Formal sector subcontracting and informal sector employment in Indian manufacturing

Moreno-Monroy, Ana I.; Pieters, Janneke; Erumban, Abdul Azeez

doi:10.1186/s40175-014-0022-2

Cited by 31 publications

(29 citation statements)

References 21 publications

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“…Mukin (2014) finds that the co-agglomeration of the formal and informal sectors in India is very low whereasMoreno-Monroy et al (2014) shows that formal sector subcontracting positively correlates with employment growth only in the most modern segments of the informal sector in India.3 Estimating a spatial autoregressive model for firm-level productivity is complicated by the difficulty in measuring spatial autocorrelation among individual firms. This issue is addressed by estimating a hierarchical spatial model inHashiguchi and Tanaka (2014).…”

mentioning

confidence: 99%

Agglomeration economies in the formal and informal sectors: a Bayesian spatial approach‡

Tanaka

Hashiguchi

2019

Journal of Economic Geography

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This paper examines whether localized clusters of similar industries produce agglomeration economies in the formal and informal sectors. We develop a Bayesian method to estimate a spatial autoregressive model with an endogenous independent variable. We use establishment-level census data that cover both formal registered and informal unregistered establishments in Cambodia. We find that the density of local employment has a significantly positive effect on productivity in the informal sector, but little effect in the formal sector. For manufacturing, a doubling of employment density increases productivity in the informal sector by 9% through local linkages and by 17% through spatial multiplier linkages, leading to a 26% increase in total. A spatial network magnifies the local impact of agglomeration economies in the informal sector. The Institute of Developing Economies (IDE) is a semigovernmental, nonpartisan, nonprofit research institute, founded in 1958. The Institute merged with the Japan External Trade Organization (JETRO) on July 1, 1998. The Institute conducts basic and comprehensive studies on economic and related affairs in all developing countries and regions, including Asia, the

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confidence: 99%

Agglomeration economies in the formal and informal sectors: a Bayesian spatial approach‡

Tanaka

Hashiguchi

2019

Journal of Economic Geography

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“…Formal sector subcontracting is positively related to employment growth only in the most modern segments of the informal sector. They argued that subcontracting can contribute to job creation in relatively modern segments of the informal sector [15].…”

Section: Literature Reviewmentioning

confidence: 99%

“…Financial inclusion as a percent of total adults' population by banks increased to 66.7 % in 2014 from 42.2 % in 2009. The same by MFIs increased to 32.7 % in 2014 from 22.4 % from 2004 in Bangladesh [15]. While the Philippines are at the forefront of promoting and creating an enabling environment for financial inclusion, some sector experts believe that delivery and implementation are weak.…”

Section: Literature Reviewmentioning

confidence: 99%

Comparative Positioning of Small and Medium Enterprises in Bangladesh, Thailand and the Philippines

Ali¹,

Rattanawiboonsom²,

Perez³

et al. 2017

EoR

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Small and Medium Enterprises (SMEs) play a significant role in the nation's economic development process. SMEs provide job opportunities, create wealth, promote modernization and contribute to technological changes. The Asia-Pacific Region is foreseen to be the next economic boom. A comparison of SMEs in Bangladesh, Thailand and the Philippines on their SMEs Landscape, Banking sector, Non-Banking sector and Capital Markets would give a picture of which strengths, weaknesses, opportunities and threats these countries face. The time period of the study is from August 2016 to January 2017. Based on the secondary sources of data, the research was conducted to examine real scenarios. The study aimed at getting information whether each country would have any benchmark to attain the best practices. The study found that SMEs credit and repayment schemes in these countries need to be gradually improved. Through proper utilization of SMEs, these countries can alleviate poverty and attain economic progress. Unfortunately, the informal sector of these countries is playing a large role. It should be transformed to formal sector by financial inclusion. This can be achieved by setting up SMEs in the formal sector .The creation of employment along with poverty reduction in the formal sector will enhance economic growth as well as fulfill the basic needs and create empowerment of people. Community banking is suggested to be introduced for accumulating micro-savings and allocating, distributing setting up SMEs in the formal sector through micro investment under the umbrella of community banking. Further, under the regional cooperation flagship of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) Bangladesh and Thailand may work in collaborative manner in the SMEs sector. The Philippines may join the regional body of BIMSTEC and collaborate with SMEs at the regional level. This may lead to achieve some goals of sustainable development goals (SDGs). SMEs can work more rigorously for lower income group people to improve their living standard. The further research on these three countries can consider primary sources of data to find out the way to implement community bank for transforming micro savings to micro investment for removing income inequality, disparity and attaining social justice.

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“…This outcome, however, is not predicted by economic theory. The latter strongly suggests that all non-coerced transactions are mutually beneficial ‘modernising linkages’, irrespective of motive (Moreno-Monroy, Pieters & Erumban, 2012). Whether prices are high or low, it is the demand, not the ability to retain earnings, that counts.…”

Section: Data: Indian Manufacturing Informalitymentioning

confidence: 99%

“…The more capital intensive is the firm doing the subcontracting work, the more likely it is in turn to encounter its own capital constraint and then to subcontract out part of its work (Morcos, 2003). The positive relationship between formal and informal activity is smaller for labour-intensive formal activity (Kongmanila & Takahashi, 2009; Moreno-Monroy et al, 2012; Sundaram, Ahsan & Mitra, 2012). The reason is self-evident in the framework of this article.…”

Section: Data: Indian Manufacturing Informalitymentioning

confidence: 99%

Juridical and Functional Informality: From Theory to Practical Policy

Gibson

Flaherty

2016

Margin: The Journal of Applied Economic Research

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The purpose of this article is to deepen the understanding of informality, and related efforts governments must take to cope with large and persistent informal sectors. Is the informal sector a source of growth and employment or a drain on the fiscus that undermines social safety nets? This article questions the ‘formal sector bias’ present in much of the policy discussions surrounding informality. A theoretically grounded distinction between ‘functional’ and ‘juridical’ informality is drawn and applied to subcontracting as an illustrative case. The broad conclusion of the paper is not supportive of public intervention to formalise the informal sector but rather suggests that tolerating the informal sector might well improve economic performance as measured by output and employment. JEL Classification: O17, E17

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Formal sector subcontracting and informal sector employment in Indian manufacturing

Cited by 31 publications

References 21 publications

Agglomeration economies in the formal and informal sectors: a Bayesian spatial approach‡

Agglomeration economies in the formal and informal sectors: a Bayesian spatial approach‡

Comparative Positioning of Small and Medium Enterprises in Bangladesh, Thailand and the Philippines

Juridical and Functional Informality: From Theory to Practical Policy

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