORY ENVIRONMENT REGULATORY REQUIREMENTS RESULT RESULTS SAVINGS SMALL FIRMS SOUTH AMERICA SOUTH AMERICAN STARTUP SUPPLIERS TAX TAX ADMINISTRATION TAX CODE TAX RATE TAX RATES TAX_RATE TAXATION TELEVISION THIRD WORLD TRANSPORT USERS VENDORS VERIFICATIONS WEB WORLD ECONOMY ACCOUNTABILITY ACCOUNTING ADVERSE EFFECTS BENCHMARK BUSINESS ACTIVITIES BUSINESS ENTRY BUSINESS ENVIRONMENT BUSINESS ENVIRONMENTS BUSINESS INDICATOR BUSINESS INDICATORS BUSINESS REGULATIONS BUSINESS RELATIONSHIPS BUSINESS TO BUSINESS BUSINESSES BUYER BUYERS CAPITAL INTENSITY CAPITAL REQUIREMENT CENTRAL AMERICA COMMERCIAL BUSINESS COMMERCIAL CREDIT COMMERCIAL OPERATIONS COMPANY COMPETITIVENESS COMPETITORS CORRELATION MATRIX COST DIFFERENTIALS COST OF ENTRY COUNTRY COMPARISONS COUNTRY FIXED EFFECTS CREDIT CONSTRAINT CREDIT LINES CUSTOMS DEPOSIT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GEOGRAPHY ECONOMIC PERFORMANCE ECONOMIES OF SCALE ELECTRICITY EMAILS EMPLOYMENT ENTERPRISE SURVEY ENTERPRISE SURVEYS ENTREPRENEUR EQUIPMENT EXPORT MARKETS EXPORTS EXTERNAL FINANCE EXTERNAL FINANCING FINANCIAL INSTITUTION FINANCIAL MARKETS FINANCIAL SERVICES FIRM PERFORMANCE FIRM SIZE FIRMS FIXED COST FIXED COSTS GDP GOVERNANCE INDICATOR GOVERNANCE INDICATORS GOVERNMENT REGULATION INCOME LEVELS INCOME TAX INFORMAL ECONOMY INSTITUTIONAL FRAMEWORK INVESTMENT CLIMATE JOB CREATION LATIN AMERICAN LAWS LEGAL PROTECTION LESS DEVELOPED COUNTRIES LICENSE LICENSES LICENSING LIMITED ACCESS LINE OF CREDIT LINES OF CREDIT LOAN LOW-INCOME COUNTRIES MANUFACTURERS MANUFACTURING MANUFACTURING INDUSTRIES MARKET OPPORTUNITIES MENU MIDDLE INCOME COUNTRY NATIONAL INCOME OUTPUT OUTPUTS PER CAPITA INCOME POLICY FORMULATION POLITICAL STABILITY POWER OUTAGES PRICE COMPETITION PRIVATE ENTITIES PRIVATE SECTOR PRIVATE SECTOR DEVELOPMENT PRODUCTIVITY PRODUCTIVITY GROWTH QUALITY OF SERVICES RADIO RED TAPE REGULATORY BURDENS REGULATORY ENVIRONMENT REGULATORY REQUIREMENTS RESULT RESULTS SAVINGS SMALL FIRMS SOUTH AMERICA SOUTH AMERICAN STARTUP SUPPLIERS TAX TAX ADMINISTRATION TAX CODE TAX RATE TAX RATES TAX_RATE TAXATION TELEVISION THIRD WORLD TRANSPORT USERS VENDORS VERIFICATIONS WEB WORLD ECONOMY |
| spellingShingle |
ACCOUNTABILITY ACCOUNTING ADVERSE EFFECTS BENCHMARK BUSINESS ACTIVITIES BUSINESS ENTRY BUSINESS ENVIRONMENT BUSINESS ENVIRONMENTS BUSINESS INDICATOR BUSINESS INDICATORS BUSINESS REGULATIONS BUSINESS RELATIONSHIPS BUSINESS TO BUSINESS BUSINESSES BUYER BUYERS CAPITAL INTENSITY CAPITAL REQUIREMENT CENTRAL AMERICA COMMERCIAL BUSINESS COMMERCIAL CREDIT COMMERCIAL OPERATIONS COMPANY COMPETITIVENESS COMPETITORS CORRELATION MATRIX COST DIFFERENTIALS COST OF ENTRY COUNTRY COMPARISONS COUNTRY FIXED EFFECTS CREDIT CONSTRAINT CREDIT LINES CUSTOMS DEPOSIT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GEOGRAPHY ECONOMIC PERFORMANCE ECONOMIES OF SCALE ELECTRICITY EMAILS EMPLOYMENT ENTERPRISE SURVEY ENTERPRISE SURVEYS ENTREPRENEUR EQUIPMENT EXPORT MARKETS EXPORTS EXTERNAL FINANCE EXTERNAL FINANCING FINANCIAL INSTITUTION FINANCIAL MARKETS FINANCIAL SERVICES FIRM PERFORMANCE FIRM SIZE FIRMS FIXED COST FIXED COSTS GDP GOVERNANCE INDICATOR GOVERNANCE INDICATORS GOVERNMENT REGULATION INCOME LEVELS INCOME TAX INFORMAL ECONOMY INSTITUTIONAL FRAMEWORK INVESTMENT CLIMATE JOB CREATION LATIN AMERICAN LAWS LEGAL PROTECTION LESS DEVELOPED COUNTRIES LICENSE LICENSES LICENSING LIMITED ACCESS LINE OF CREDIT LINES OF CREDIT LOAN LOW-INCOME COUNTRIES MANUFACTURERS MANUFACTURING MANUFACTURING INDUSTRIES MARKET OPPORTUNITIES MENU MIDDLE INCOME COUNTRY NATIONAL INCOME OUTPUT OUTPUTS PER CAPITA INCOME POLICY FORMULATION POLITICAL STABILITY POWER OUTAGES PRICE COMPETITION PRIVATE ENTITIES PRIVATE SECTOR PRIVATE SECTOR DEVELOPMENT PRODUCTIVITY PRODUCTIVITY GROWTH QUALITY OF SERVICES RADIO RED TAPE REGULATORY BURDENS REGULATORY ENVIRONMENT REGULATORY REQUIREMENTS RESULT RESULTS SAVINGS SMALL FIRMS SOUTH AMERICA SOUTH AMERICAN STARTUP SUPPLIERS TAX TAX ADMINISTRATION TAX CODE TAX RATE TAX RATES TAX_RATE TAXATION TELEVISION THIRD WORLD TRANSPORT USERS VENDORS VERIFICATIONS WEB WORLD ECONOMY ACCOUNTABILITY ACCOUNTING ADVERSE EFFECTS BENCHMARK BUSINESS ACTIVITIES BUSINESS ENTRY BUSINESS ENVIRONMENT BUSINESS ENVIRONMENTS BUSINESS INDICATOR BUSINESS INDICATORS BUSINESS REGULATIONS BUSINESS RELATIONSHIPS BUSINESS TO BUSINESS BUSINESSES BUYER BUYERS CAPITAL INTENSITY CAPITAL REQUIREMENT CENTRAL AMERICA COMMERCIAL BUSINESS COMMERCIAL CREDIT COMMERCIAL OPERATIONS COMPANY COMPETITIVENESS COMPETITORS CORRELATION MATRIX COST DIFFERENTIALS COST OF ENTRY COUNTRY COMPARISONS COUNTRY FIXED EFFECTS CREDIT CONSTRAINT CREDIT LINES CUSTOMS DEPOSIT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GEOGRAPHY ECONOMIC PERFORMANCE ECONOMIES OF SCALE ELECTRICITY EMAILS EMPLOYMENT ENTERPRISE SURVEY ENTERPRISE SURVEYS ENTREPRENEUR EQUIPMENT EXPORT MARKETS EXPORTS EXTERNAL FINANCE EXTERNAL FINANCING FINANCIAL INSTITUTION FINANCIAL MARKETS FINANCIAL SERVICES FIRM PERFORMANCE FIRM SIZE FIRMS FIXED COST FIXED COSTS GDP GOVERNANCE INDICATOR GOVERNANCE INDICATORS GOVERNMENT REGULATION INCOME LEVELS INCOME TAX INFORMAL ECONOMY INSTITUTIONAL FRAMEWORK INVESTMENT CLIMATE JOB CREATION LATIN AMERICAN LAWS LEGAL PROTECTION LESS DEVELOPED COUNTRIES LICENSE LICENSES LICENSING LIMITED ACCESS LINE OF CREDIT LINES OF CREDIT LOAN LOW-INCOME COUNTRIES MANUFACTURERS MANUFACTURING MANUFACTURING INDUSTRIES MARKET OPPORTUNITIES MENU MIDDLE INCOME COUNTRY NATIONAL INCOME OUTPUT OUTPUTS PER CAPITA INCOME POLICY FORMULATION POLITICAL STABILITY POWER OUTAGES PRICE COMPETITION PRIVATE ENTITIES PRIVATE SECTOR PRIVATE SECTOR DEVELOPMENT PRODUCTIVITY PRODUCTIVITY GROWTH QUALITY OF SERVICES RADIO RED TAPE REGULATORY BURDENS REGULATORY ENVIRONMENT REGULATORY REQUIREMENTS RESULT RESULTS SAVINGS SMALL FIRMS SOUTH AMERICA SOUTH AMERICAN STARTUP SUPPLIERS TAX TAX ADMINISTRATION TAX CODE TAX RATE TAX RATES TAX_RATE TAXATION TELEVISION THIRD WORLD TRANSPORT USERS VENDORS VERIFICATIONS WEB WORLD ECONOMY González, Alvaro S. Lamanna, Francesca Who Fears Competition from Informal Firms? Evidence from Latin America |
| description |
This paper investigates who is most
affected by informal competition and how regulation and
enforcement affect the extent and nature of this
competition. Using newly-collected enterprise data for 6,466
manufacturing formal firms across 14 countries in Latin
America, the authors show that formal firms affected by
head-to-head competition with informal firms largely
resemble them. They are small credit constrained,
underutilize their productive capacity, serve smaller
customers, and are in markets with low entry costs. In
countries where the government is effective and business
regulations onerous, formal firms in industries
characterized by low costs to entry feel the sting of
informal competition more than in other business
environments. Finally, the analysis finds that in an economy
with relatively onerous tax regulations and a government
that poorly enforces its tax code, the percentage of firms
adversely affected by informal competition will be reduced
from 38.8 to 37.7 percent when the government increases
enforcement to cover all firms. |
| topic_facet |
ACCOUNTABILITY ACCOUNTING ADVERSE EFFECTS BENCHMARK BUSINESS ACTIVITIES BUSINESS ENTRY BUSINESS ENVIRONMENT BUSINESS ENVIRONMENTS BUSINESS INDICATOR BUSINESS INDICATORS BUSINESS REGULATIONS BUSINESS RELATIONSHIPS BUSINESS TO BUSINESS BUSINESSES BUYER BUYERS CAPITAL INTENSITY CAPITAL REQUIREMENT CENTRAL AMERICA COMMERCIAL BUSINESS COMMERCIAL CREDIT COMMERCIAL OPERATIONS COMPANY COMPETITIVENESS COMPETITORS CORRELATION MATRIX COST DIFFERENTIALS COST OF ENTRY COUNTRY COMPARISONS COUNTRY FIXED EFFECTS CREDIT CONSTRAINT CREDIT LINES CUSTOMS DEPOSIT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GEOGRAPHY ECONOMIC PERFORMANCE ECONOMIES OF SCALE ELECTRICITY EMAILS EMPLOYMENT ENTERPRISE SURVEY ENTERPRISE SURVEYS ENTREPRENEUR EQUIPMENT EXPORT MARKETS EXPORTS EXTERNAL FINANCE EXTERNAL FINANCING FINANCIAL INSTITUTION FINANCIAL MARKETS FINANCIAL SERVICES FIRM PERFORMANCE FIRM SIZE FIRMS FIXED COST FIXED COSTS GDP GOVERNANCE INDICATOR GOVERNANCE INDICATORS GOVERNMENT REGULATION INCOME LEVELS INCOME TAX INFORMAL ECONOMY INSTITUTIONAL FRAMEWORK INVESTMENT CLIMATE JOB CREATION LATIN AMERICAN LAWS LEGAL PROTECTION LESS DEVELOPED COUNTRIES LICENSE LICENSES LICENSING LIMITED ACCESS LINE OF CREDIT LINES OF CREDIT LOAN LOW-INCOME COUNTRIES MANUFACTURERS MANUFACTURING MANUFACTURING INDUSTRIES MARKET OPPORTUNITIES MENU MIDDLE INCOME COUNTRY NATIONAL INCOME OUTPUT OUTPUTS PER CAPITA INCOME POLICY FORMULATION POLITICAL STABILITY POWER OUTAGES PRICE COMPETITION PRIVATE ENTITIES PRIVATE SECTOR PRIVATE SECTOR DEVELOPMENT PRODUCTIVITY PRODUCTIVITY GROWTH QUALITY OF SERVICES RADIO RED TAPE REGULATORY BURDENS REGULATORY ENVIRONMENT REGULATORY REQUIREMENTS RESULT RESULTS SAVINGS SMALL FIRMS SOUTH AMERICA SOUTH AMERICAN STARTUP SUPPLIERS TAX TAX ADMINISTRATION TAX CODE TAX RATE TAX RATES TAX_RATE TAXATION TELEVISION THIRD WORLD TRANSPORT USERS VENDORS VERIFICATIONS WEB WORLD ECONOMY |
| author |
González, Alvaro S. Lamanna, Francesca |
| author_facet |
González, Alvaro S. Lamanna, Francesca |
| author_sort |
González, Alvaro S. |
| title |
Who Fears Competition from Informal Firms? Evidence from Latin America |
| title_short |
Who Fears Competition from Informal Firms? Evidence from Latin America |
| title_full |
Who Fears Competition from Informal Firms? Evidence from Latin America |
| title_fullStr |
Who Fears Competition from Informal Firms? Evidence from Latin America |
| title_full_unstemmed |
Who Fears Competition from Informal Firms? Evidence from Latin America |
| title_sort |
who fears competition from informal firms? evidence from latin america |
| publisher |
World Bank, Washington, DC |
| publishDate |
2007-08 |
| url |
http://documents.worldbank.org/curated/en/2007/08/8091496/fears-competition-informal-firms-evidence-latin-america https://hdl.handle.net/10986/7258 |
| work_keys_str_mv |
AT gonzalezalvaros whofearscompetitionfrominformalfirmsevidencefromlatinamerica AT lamannafrancesca whofearscompetitionfrominformalfirmsevidencefromlatinamerica |
| _version_ |
1807156967412596736 |