Title: Who Fears Competition From Informal Firms ? Evidence From Latin America
Abstract: No AccessPolicy Research Working Papers22 Jun 2013Who Fears Competition From Informal Firms ? Evidence From Latin AmericaAuthors/Editors: Alvaro S. Gonzalez, Francesca LamannaAlvaro S. Gonzalez, Francesca Lamannahttps://doi.org/10.1596/1813-9450-4316SectionsAboutPDF (1.2 MB) ToolsAdd to favoritesDownload CitationsTrack Citations ShareFacebookTwitterLinked In Abstract:This paper investigates who is most affected by informal competition and how regulation and enforcement affect the extent and nature of this competition. Using newly-collected enterprise data for 6,466 manufacturing formal firms across 14 countries in Latin America, the authors show that formal firms affected by head-to-head competition with informal firms largely resemble them. They are small credit constrained, underutilize their productive capacity, serve smaller customers, and are in markets with low entry costs. In countries where the government is effective and business regulations onerous, formal firms in industries characterized by low costs to entry feel the sting of informal competition more than in other business environments. Finally, the analysis finds that in an economy with relatively onerous tax regulations and a government that poorly enforces its tax code, the percentage of firms adversely affected by informal competition will be reduced from 38.8 to 37.7 percent when the government increases enforcement to cover all firms. Previous bookNext book FiguresreferencesRecommendeddetailsCited byInnovations as a Response to Shadow Economy: Evidence from Privately Held FirmsJournal of Industry, Competition and Trade, Vol.22, No.3-420 June 2022Uncovering commercial activity in informal citiesRoyal Society Open Science, Vol.9, No.112 November 2022Does competition from informal firms hurt job creation by formal manufacturing SMEs in developing and emerging countries? Evidence using firm-level survey dataSmall Business Economics, Vol.3415 August 2022Entrepreneurship and economic growth in emerging markets: An empirical analysisActa Oeconomica, Vol.72, No.1Informal competition and firm performance: Impacts on input‐ versus output performanceManagerial and Decision Economics, Vol.43, No.28 June 2021Formalizing small and women-led businesses in West Africa: major approaches and their limitationsJournal of Small Business & Entrepreneurship, Vol.33, No.419 February 2020Institutional environment, competencies and firm export performance: A study of the emerging countryCorporate Ownership and Control, Vol.18, No.212 February 2021Casting a shadow: Productivity of formal firms and informalityReview of Development Economics, Vol.24, No.417 July 2020Reaching up and reaching out: The impact of competition on firms' productivity and export decisionsPacific Economic Review, Vol.25, No.125 November 2018Who is Afraid of Informal Competition? The Role of Finance for Firms in Developing and Emerging EconomiesThe European Journal of Development Research, Vol.31, No.41 March 2019How Does Competition By Informal Firms Affect The Innovation In Formal Firms?International Studies of Management & Organization, Vol.49, No.213 May 2019Gender difference and informal competition: evidence from IndiaJournal of Small Business and Enterprise Development, Vol.26, No.1How does home country bribery affect firms' foreign market focus?Multinational Business Review, Vol.26, No.3The Interplay Between Formal and Informal Firms and Its Implications on Jobs in Francophone Africa: Case Studies of Senegal and Benin19 April 2017Firm Performance and Obstacles to Doing Business in the Western Balkans: Evidence from the BEEPSSSRN Electronic JournalShadow Economy in the Business and Entrepreneurial SectorsDeterminants of Initial Technology Adoption and Intensification: Evidence from Latin America and the CaribbeanSSRN Electronic Journal View Published: November 2007 Copyright & Permissions Related RegionsLatin America & CaribbeanRelated CountriesBoliviaEl SalvadorGuatemalaParaguayUruguayRelated TopicsEnvironment KeywordsCOMPLIANCE COSTSCOST SAVINGSECONOMIC DEVELOPMENTECONOMIC GROWTHENVIRONMENTSFIXED COSTSMETALSNATIONAL INCOMEPRODUCTIVITY GROWTHTAX RATES PDF DownloadLoading ...