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Informality and Micro Entrepreneurs in Developing Countries: Findings from Delhi, India

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  • Kurosaki, Takashi

Abstract

As a case study of the urban informal sector in developing countries, this paper examines small and micro entrepreneurs in Delhi, India, using a primary dataset collected by the author. Out of 506 sample entrepreneurs in the manufacturing and service sectors, 46% were unregistered with the government. The descriptive analysis comparing registered (less informal) and unregistered (more informal) enterprises reveals the followings. Unregistered firms were smaller and headed by less educated entrepreneurs than registered ones. Unregistered firms performed better than registered ones in terms of profit rates. Their disadvantage in fixed capital investment is compensated by active innovation in process and marketing and better ability to cope with the police and administration. In the micro and small enterprises sector in Delhi, registered and unregistered firms coexist with different kinds of superiority.

Suggested Citation

  • Kurosaki, Takashi, 2015. "Informality and Micro Entrepreneurs in Developing Countries: Findings from Delhi, India," Economic Review, Hitotsubashi University, vol. 66(4), pages 301-320, October.
    • Handle: RePEc:hit:ecorev:v:66:y:2015:i:4:p:301-320
    DOI: 10.15057/27559
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    More about this item

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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