Informal-Formal Linkages and Informal Enterprise Performance in Urban West Africa
Employing a unique dataset that covers almost 6000 informal enterprises from six West African urban centers, this paper examines the backward and forward linkages of these enterprises to the formal sector. Authors first provide a descriptive analys...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/252061468155715434/Informal-formal-linkages-and-informal-enterprise-performance-in-urban-West-Africa http://hdl.handle.net/10986/26787 |
| Summary: | Employing a unique dataset that covers
almost 6000 informal enterprises from six West African urban
centers, this paper examines the backward and forward
linkages of these enterprises to the formal sector. Authors
first provide a descriptive analysis of the existing
formal-informal linkages. It turns out that formal backward
linkages are much more prevalent than formal forward
linkages, and that linkages vary with the degree of
informality, occurring less frequently if firms have no ties
to the formal sector at all or low capital stocks. In the
second step, authors employ a Probit approach to identify
major factors associated with the observed backward
linkages. The Probit analysis corroborates the importance of
the degree of informality for the existence of linkages and
shows various enterprise characteristics to be significant
determinants as well. Finally, authors analyze whether
backward linkages matter for enterprise performance using
both Ordinary Least Squares (OLS) and four estimations.
Authors find a positive and robust impact of backward
linkages, whereas the degree of informality of the
enterprises in our sample seems to affect firm performance
only indirectly through their linkages to the formal sector. |
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