Increasing Formality and Productivity of Bolivian Firms

Bolivia's informal sector is the largest in Latin America, by many definitions and measures. Bolivia's high informality rate has been blamed on many factors including the burden of regulation, the weakness of public institutions, and the...

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Main Author: World Bank
Format: Publication
Language:English
Published: World Bank 2012
Subjects:
Online Access:http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000333037_20090916013154
http://hdl.handle.net/10986/2675
id okr-10986-2675
recordtype oai_dc
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic ACCESS TO CAPITAL
ACCESS TO CREDIT
ACCESS TO FINANCE
ACCESS TO FINANCIAL SERVICES
ACCESS TO FOREIGN MARKETS
ACCESS TO MARKET
ADMINISTRATIVE BARRIERS
ADVISORY SERVICES
AGE OF RETIREMENT
ANNUAL INCOME
BALANCE SHEET
BANK DEPOSIT
BANKRUPTCY
BANKS
BARRIERS TO ENTRY
BRANCH
BRIBES
BUSINESS ASSOCIATIONS
BUSINESS DEVELOPMENT
BUSINESS ENVIRONMENT
BUSINESS SUPPORT
BUSINESS TAXES
CAPITAL REQUIREMENT
CHAMBER OF COMMERCE
COLLATERAL
COMPANY
CONTRACT ENFORCEMENT
CONTRIBUTION
CONTRIBUTIONS
CORRUPTION
CREDIT BUREAUS
CURRENCY
CUSTOMER BASE
DEBT
DEBT RELIEF
DEDUCTIBLE
DEMOGRAPHIC GROUPS
DEVELOPMENT BANK
DISCRIMINATION
DOMESTIC MARKET
DOMESTIC WORKERS
EARNINGS
ECONOMIC COOPERATION
ECONOMIC GROWTH
ECONOMIC REFORMS
ECONOMIES OF SCALE
EDUCATION LEVELS
EMPLOYEE
EMPLOYERS
EMPLOYMENT
ENFORCEABILITY OF CONTRACTS
ENTREPRENEUR
ENTREPRENEURS
EXPANSION
EXTERNALITIES
FACILITATION
FAMILIES
FAMILY INCOME
FAMILY MEMBERS
FAMILY RESPONSIBILITIES
FEMALE ENTREPRENEURS
FINANCIAL ENVIRONMENT
FINANCIAL INSTRUMENTS
FINANCIAL SECTOR
FINANCIAL SERVICES
FINANCIAL SUPPORT
FIRM LEVEL
FIRM SIZE
FIRMS
FISCAL RESOURCES
FORMAL ECONOMY
FORMAL LABOR MARKET
FUND MANAGEMENT
GENDER
GENDER DIFFERENCES
GROUPS OF PEOPLE
HEALTH INSURANCE
HOUSEHOLD SURVEYS
HOUSEHOLDS
HUMAN CAPITAL
INCOME DISTRIBUTION
INCOME INEQUALITY
INCOME TAX
INCOMES
INDUSTRY CHARACTERISTICS
INEQUALITY
INFORMAL EMPLOYMENT
INFORMAL SECTOR
INFORMAL WORKERS
INPUT PRICES
INSURANCE
INTEREST RATES
INTERNATIONAL BANK
JOB OPPORTUNITIES
JOBS
LABOR CONTRACT
LABOR CONTRACTS
LABOR FORCE
LABOR LAWS
LABOR MARKET
LABOR MARKET SEGMENTATION
LABOR ORGANIZATION
LABOR REGULATION
LABOR REGULATIONS
LACK OF INFORMATION
LACK OF KNOWLEDGE
LARGE ENTERPRISES
LARGE FIRMS
LAWS
LAWYER
LAWYERS
LEVEL OF EDUCATION
LIABILITY
LICENSING
LIMITED ACCESS
LOCAL FIRMS
LOW COST
LOW ENTRY BARRIERS
MARRIED WOMEN
MEDIUM ENTERPRISES
MICRO ENTERPRISES
MICROCREDIT
MICROFINANCE
MIGRATION
MUNICIPAL GOVERNMENTS
MUNICIPALITIES
NEW BUSINESS
NEW ENTRANTS
NONGOVERNMENTAL ORGANIZATION
OCCUPATION
OLDER WORKERS
PENALTIES
PENSION
PENSION FUND
PENSION FUNDS
PENSION RIGHTS
PENSION SYSTEM
PENSION SYSTEMS
PRIMARY SCHOOL
PRIVATE COSTS
PRIVATE EMPLOYMENT
PRIVATE FIRMS
PRIVATE INSTITUTIONS
PRIVATE SECTOR
PRIVATIZATIONS
PRODUCT MARKET
PRODUCT MARKET REGULATION
PRODUCT MARKETS
PRODUCTION PROCESS
PRODUCTIVE SECTOR
PRODUCTIVITY
PRODUCTIVITY GROWTH
PROFITABILITY
PROPERTY RIGHTS
PUBLIC AGENCIES
PUBLIC EDUCATION
PUBLIC EMPLOYMENT
PUBLIC GOODS
PUBLIC POLICY
PUBLIC SECTOR EMPLOYEES
PUBLIC SECTOR EMPLOYMENT
PUBLIC SERVICES
PURCHASES
RATES OF RETURN
REAL ESTATE
RECEIPTS
RED TAPE
REGISTRATION PROCESS
REGULATORY BURDEN
REGULATORY BURDENS
RETIRED
RETIREMENT
RETIREMENT PENSION
RURAL EMPLOYMENT
SALARIED EMPLOYMENT
SALARIED WORKERS
SALARIES
SAVINGS
SECONDARY EDUCATION
SELF-EMPLOYMENT
SIZE OF FIRM
SKILLED LABOR
SMALL BUSINESSES
SMALL ENTERPRISES
SMALL ENTREPRENEURS
SMALL FIRMS
SMALLER FIRMS
SUBSIDIARY
SUPPLIER
SUPPLY OF CREDIT
TAX ADMINISTRATION
TAX BURDEN
TAX COLLECTION
TAX RATES
TAX REGIME
TAX REGIMES
TAXATION
TECHNICAL ASSISTANCE
TOTAL COST
TOTAL EMPLOYMENT
TOTAL FACTOR PRODUCTIVITY
TRAINING SERVICES
TRANSACTION
TRANSPORT
UNEMPLOYED
URBAN AREAS
URBAN EMPLOYMENT
URBAN WORKERS
URBANIZATION
VULNERABLE GROUPS
WAGE
WORKER
YOUNG PEOPLE
spellingShingle ACCESS TO CAPITAL
ACCESS TO CREDIT
ACCESS TO FINANCE
ACCESS TO FINANCIAL SERVICES
ACCESS TO FOREIGN MARKETS
ACCESS TO MARKET
ADMINISTRATIVE BARRIERS
ADVISORY SERVICES
AGE OF RETIREMENT
ANNUAL INCOME
BALANCE SHEET
BANK DEPOSIT
BANKRUPTCY
BANKS
BARRIERS TO ENTRY
BRANCH
BRIBES
BUSINESS ASSOCIATIONS
BUSINESS DEVELOPMENT
BUSINESS ENVIRONMENT
BUSINESS SUPPORT
BUSINESS TAXES
CAPITAL REQUIREMENT
CHAMBER OF COMMERCE
COLLATERAL
COMPANY
CONTRACT ENFORCEMENT
CONTRIBUTION
CONTRIBUTIONS
CORRUPTION
CREDIT BUREAUS
CURRENCY
CUSTOMER BASE
DEBT
DEBT RELIEF
DEDUCTIBLE
DEMOGRAPHIC GROUPS
DEVELOPMENT BANK
DISCRIMINATION
DOMESTIC MARKET
DOMESTIC WORKERS
EARNINGS
ECONOMIC COOPERATION
ECONOMIC GROWTH
ECONOMIC REFORMS
ECONOMIES OF SCALE
EDUCATION LEVELS
EMPLOYEE
EMPLOYERS
EMPLOYMENT
ENFORCEABILITY OF CONTRACTS
ENTREPRENEUR
ENTREPRENEURS
EXPANSION
EXTERNALITIES
FACILITATION
FAMILIES
FAMILY INCOME
FAMILY MEMBERS
FAMILY RESPONSIBILITIES
FEMALE ENTREPRENEURS
FINANCIAL ENVIRONMENT
FINANCIAL INSTRUMENTS
FINANCIAL SECTOR
FINANCIAL SERVICES
FINANCIAL SUPPORT
FIRM LEVEL
FIRM SIZE
FIRMS
FISCAL RESOURCES
FORMAL ECONOMY
FORMAL LABOR MARKET
FUND MANAGEMENT
GENDER
GENDER DIFFERENCES
GROUPS OF PEOPLE
HEALTH INSURANCE
HOUSEHOLD SURVEYS
HOUSEHOLDS
HUMAN CAPITAL
INCOME DISTRIBUTION
INCOME INEQUALITY
INCOME TAX
INCOMES
INDUSTRY CHARACTERISTICS
INEQUALITY
INFORMAL EMPLOYMENT
INFORMAL SECTOR
INFORMAL WORKERS
INPUT PRICES
INSURANCE
INTEREST RATES
INTERNATIONAL BANK
JOB OPPORTUNITIES
JOBS
LABOR CONTRACT
LABOR CONTRACTS
LABOR FORCE
LABOR LAWS
LABOR MARKET
LABOR MARKET SEGMENTATION
LABOR ORGANIZATION
LABOR REGULATION
LABOR REGULATIONS
LACK OF INFORMATION
LACK OF KNOWLEDGE
LARGE ENTERPRISES
LARGE FIRMS
LAWS
LAWYER
LAWYERS
LEVEL OF EDUCATION
LIABILITY
LICENSING
LIMITED ACCESS
LOCAL FIRMS
LOW COST
LOW ENTRY BARRIERS
MARRIED WOMEN
MEDIUM ENTERPRISES
MICRO ENTERPRISES
MICROCREDIT
MICROFINANCE
MIGRATION
MUNICIPAL GOVERNMENTS
MUNICIPALITIES
NEW BUSINESS
NEW ENTRANTS
NONGOVERNMENTAL ORGANIZATION
OCCUPATION
OLDER WORKERS
PENALTIES
PENSION
PENSION FUND
PENSION FUNDS
PENSION RIGHTS
PENSION SYSTEM
PENSION SYSTEMS
PRIMARY SCHOOL
PRIVATE COSTS
PRIVATE EMPLOYMENT
PRIVATE FIRMS
PRIVATE INSTITUTIONS
PRIVATE SECTOR
PRIVATIZATIONS
PRODUCT MARKET
PRODUCT MARKET REGULATION
PRODUCT MARKETS
PRODUCTION PROCESS
PRODUCTIVE SECTOR
PRODUCTIVITY
PRODUCTIVITY GROWTH
PROFITABILITY
PROPERTY RIGHTS
PUBLIC AGENCIES
PUBLIC EDUCATION
PUBLIC EMPLOYMENT
PUBLIC GOODS
PUBLIC POLICY
PUBLIC SECTOR EMPLOYEES
PUBLIC SECTOR EMPLOYMENT
PUBLIC SERVICES
PURCHASES
RATES OF RETURN
REAL ESTATE
RECEIPTS
RED TAPE
REGISTRATION PROCESS
REGULATORY BURDEN
REGULATORY BURDENS
RETIRED
RETIREMENT
RETIREMENT PENSION
RURAL EMPLOYMENT
SALARIED EMPLOYMENT
SALARIED WORKERS
SALARIES
SAVINGS
SECONDARY EDUCATION
SELF-EMPLOYMENT
SIZE OF FIRM
SKILLED LABOR
SMALL BUSINESSES
SMALL ENTERPRISES
SMALL ENTREPRENEURS
SMALL FIRMS
SMALLER FIRMS
SUBSIDIARY
SUPPLIER
SUPPLY OF CREDIT
TAX ADMINISTRATION
TAX BURDEN
TAX COLLECTION
TAX RATES
TAX REGIME
TAX REGIMES
TAXATION
TECHNICAL ASSISTANCE
TOTAL COST
TOTAL EMPLOYMENT
TOTAL FACTOR PRODUCTIVITY
TRAINING SERVICES
TRANSACTION
TRANSPORT
UNEMPLOYED
URBAN AREAS
URBAN EMPLOYMENT
URBAN WORKERS
URBANIZATION
VULNERABLE GROUPS
WAGE
WORKER
YOUNG PEOPLE
World Bank
Increasing Formality and Productivity of Bolivian Firms
geographic_facet Latin America & Caribbean
South America
Latin America
Bolivia
relation World Bank Country Study
description Bolivia's informal sector is the largest in Latin America, by many definitions and measures. Bolivia's high informality rate has been blamed on many factors including the burden of regulation, the weakness of public institutions, and the lack of perceived benefits to being formal. The high level of informality has a number of negative implications related to for low productivity, low growth, and low quality of jobs. This study presents fresh qualitative and quantitative analyses to better understand the reasons why firms are informal and the impact of formalization on their profitability, in order to inform policy actions appropriate to the reality of Bolivia. The crucial finding of the analysis is that the impact of tax registration on profitability depends on firm size and the ability to issue tax receipts. The smallest and the largest firms in the sample have lower profits as a result of tax registration because their cost of formalizing exceeds benefits. Firms in the middle range (two to five employees) benefit from tax registration in large part due to increasing the customer base by issuing tax receipts. The study presents a set of prioritized policy implications for policy makers. In the short term, the first priority should be to increase the benefits of formalization through training, access to credit and markets, and business support. The second priority is to increase information on how to formalize and its benefits. In the medium term, the priority is to simplify formalization, regulatory, and taxation procedures and to reduce their costs. Increasing even-handed enforcement of taxation and regulation is also important but not a priority for micro and small firms. Measures to boost the productivity of micro and small firms in general will help overall economic growth, employment, and formalization.
format Publications & Research :: Publication
author World Bank
author_facet World Bank
author_sort World Bank
title Increasing Formality and Productivity of Bolivian Firms
title_short Increasing Formality and Productivity of Bolivian Firms
title_full Increasing Formality and Productivity of Bolivian Firms
title_fullStr Increasing Formality and Productivity of Bolivian Firms
title_full_unstemmed Increasing Formality and Productivity of Bolivian Firms
title_sort increasing formality and productivity of bolivian firms
publisher World Bank
publishDate 2012
url http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000333037_20090916013154
http://hdl.handle.net/10986/2675
_version_ 1764385799904690176
spelling okr-10986-26752021-04-23T14:02:03Z Increasing Formality and Productivity of Bolivian Firms World Bank ACCESS TO CAPITAL ACCESS TO CREDIT ACCESS TO FINANCE ACCESS TO FINANCIAL SERVICES ACCESS TO FOREIGN MARKETS ACCESS TO MARKET ADMINISTRATIVE BARRIERS ADVISORY SERVICES AGE OF RETIREMENT ANNUAL INCOME BALANCE SHEET BANK DEPOSIT BANKRUPTCY BANKS BARRIERS TO ENTRY BRANCH BRIBES BUSINESS ASSOCIATIONS BUSINESS DEVELOPMENT BUSINESS ENVIRONMENT BUSINESS SUPPORT BUSINESS TAXES CAPITAL REQUIREMENT CHAMBER OF COMMERCE COLLATERAL COMPANY CONTRACT ENFORCEMENT CONTRIBUTION CONTRIBUTIONS CORRUPTION CREDIT BUREAUS CURRENCY CUSTOMER BASE DEBT DEBT RELIEF DEDUCTIBLE DEMOGRAPHIC GROUPS DEVELOPMENT BANK DISCRIMINATION DOMESTIC MARKET DOMESTIC WORKERS EARNINGS ECONOMIC COOPERATION ECONOMIC GROWTH ECONOMIC REFORMS ECONOMIES OF SCALE EDUCATION LEVELS EMPLOYEE EMPLOYERS EMPLOYMENT ENFORCEABILITY OF CONTRACTS ENTREPRENEUR ENTREPRENEURS EXPANSION EXTERNALITIES FACILITATION FAMILIES FAMILY INCOME FAMILY MEMBERS FAMILY RESPONSIBILITIES FEMALE ENTREPRENEURS FINANCIAL ENVIRONMENT FINANCIAL INSTRUMENTS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL SUPPORT FIRM LEVEL FIRM SIZE FIRMS FISCAL RESOURCES FORMAL ECONOMY FORMAL LABOR MARKET FUND MANAGEMENT GENDER GENDER DIFFERENCES GROUPS OF PEOPLE HEALTH INSURANCE HOUSEHOLD SURVEYS HOUSEHOLDS HUMAN CAPITAL INCOME DISTRIBUTION INCOME INEQUALITY INCOME TAX INCOMES INDUSTRY CHARACTERISTICS INEQUALITY INFORMAL EMPLOYMENT INFORMAL SECTOR INFORMAL WORKERS INPUT PRICES INSURANCE INTEREST RATES INTERNATIONAL BANK JOB OPPORTUNITIES JOBS LABOR CONTRACT LABOR CONTRACTS LABOR FORCE LABOR LAWS LABOR MARKET LABOR MARKET SEGMENTATION LABOR ORGANIZATION LABOR REGULATION LABOR REGULATIONS LACK OF INFORMATION LACK OF KNOWLEDGE LARGE ENTERPRISES LARGE FIRMS LAWS LAWYER LAWYERS LEVEL OF EDUCATION LIABILITY LICENSING LIMITED ACCESS LOCAL FIRMS LOW COST LOW ENTRY BARRIERS MARRIED WOMEN MEDIUM ENTERPRISES MICRO ENTERPRISES MICROCREDIT MICROFINANCE MIGRATION MUNICIPAL GOVERNMENTS MUNICIPALITIES NEW BUSINESS NEW ENTRANTS NONGOVERNMENTAL ORGANIZATION OCCUPATION OLDER WORKERS PENALTIES PENSION PENSION FUND PENSION FUNDS PENSION RIGHTS PENSION SYSTEM PENSION SYSTEMS PRIMARY SCHOOL PRIVATE COSTS PRIVATE EMPLOYMENT PRIVATE FIRMS PRIVATE INSTITUTIONS PRIVATE SECTOR PRIVATIZATIONS PRODUCT MARKET PRODUCT MARKET REGULATION PRODUCT MARKETS PRODUCTION PROCESS PRODUCTIVE SECTOR PRODUCTIVITY PRODUCTIVITY GROWTH PROFITABILITY PROPERTY RIGHTS PUBLIC AGENCIES PUBLIC EDUCATION PUBLIC EMPLOYMENT PUBLIC GOODS PUBLIC POLICY PUBLIC SECTOR EMPLOYEES PUBLIC SECTOR EMPLOYMENT PUBLIC SERVICES PURCHASES RATES OF RETURN REAL ESTATE RECEIPTS RED TAPE REGISTRATION PROCESS REGULATORY BURDEN REGULATORY BURDENS RETIRED RETIREMENT RETIREMENT PENSION RURAL EMPLOYMENT SALARIED EMPLOYMENT SALARIED WORKERS SALARIES SAVINGS SECONDARY EDUCATION SELF-EMPLOYMENT SIZE OF FIRM SKILLED LABOR SMALL BUSINESSES SMALL ENTERPRISES SMALL ENTREPRENEURS SMALL FIRMS SMALLER FIRMS SUBSIDIARY SUPPLIER SUPPLY OF CREDIT TAX ADMINISTRATION TAX BURDEN TAX COLLECTION TAX RATES TAX REGIME TAX REGIMES TAXATION TECHNICAL ASSISTANCE TOTAL COST TOTAL EMPLOYMENT TOTAL FACTOR PRODUCTIVITY TRAINING SERVICES TRANSACTION TRANSPORT UNEMPLOYED URBAN AREAS URBAN EMPLOYMENT URBAN WORKERS URBANIZATION VULNERABLE GROUPS WAGE WORKER YOUNG PEOPLE Bolivia's informal sector is the largest in Latin America, by many definitions and measures. Bolivia's high informality rate has been blamed on many factors including the burden of regulation, the weakness of public institutions, and the lack of perceived benefits to being formal. The high level of informality has a number of negative implications related to for low productivity, low growth, and low quality of jobs. This study presents fresh qualitative and quantitative analyses to better understand the reasons why firms are informal and the impact of formalization on their profitability, in order to inform policy actions appropriate to the reality of Bolivia. The crucial finding of the analysis is that the impact of tax registration on profitability depends on firm size and the ability to issue tax receipts. The smallest and the largest firms in the sample have lower profits as a result of tax registration because their cost of formalizing exceeds benefits. Firms in the middle range (two to five employees) benefit from tax registration in large part due to increasing the customer base by issuing tax receipts. The study presents a set of prioritized policy implications for policy makers. In the short term, the first priority should be to increase the benefits of formalization through training, access to credit and markets, and business support. The second priority is to increase information on how to formalize and its benefits. In the medium term, the priority is to simplify formalization, regulatory, and taxation procedures and to reduce their costs. Increasing even-handed enforcement of taxation and regulation is also important but not a priority for micro and small firms. Measures to boost the productivity of micro and small firms in general will help overall economic growth, employment, and formalization. 2012-03-19T10:04:34Z 2012-03-19T10:04:34Z 2009-06-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000333037_20090916013154 978-0-8213-8023-9 http://hdl.handle.net/10986/2675 English World Bank Country Study CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank Publications & Research :: Publication Publications & Research :: Publication Latin America & Caribbean South America Latin America Bolivia