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Informal Competition, Firms Productivity and Policy Reforms in Egypt

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  • Nesma Ali

    (Universiti Paris-Est, France.)

  • Boris Najman

Abstract

This paper investigates the effect of the competition stemmed from informal firms on formal firms productivity in Egypt. Using the World Banks Enterprise Surveys, we update the two-step methodology of Guiso et al. (2004) to build a regional indicator of informal competition intensity. Our estimation reports a positive effect of this indicator on formal firms productivity that remains valid to the instrumental variable approach and to multiple robustness check. This result is subject to factors accounting for the characteristics of the firm and is segmented by formal firms size. We also identify informal firms cost advantage as the main channel through which this effect occurs. Our results call on the importance of tax reforms and effective regulation to be implemented in Egypt.

Suggested Citation

  • Nesma Ali & Boris Najman, 2016. "Informal Competition, Firms Productivity and Policy Reforms in Egypt," Working Papers 1025, Economic Research Forum, revised Jul 2016.
    • Handle: RePEc:erg:wpaper:1025
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    References listed on IDEAS

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