Tag Archives: informal sector

What Good is Economics as a Science, if Not Based on Field Studies?

Reem_Abdel_Halim

By Dr. Reem Abdel Haliem

This post originally appeared in Arabic on the CIPE Arabia blog.

I currently work with CIPE partner the Federation of Economic Development Associations (FEDA) on a study to bring Egypt’s informal sector into the formal one. Since there are number of studies on this topic, FEDA chose to focus its study on producing a guide – more of a roadmap – that outlines practical steps to facilitating the informal sector’s formalization.

A series of focus groups based on a robust methodology was a must to achieve sound findings and to draw evidence-based conclusions. Through those focus groups, we formed a logical and comprehensive understanding of the problems that the formal sector faces, so to grasp the disincentives that make the idea of formalizing unattractive to the informal sector. Formal sector operators face these problems almost on a daily basis and with a variety of local and national government authorities. This understanding could not be reached through a typical literature review.

Through my experience in the focus groups and with drafting this roadmap, it became clear to me that with the right field research tools, grasping the on-the-ground reality makes policy recommendations more accurate and relevant to addressing the stakeholders’ needs and, as such, makes these recommendations of higher value to the state and the general public.

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CIPE Arabia: Expert Interview with Dr. Ahmed Fikry Abdel Wahab

Ahmed_Fikry_Abdel_WahabThis post originally appeared at CIPE-Arabia in Arabic.

In a brief interview with CIPE-Arabia, Dr. Ahmed Fikry Abdel Wahab shared some of his thoughts on the pervasive informal sector in Egypt.  His concerns center on the potentially negative consequences a large informal sector has on competitiveness, market values, and norms and quality of products.  Abdel Wahab explained that while one might not necessarily describe the competition between the formal and informal sector as dishonest, it could easily be described as unfair.

Unlike informal businesses, formal enterprises have higher costs, which are reflected in the pricing of their products.  In order to be able to compete, some enterprises compromise on the quality of their products thereby creating negative impacts on the industry and the overall market, as well as undermining consumer rights and the competiveness of the Egyptian products in the global market.  He acknowledged that informal businesses suffer from marginalization, lack of access to credit, and meager opportunities for training, advancement and business relations. Abdel Wahab also noted problems faced by informal enterprises in terms of limited market size, attributing this issue to the quality of their products, which are often not fit for export because they do not meet the minimal quality standards.  As a result, all these factors create unfair conditions with consequences for both sectors as they generate unhealthy competition, negatively impact the market, and undermine the foundations of industry and its values and norms.

Following is a summary of the main points raised by Abdel Wahab during the discussion.

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Democracy that Delivers Podcast #19: Former CIPE Executive Director John D. Sullivan on the Role of the Private Sector in Democracy and CIPE’s Evolution

Podcast hosts Julie Johnson and Ken Jaques with guest John D. Sullivan right).

Podcast hosts Julie Johnson and Ken Jaques with guest John D. Sullivan (right).

Former Executive Director of CIPE John D. Sullivan discusses how the private sector and a free market economy are essential for a thriving democracy and the role CIPE plays working with private sector partners to strengthen democratic institutions around the world. Sullivan recalls what led to the establishment of the National Endowment for Democracy and its core institutes, including CIPE, and how it was decided that the private sector needed to be represented in the “democracy program” that began under former President Ronald Reagan. Sullivan also discusses the important relationship CIPE developed with the Russian Chamber of Commerce, and the impact of the work of Peruvian economist Hernando de Soto on CIPE’s programs.

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Global Enterprise Registration: A Window on Starting a Business

global e registration

In many countries the procedures to register a business can be confusing, costly, and discouraging. Although the Doing Business index has recorded increased efficiencies over the years, registering a business can still be a daunting process, especially for smaller firms and firms located outside major cities. In Brazilian cities, for example, it takes on average 129 days to start a business, according to a study by Endeavor.

The new site Global Enterprise Registration aims to bring greater awareness and transparency to registration processes and to simplify the registration experience for entrepreneurs. A project of UNCTAD, Global Enterprise Registration combines access to information portals, which provide instructions and forms, and online single windows, which consolidate applications and payments for mandatory registrations. In addition, the site’s user feedback tool shows where governments can improve the user experience.

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Small Business in Egypt: the Heavy Burden of Following the Rules

Sayed Diab makes his living providing sound systems and digital services for events like this CIPE discussion. (Photo: CIPE Egypt)

By Ahmed ElSawy

This post originally appeared in Arabic on the CIPE Arabia blog.

Sayed Diab spent 26 years of his life working as a technician supplying organizations with sound systems and related digital services for their events and conferences. Six years ago he started his own business in this field and has since made his living providing his services to CIPE, other NGOs, business associations, and think tanks in Cairo, Egypt.

Diab recently sat down for an interview about his experiences running his own business in Egypt and what he has learned as a small business owner from the many CIPE events and discussions he has worked on.

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Fighting Informality in Albania

Street_shop_Albania

With reports showing a steady increase of the level of informality in Albania and recent World Bank reports that Albania’s informal sector is estimated to make up as much as 40 to 50 percent of the country’s economy, the issue of informality is integral to Albania’s development. Now especially, as the European Union has granted Albania conditional EU candidate status. The gesture indicates both a challenge and an opportunity – formal accession negotiations will not begin until Albania addresses several key priorities, particularly reforming the country’s finances and reducing corruption.

Over the last decade, the number of businesses around the world operating in the shadows has grown. Men and women who stand at cash registers and add up their profits at the end of the day are increasingly doing so outside the jurisdiction of the state. Profits derived from the informal economy represent a significant share of the global economy, both in terms of currency and workforce labor, accounting for between 25 and 40 percent of annual output.

In developing countries with large informal sectors, thousands of entrepreneurs are locked out of the formal legal economy by a maze of regulations, burdensome procedures, high tax rates, and other barriers. These entrepreneurs can neither thrive personally nor contribute to their economy. Further, these entrepreneurs, and their employees alike, lack legal protection, access to credit, and have no legal ground to push back against corruption.

Thus the concerted effort to reduce informality has taken a front and center role in Albania. Recognizing how the informal sector is a breeding ground for corruption, one of the country’s leading think tanks, the Albanian Center for Economic Research (ACER), began working on the issue with a group of reform-minded business organizations.

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Property Rights, the Rule of Law, and Indigenous Rights

The United Nations chose “Ensuring indigenous peoples’ health and well-being” as the theme for this year’s International Day of the World’s Indigenous Peoples on August 9. (Photo: CIPE Staff)

The United Nations chose “Ensuring indigenous peoples’ health and well-being” as the theme for this year’s International Day of the World’s Indigenous Peoples on August 9. (Photo: CIPE Staff)

What do property rights and rule of law have to do with the rights, health, and well-being of indigenous people? Quite a lot.

The worldwide indigenous population is estimated to be between 220 million and 350 million, spread across all inhabitable stretches of the earth. Land and the natural resources provided by the earth are central to many indigenous cultures and beliefs. The land provides identity, nourishment, home, and often very significant religious or spiritual significance.

Despite this central importance of land, indigenous peoples have historically been deprived of their rights to land by colonization – both political and economic. Communal understanding of ownership and the absence of the concept of land ownership left the door open to such abuses. However, as indigenous rights are becoming more widely recognized and celebrated, many countries are taking important steps to ensure respect for these rights, in order to improve the opportunities and well-being of their indigenous citizens.

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