Entry Regulation and Formalization of Microenterprises in Developing Countries
The majority of microenterprises in most developing countries remain informal despite more than a decade of reforms aimed at making it easier and cheaper for them to formalize. This paper summarizes the evidence on the effects of entry reforms and...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2013/06/17926606/entry-regulation-formalization-microenterprises-developing-countries http://hdl.handle.net/10986/15866 |
| Summary: | The majority of microenterprises in most
developing countries remain informal despite more than a
decade of reforms aimed at making it easier and cheaper for
them to formalize. This paper summarizes the evidence on the
effects of entry reforms and related policy actions to
promote firm formalization. Most of these policies result
only in a modest increase in the number of formal firms, if
at all. Less is known about the impact of other forms of
business regulations on the performance of low-scale
enterprises. Most informal firms appear not to benefit on
net from formalizing, so ease of formalization alone will
not lead to most of them formalizing. Increased enforcement
of rules can increase formality. Although there is a fiscal
benefit of doing this with larger informal firms, it is
unclear whether there is a public rationale for trying to
formalize subsistence enterprises. |
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