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2017 | Buch

The Informal Economy in Global Perspective

Varieties of Governance

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This book critically engages with how formal and informal mechanisms of governance are used across the world. Specifically, it analyzes how the governance mechanisms of formal institutions are questioned, challenged and renegotiated through informal institutions. Whilst there is an emerging body of scholarship focusing on informal practices, this is scattered across a number of disciplines. This edited collection, by contrast, fosters a dialogue on these issues, moving away from monodisciplinary and normative methodologies that view informal institutions and practices simply as temporary economic phenomena. In doing so, the authors provide a wider understanding of how governance is composed of both the formal and the informal, which complement each other but are also constantly in competition. This novel approach will appeal to social scientists, economists, policy-makers, practitioners, and anyone else willing to widen their understanding of how governance works.







Inhaltsverzeichnis

Frontmatter
Introduction: Informal Economies as Varieties of Governance
Abstract
The growing body of research on informality, that has its origins in the work of Hart (1973) in Ghana, and which has resulted in a burgeoning literature comprising thousands of new articles ever year, has moved in recent years a long way from the monodisciplinary approach and lack of dialogue between disciplines that conventionally plagued the study of the informal sector. Initially approached from the perspectives of economic anthropology (1973) and labour studies (ILO 1972) that dealt, respectively, with informal economy and informal labour, studies on informality have increasingly broadened in terms of disciplines and geographical scope.
Abel Polese, Colin C. Williams, Ioana A. Horodnic, Predrag Bejakovic
Why Read Informality in a Substantivist Manner? On the Embeddedness of the Soviet Second Economy
Abstract
Existing literature tends to see informality in Soviet times as a rational response to deficient socialist institutions. In contrast, informality in post-socialist times is explained by the stickiness of culturally embedded norms. This chapter examines the reasons and implications for these inconsistent interpretations of Soviet and post-Soviet informality using the example of Georgia. It suggests that two influential schools of thought on post-Soviet informality, new institutionalist economics and economic sociology, both fail to overcome this theoretical inconsistency. The chapter then elaborates how a Polanyian substantivist approach can overcome identified theoretical pitfalls and establish continuity in interpreting socialist and post-socialist informality. The importance of recalling this seemingly forgotten substantivist approach is illustrated using the changing institutional context and reproduction of informality in the Georgian case.
Lela Rekhviashvili
Informal Economy: The Invisible Hand of Government
Abstract
The informal economy embraces a broad range of activities. However, they have something in common: the invisible hand of government. Government’s active role is necessary to control the illegal economy and irregular production as two extreme informal practices. However, the economically motivated hidden activities known as the shadow economy, take place because of government overregulation. This chapter explains the development of the informal economy focusing on government’s role. Iran is selected as a case study because of its event-filled history, the Islamic revolution, the Iran–Iraq war and the sanctions. Applying a MIMIC model for the sample period (1972–2013), government interventions are impactful, confirming that the informal economy is the result of government’s invisible hand. In the short run, however, higher per capita income and unemployment insurance mediate.
Abbas Khandan
Estimating the Size of the Croatian Shadow Economy: A Labour Approach
Abstract
The shadow economy, present in every country in the world, is naturally also present in Croatia. Activities in the shadow economy are unregulated, untaxed, unregistered and unmeasured by official statistics, and, in Croatia, influence all kinds of economic activities with allocative, stabilising, welfare and redistributive effects. This chapter explores the size of the shadow economy in the period 2008–2014 using a labour inputs approach. The results show that in the period under study, the level of the Croatian shadow economy was highest in 2010 (2.89 %) and lowest in 2012 (0.29 %). The outcome will be to reveal the main reasons for the varying size of the shadow economy in recent decades in Croatia.
Sabina Hodzic
Informal Employment and Earnings Determination in Ukraine
Abstract
Informal employment is a serious challenge for the Ukrainian economy, since the number of informal workers has been rising over time. This chapter provides an extensive literature review on labour market segmentation in Ukraine, along with a review of the current state of informal employment in Ukraine according to the latest ILO definition. We pay detailed attention to distribution across four categories of workers: formal employees, formal self-employed, informal employees and the informal self-employed. We use data from the Ukrainian Longitudinal Monitoring Survey (ULMS) for 2007 and design a Mincer earnings distribution function to investigate the factors that determine the income of individuals. Human capital theory proves robust in as much as educational attainment is a major explanatory factor for formal workers, although it is not as robust regarding informal workers.
Oksana Nezhyvenko, Philippe Adair
Approaching Informality: Rear-Mirror Methodology and Ethnographic Inquiry
Abstract
The purpose of this chapter is to advance a methodological framework for the study of open secrecy, the voluntary concealment of the nature of proceedings jointly performed by members of a social order with a vested interest in protecting the current state of affairs. It elaborates on the “rear-mirror methodology”, extending it to ethnographic inquiry. To cast aside the veil of collective secrecy, the chapter makes the case for a flexible approach to fieldwork, and recommends that researchers adopt the status of partial insider and the role of naïve newcomer; maintain rapport with, but also distance from, participants; and regard as meaningful the apparent incongruities between data generated through casual talk and data obtained via formal interviews.
Marius Wamsiedel
Explaining the Informal Economy in Post-Communist Societies: A Study of the Asymmetry Between Formal and Informal Institutions in Romania
Abstract
This chapter proposes a way of explaining the informal economy in post-communist economies. Drawing upon evidence from 1,027 face-to-face interviews conducted in Romania during 2013, using an ordinal logistic regression analysis this chapter reveals that participation in the informal economy arises when there is asymmetry between the norms, values and beliefs of citizens (informal institutions) and the codified laws and regulations (formal institutions), and that tackling the informal economy thus needs to focus upon changing not only informal institutions but also formal institutions in order to reduce this institutional asymmetry. How to achieve this in post-communist societies is then discussed.
Colin C. Williams, Ioana A. Horodnic
Post-Socialist Informality Rural Style: Impressions from Bulgaria
Abstract
The informality phenomenon is widespread in both rural and urban areas of transitional economies, but most of the current empirical research on informality targets the urban context. The pulse of the rural economy is known to be a slower one. Remoteness, dependency on agriculture, high unemployment, lower purchasing power, deteriorating infrastructure and depopulation pose great challenges for rural development. Post-socialist rural places desperately need jobs. Job creation was left to private initiative and became closely linked to the wider practice of informality. This contribution seeks to better understand the rural manifestations of informal business activities and provide guidance for future scholars of rural informal economic activities in the post-socialist context.
Diana Traikova
Exploring the Practice of Making Informal Payments in the Health Sector: Some Lessons from Greece
Abstract
This chapter explores the prevalence of informal payments in public healthcare services in Greece. To evaluate the relationship between extra payments or valuable gifts (apart from official fees) and the level of acceptability of corruption, as well as the socio-spatial variations in the tendency to offer informal payments, data from a 2013 Eurobarometer survey is reported. Using logistic regression analysis, the finding is that patients with a high acceptability of corruption, those considering corruption as a very widespread phenomenon and those located in rural areas are more likely to offer, apart from official fees, extra payments or valuable gifts for healthcare services. The chapter concludes by discussing the health policy implications.
Adrian V. Horodnic, Colin C. Williams, Abel Polese, Adriana Zait, Liviu Oprea
Violent Pressure on Business and the Size of the Informal Economy: Evidence from Russian Regions
Abstract
Does violent pressure on business influence the decision of firms to stay in the informal economy? Using evidence from Russian regions, this chapter finds that the result depends on the type of violence. Physical violence in a given region is positively correlated with the number of people working outside the corporate sector, but negatively with the degree of competition from the informal sector. On the other hand, insecure property rights for entrepreneurs and investors increase the amount of competition from the informal economy. These findings are consistent with a theory where firms seek the protection of the formal economy against different types of physical violence in regions with decentralized predation, but hide in the informal economy against predatory state officials and corporate raiders in regions where predation is centralized.
Michael Rochlitz
Labor Informality in Mexico: An Indicator Analysis
Abstract
This chapter presents an analysis of labor informality in Mexico. It provides a discussion of different theoretical approaches explaining the phenomenon and performs an empirical exercise. The exercise includes a description of various labor market indicators and the estimation of a logistic equation. For the latter it considers information from the National Occupational and Employment Survey (ENOE) for the first quarter of 2015. The results suggest that the probability of becoming an informal worker decreases as individuals acquire more education or live in urban areas. Women are more likely to join the informal labor market relative to men. Searching for additional employment also increases the probability of entering informality.
Rogelio Varela Llamas, Ramón A. Castillo Ponce, Juan Manuel Ocegueda Hernández
The Interplay Between Formal and Informal Firms and Its Implications on Jobs in Francophone Africa: Case Studies of Senegal and Benin
Abstract
In this chapter, the relationship between the formal and informal sectors in francophone Africa is investigated, considering both trade with and outsourcing to the informal sector, and competition from it. Using survey data collected in francophone West Africa, important cases of backward and forward linkages between both sectors are documented. The chapter also highlights areas where fierce competition from the informal sector is observed. Finally, a descriptive statistic relational analysis and econometric regression are used to shed light on the profile of formal firms that are more likely to interact with informal ones, either by way of trade or outsourcing or through competition.
Ahmadou Aly Mbaye, Nancy Claire Benjamin, Fatou Gueye
Governing Informal Payments by Market in the Chinese Healthcare System
Abstract
Informal payments are an illegitimate practice that has been endemic in the Chinese healthcare system for decades. This chapter examines two market mechanisms that the government has used to contain it, namely, internal competition and differential pricing. It reveals that due to market failures, internal competition pushed up the demand for the services of elite practitioners and led to the concentration of informal payments in their hands. Differential pricing not only concentrated informal payments in the hands of senior surgeons, but also exacerbated health inequality and subverted the government’s ideological commitment to social justice. Both mechanisms did not achieve the purpose of controlling informal payments and have been abandoned either by hospitals or by the government.
Jingqing Yang
Social Mechanisms of the Counterpublic Sphere: A Case of a Coffee Farmers’ Cooperative in LAO PDR
Abstract
This chapter aims to examine the mechanisms and conditions of the emergence of the counterpublic sphere through describing the features of the connections possessed by a coffee farmers’ cooperative in two different but interrelated dimensions: the transformation of connections inside the cooperative and the construction of connections outside the cooperative. Through this case study in Lao PDR, the finding is that distrust among the farmers has affected the mechanism of the exclusion of the members on the one hand, and on the other the cooperatives have acquired political power in order to use such mechanisms through the connection to external organisations. In this process, the exclusion of members might occur, in contrast to the openness of the members which is often referred as an ideal of the counterpublic sphere.
Arihiro Minoo
Formalisation of Entrepreneurship in the Informal Economy in Sub-Saharan Africa and the Role of Formal Institutions: An Analysis of Ghana’s Experience
Abstract
Informal entrepreneurship has been for a long time a major lifeline for many living in rural and urban economies in developing countries especially in sub-Saharan Africa and more particularly Ghana. Formalising the informal economy has become prominent within development circles but there has been no clear policy direction from the formal institutions in terms of their role in formalising informal entrepreneurship. This chapter seeks to evaluate critically the role of formal institutions in formalising entrepreneurship in the informal economy in Ghana. Formal institutions are seen as strategic leaders in this endeavour but they are also perceived as enemies of formalisation since they profit from the current bureaucratic impediments as informal entrepreneurs try to formalise their operations.
Kwame Adom
Evidence on Corruption in Public Procurements in Healthcare and the Implications for Policy
Abstract
Bribery, kickbacks, collusion and favoritism in public procurements are well-known challenges in almost all countries. In healthcare, these informal practices—often labeled as “corruption”—may have consequences ranging from financial losses to higher morbidity and mortality rates. Most informal practices in public procurement indeed fit the definition of corruption, for instance bribery and kickbacks. However, others, such as collusion and favoritism, are less tangible and sometimes it is arguable whether they can be called corruption. This chapter follows a normative vision and presents a review of evidence on corruption in public procurements of medical devices and pharmaceuticals. The focus is on the forms of corruption in public procurements, consequences and possible solutions.
Julia Schipperges, Milena Pavlova, Tetiana Stepurko, Paul Vincke, Wim Groot
Backmatter
Metadaten
Titel
The Informal Economy in Global Perspective
herausgegeben von
Abel Polese
Colin C. Williams
Ioana A. Horodnic
Predrag Bejakovic
Copyright-Jahr
2017
Electronic ISBN
978-3-319-40931-3
Print ISBN
978-3-319-40930-6
DOI
https://doi.org/10.1007/978-3-319-40931-3