Do Informal Firms Want to Formalize and Does It Help Them If They Do?

Mel, Suresh de ; McKenzie, David ; Woodruff, Christopher

World Bank, Washington, DC

关键词: ADVERTISING;    BANK ACCOUNT;    BANK POLICY;    BUSINESSES;    DEVELOPING COUNTRIES;   

RP-ID  :  68268

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Most firms in developing countries areinformal. Does it make sense for them to formalize? Hernandode Soto has famously argued that informal firms would liketo be formal, only that burden some entry barriers preventthem. The result, spurred by the efforts of doing businessand investment climate reform efforts has been effortsaround the world to streamline the entry process. However, acountervailing view of informality views informal firmowners as rationally weighing up the costs and benefits offormalizing, and rationally choosing only to become formalwhen they grow large enough to benefit from the formalinstitutions of society. In this view, smaller, lessproductive firms don't see any gain to formalizing, sochoose not to.