What is it about?

The aim of this paper is to evaluate the contrasting explanations for the cross-national variations in the commonality of informal sector entrepreneurship. These variously view such work as: a result of economic under-development (modernisation thesis); driven by high taxes, corruption and state interference which lead them to exit the formal economy (neo-liberal thesis), or a product of inadequate state intervention to protect workers from poverty (political economy thesis).

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Why is it important?

Analysing International Labour Organisation data on the proportion of the non-agricultural workforce engaged in informal sector entrepreneurship in 38 emerging economies, and data on the economic and social conditions deemed important in each explanation, a tentative call is made to reject the neo-liberal explanation and to synthesise the modernisation and political economy perspectives.

Perspectives

The outcome is a new “neo-modernisation” explanation that associates greater levels of informal sector entrepreneurship with economic under-development and inadequate state intervention to protect workers from poverty.

Professor Colin C Williams
University of Sheffield

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This page is a summary of: Explaining cross-national variations in the commonality of informal sector entrepreneurship: an exploratory analysis of 38 emerging economies, Journal of Small Business & Entrepreneurship, March 2014, Taylor & Francis, DOI: 10.1080/08276331.2015.1004959.
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