Who Fears Competition From Informal Firms ? Evidence From Latin America

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Investment climate, outward orientation and manufacturing firm productivity: new empirical evidence

“…impact of competition on firms' performance was validated by Bastos and Nasir (2004) and , and the negative impact of the informal sector by González and Lamanna (2007) and Ospina and Schiffbauer (2010).…”

Determinants of Labor Productivity in Emerging Markets: Evidence from Pre- and Post-Financial Crisis Mexico

“…There are different definitions of informality among scholars (Kang and Chung 2015). In this study, informality is related to unregistered businesses that are less likely to be monitored by the regulatory authority (e.g., González and Lamanna 2007;Amin 2011); while competition with informal rivals is relevant to firm level performance (Baik et al 2015). More precisely, informality is defined as competition with unregistered rivals (González and Lamanna 2007;Amin 2011;Kang and Chung 2015).…”

“…Some of the scholars that have attempted to identify the determinants of labor productivity in emerging markets pay attention to these factors (e.g., Mitton 2002;Kang and Chung 2015). In emerging markets, financial markets and institutions are less developed (Alaimo et al 2009); corruption is relatively severe (Schneider 2005;Cuervo-Cazurra 2006;Sanchez et al 2008: 341); and the ratio of informal sectors to the national economy is relatively high (González and Lamanna 2007;Alaimo et al 2009;Baik et al 2015). As the 2008 financial crisis increased uncertainty and risk, the effects of the three factors on labor productivity may differ before and after the crisis.…”

Determinants of initial technology adoption and intensification: evidence from Latin America and the Caribbean

“…The informal sectors in developing countries, including in Latin America, are estimated to be far larger as a share of national output than those in developed countries (Schneider and Enste 2000), and so are likely to exert a much greater impact on business decisions. Formal sector companies face costs that informal sector firms do not, including taxes, license fees, permit charges, notification fees, requirements for capital deposits, and costs arising from government inefficiency or corruption (González and Lamanna 2007). Informal rivals can produce without incurring these costs and so undercut the prices of formal sector companies.…”