Jun 11, 2014

Informality and Development

That is from a revised version of this paper by Rafael La Porta and Andrei Shleifer. From the conclusions:
There is accumulating evidence that growth that kills the informal sector is driven by the formation and expansion of formal firms managed by educated entrepreneurs. Uneducated entrepreneurs – in both informal and formal sectors – generally run small and inefficient firms; educated entrepreneurs and managers run larger and more efficient firms. p. 17.
It is possible that what is being measured in some countries is not rally entrepreneurship but the informal economy, or in other terms, what comes as a result of low economic growth.  
HT: Jacob A. Jordaan.

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