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Can e-government limit the scope of the informal economy?

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  • Elbahnasawy, Nasr G.

Abstract

The study explores the potential association between e-government and the informal economy. We find that e-government is a powerful instrument to lessen informal economic activities, which is robust to different estimation techniques, subsamples of developing countries, and a wide array of controls and alternative measures. The long-run effect of e-government on lessening informal production is substantially higher than the short-run effect. The strength of e-government appears to be in its entirety, although we find evidence of more influence driven by the development of telecommunications infrastructure. Interaction models show that e-government reinforces the effect of various factors on informal economy reduction. Panel Granger causality tests indicate that causality between e-government and shadow economy is bidirectional.

Suggested Citation

  • Elbahnasawy, Nasr G., 2021. "Can e-government limit the scope of the informal economy?," World Development, Elsevier, vol. 139(C).
    • Handle: RePEc:eee:wdevel:v:139:y:2021:i:c:s0305750x2030468x
    DOI: 10.1016/j.worlddev.2020.105341
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    2. Emmanuel U. Haruna, 2023. "The multidimensional effect of financial development on the shadow economy in Africa: A dynamic panel analysis approach," International Economics and Economic Policy, Springer, vol. 20(2), pages 327-365, May.
    3. Du, Jiayue & Gao, Haoyu & Wen, Huiyu & Ye, Yanyi, 2024. "Public data acces and stock price synchronicity: Evidence from China," Economic Modelling, Elsevier, vol. 130(C).
    4. Sever, Can & Yücel, Emekcan, 2024. "Does informality hinder financial development convergence?," Economic Systems, Elsevier, vol. 48(2).
    5. BRICI Iulia & ACHIM Monica Violeta, 2023. "Does The Digitalization Of Public Services Influence Economic And Financial Crime?," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 18(2), pages 67-85, August.
    6. Xu, Chang & Jin, Long, 2024. "Effects of government digitalization on firm investment efficiency: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 819-834.
    7. Kpognon, Koffi D., 2022. "Fostering domestic resources mobilization in sub-Saharan Africa: Linking natural resources and ICT infrastructure to the size of informal economy," Resources Policy, Elsevier, vol. 77(C).
    8. Sultana, Nahid & Rahman, Mohammad Mafizur & Murad, S.M. Woahid, 2024. "Asymmetric role of the informal sector on economic growth: Empirical investigation on a developing country," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 96-107.
    9. Nguyen, Canh Phuc, 2022. "Does economic complexity matter for the shadow economy?," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 210-227.
    10. Emmanuel Umoru Haruna & Usman Alhassan, 2022. "Does digitalization limit the proliferation of the shadow economy in African countries? An in‐depth panel analysis," African Development Review, African Development Bank, vol. 34(S1), pages 34-62, July.
    11. Salinas, Aldo & Ortiz, Cristian & Changoluisa, Javier & Muffatto, Moreno, 2023. "Testing three views about the determinants of informal economy: New evidence at global level and by country groups using the CS-ARDL approach," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 438-455.
    12. Sacchi Agnese & Santolini Raffaella & Schneider Friedrich, 2022. "On the effects of e-participation on shadow economy: a worldwide empirical analysis," German Economic Review, De Gruyter, vol. 23(3), pages 463-491, August.
    13. Erumban, Abdul A., 2024. "Informality and aggregate labor productivity growth: Does ICT moderate the relationship?," Telecommunications Policy, Elsevier, vol. 48(1).
    14. João Martins & Linda Veiga & Bruno Fernandes, 2021. "Does electronic government deter corruption? Evidence from across the world," NIPE Working Papers 02/2021, NIPE - Universidade do Minho.
    15. Estevão, João & Lopes, José Dias & Penela, Daniela, 2022. "The importance of the business environment for the informal economy: Evidence from the Doing Business ranking," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    16. Linghu, Jingying & Guo, Chengcheng, 2024. "Digital government: The new player in improving mining companies’ environmental performance?," Resources Policy, Elsevier, vol. 93(C).
    17. Martins, João & Veiga, Linda Gonçalves, 2022. "Digital government as a business facilitator," Information Economics and Policy, Elsevier, vol. 60(C).

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    More about this item

    Keywords

    E-government; Informal economy; Shadow economy;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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