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On informality and productivity of micro and small enterprises: evidence from MENA countries

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  • Rana Hendy
  • Chahir Zaki

Abstract

The objective of this paper is twofold. First, it aims to examine the impact of informality on productivity in the Middle East and North Africa (MENA) in order to identify existing barriers to formality. Second, it pinpoints factors that boost productivity of micro and small enterprises (MSEs). Using firm-level micro data from the Egyptian and Turkish MSEs surveys, we first find that firm's age, entrepreneur's gender, age and education have a significant impact on the probability of belonging to the informal sector. In addition, we find a negative effect of informality on productivity in both Egypt and Turkey. While this result is sensitive to the estimation method for the Egyptian case, it remains robust for the Turkish one. Consequently, there is a clear and significant productivity differential between formal and informal firms in Turkey, but not in Egypt.

Suggested Citation

  • Rana Hendy & Chahir Zaki, 2013. "On informality and productivity of micro and small enterprises: evidence from MENA countries," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 19(4), pages 438-470.
    • Handle: RePEc:ids:ijesbu:v:19:y:2013:i:4:p:438-470
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    Citations

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    Cited by:

    1. Fatma El-Hamidi & Cem Baslevent, 2013. "Micro and Small Enterprises (MSEs) in Urban Economies: A Comparative Study of Egypt and Turkey at the Province Level," Working Papers 761, Economic Research Forum, revised Jun 2013.
    2. Abeer Elshennawy & Dirk Willenbockel, 2014. "Trade Liberalization and the Costs and Benefits of Informality an Intertemporal General Equilibrium Model for Egypt," Working Papers 888, Economic Research Forum, revised Dec 2014.
    3. Antonio Báez-Morales, 2015. "“Differences in efficiency between Formal and Informal Micro Firms in Mexico”," IREA Working Papers 201516, University of Barcelona, Research Institute of Applied Economics, revised Jun 2015.
    4. Tansel, Aysit & Ozdemir, Zeynel / A., 2014. "Determinants of Transitions across Formal/Informal sectors in Egypt," MPRA Paper 61183, University Library of Munich, Germany.
    5. Seamus Murphy & Diksha Arora & Froukje Kruijssen & Cynthia McDougall & Paula Kantor, 2020. "Gender-based market constraints to informal fish retailing: Evidence from analysis of variance and linear regression," PLOS ONE, Public Library of Science, vol. 15(3), pages 1-16, March.
    6. Eunice Maria M. N. Dos Santos & João J. Ferreira, 2017. "Analyzing Informal Entrepreneurship: A Bibliometric Survey," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 22(04), pages 1-20, December.
    7. Ali Rashed & Maia Sieverding, 2014. "Micro and Small Household Enterprises in Egypt: Potential for Growth and Employment Generation," Working Papers 831, Economic Research Forum, revised May 2014.
    8. Nesma Ali & Boris Najman, 2016. "Informal Competition, Firms Productivity and Policy Reforms in Egypt," Working Papers 1025, Economic Research Forum, revised Jul 2016.

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