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Integrating the Informal Sector into the Formal Economy: Some Policy Implications

Year 2006, Volume: 3 Issue: 3, - , 01.06.2006

Abstract

This study presents a survey of studies on informal sector with special emphasis on country experiences on integration of informal economic activities. Informal sector is a controversial topic since for many scholars, informal economic activities distort economy while according to others, it may contribute to economic growth. Yet, there is a growing consensus on the necessity to promote the informal sector on account of its importance with respect to employment and poverty issues alike. The previous experiences on integrating informal sector into the formal economy show that formalization schemes are not guaranteed from the viewpoint of the organized sectors, but rather by the benefits that access to formality may bring in fostering the development of informal activities and the relevant parties. Yet, oversight campaigns targeting informal activities are often overrated by the need to widen the tax base, cut down on tax evasion and punish illegality. In the Turkish economy context, the low levels of tax revenues despite high tax rates suggest that Turkish economy is on the right side of the Laffer curve. Therefore policymakers should seek ways to extend the tax base.

References

  • Aguilar, E. (1995); “El Sindicato Nos Tiene con Vida Aqui: Occupational Organization, Political Behavior, and the Informal Sector in Costa Rica”, Dissertation, University of North Carolina, Chapel Hill.
  • Bromley, R. (1994); ” Informality: De Soto Style: From Concept to Policy”, in Rakowski C. (ed.): Contrapunto: The Informal Sector Debate in Latin America, Albany: State University of New York Press.
  • Chen, M. A. (2001); “Women in the Informal Sector: A Global Picture, the Global Movement”, SAIS Review, Vol: XXI No: 1 71-82.
  • De Soto, H. (1986); “El Otro Sendero. La Revolucion Informal” Lima: Instituto Libertad y Democracia.
  • (1995); “Por que Importa la Economia Informal?”, in Tokman, V. E. (ed.): El Sector Informal en America Latina, Dos Decados de Analisis, Mexico, Consejo Nacional para la Cultura y las Artes.
  • Gümüş, T. (2000); “Dışsallık ve Kayıtdışı Ekonomi Kavramına İlişkin Bir Değerlendirme”, Gazi Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, Vol: 2 No: 3 63-70.
  • Hart, K. (1973); “Informal Income Opportunities and Urban Employment in Ghana”, Journal of Modern African Studies, Vol: 11 No: 1 61-89.
  • http://www.house.gov/
  • Ilgın, Y. (2002); “Kayıtdışı Ekonomiyi Tahmin Yöntemleri ve Türkiye’de Durum”, DPT Planlama Dergisi, Special Issue 145-55.
  • ILO (1972); “Employment, Income and Equality. A Strategy for Increasing Productive Employment in Kenya”, Geneva: ILO.
  • (1991); “Dilemma of the Informal Sector”, report of the Director General presented at the 78th International Labor Conference.
  • (1997); “News Latin America and the Caribbean, 1997”, Labor Overview, No: 4, Lima, ILO Regional Office.
  • (1999); “News Latin America and the Caribbean, 1999”, Labor Overview, No: 64, Lima, ILO Regional Office.
  • ITC (2003a); “In India, Integrating the Informal Sector into the Global Economy”, ITC, Iss: 4, International Trade Centre.
  • (2003b); “In South Africa, Crafts Revival Boosts Exports”, ITC, Iss: 4, International Trade Centre.
  • (2003c); “Women’s Business Association Encourages Exporters in Cameroon”, ITC, Iss: 4, International Trade Centre.
  • (2003d); “Nepalese Businesswoman Assists New Exporters”, ITC, Iss: 4, International Trade Centre.
  • Lindbeck, A. (1983); “Budget Expansion and Cost Inflation”, American Economic Review, Vol: 73 No: 2 285-90.
  • McKean, C.S. (1994); “Training and Technical Assistance for Small and Microenterprise: A Discussion of Their Effectiveness, in Rakowski”, C. (ed.): Contrapunto: The Informal Sector Debate in Latin America. Albany: State University of New York Press.
  • Marsden, K. (1983); “Links Between Taxes and Economic Growth: Some Empirical Evidence”, World Bank Working Paper No: 605.
  • Mavral, Ü. (2001); “Karapara Kayıtdışı Ekonomi İlişkisi ve Türkiye’ye Yansımaları”, Vergi Denetmenleri Derneği, Ankara.
  • Moser, C. O.N. (1994); “The Informal Sector Debate, Part I, 1970-1983”, in Rakowski, C. (ed.): Contrapunto: The Informal Sector Debate in Latin America. Albany: State University of New York Press.
  • Mundell, R. A. (1971); “The Dollar and The Policy Mix”, Princeton Essays in International Finance, Princeton University.
  • OECD (2004); Revenue Statistics 1965-2003, Paris, OECD.
  • Otero, M. (1994); “The Role of Governments and Private Institutions in Addressing the Informal Sector in Latin America”, in Rakowski, C. (ed.): Contrapunto: The Informal Sector Debate in Latin America. Albany: State University of New York Press.
  • Öğünç, F and G. Yılmaz. (2000); “Estimating the Underground Economy in Turkey”, CBRT Research Department Discussion Paper No: 43.
  • Önder, İ. (2001); “Kayıtdışı Ekonomi ve Vergileme”, İ.Ü. Siyasal Bilgiler Fakültesi Dergisi, No: 23-24.
  • Özsoylu, A. F. (1998); ”2000’li Yıllara Doğru Türkiye’nin Önde Gelen Sorunlarına Yaklaşımlar”, Türkiye Genç İşadamları Derneği, İstanbul.
  • Sarılı, M.A. (2002); “Türkiye’de Kayıt Dışı Ekonominin Boyutları, Nedenleri, Etkileri ve Alınması Gereken Tedbirler”, Bankacılar Dergisi, No: 41 32-50.
  • Portes, A., M. Castells, L. Benton. (1989); “The Informal Economy: Studies in Advanced and Less-Developed Countries”, Baltimore and London, The Johns Hopkins University Press.
  • Portes, A. (1996); “The Informal Economy, in Pozo”, S. (ed.): Exploring the Underground Economy: Studies of Illegal and Unreported Activity, Michigan: W.E. Upjohn, Institute for Employment Research.
  • Pozo, S., (ed.) (1996); “Exploring the Underground Economy: Studies of Illegal and Unreported Activity”, Michigan: W.E. Upjohn, Institute for Employment Research.
  • Rakowski, C., (ed.) (1994) “Contrapunto: The Informal Sector Debate in Latin America” Albany: State University of New York Press.
  • Revilla, A. (1998); “La Modernizacion del Sector Informal y las Cargas Tributarias y Administrativas a las Empresas n el Peru”, ILO Working Paper No: 92.
  • Reynolds, A. (1985); “Some International Comparisons of Supply-Side Tax Policy”, Acto Journal, Vol: 5 No: 2 543-69.
  • Tokman, V.E. (1995); “Las Relaciones Entre Los Sectores Formal e Informal. Una Exploracion sobre su Naturalez”, in Tokman, V.E. (ed.): El Sector Informal en America Latina. Dos Decades de Analisis, Mexico, Consejo Nacional para la Cultura y las Artes.
  • (2001); “Integrating the Informal Sector into the Modernization Process”, SAIS Review, Vol: XX I No: 1
  • Us, V. (2004); “Kayıtdışı Ekonomi Tahmini Yöntem Önerisi: Türkiye Örneği”, Turkish Economic Association Discussion Paper No: 17.

Integrating the Informal Sector into the Formal Economy: Some Policy Implications

Year 2006, Volume: 3 Issue: 3, - , 01.06.2006

Abstract

This study presents a survey of studies on informal sector with special emphasis on country experiences on integration of informal economic activities. Informal sector is a controversial topic since for many scholars, informal economic activities distort economy while according to others, it may contribute to economic growth. Yet, there is a growing consensus on the necessity to promote the informal sector on account of its importance with respect to employment and poverty issues alike. The previous experiences on integrating informal sector into the formal economy show that formalization schemes are not guaranteed from the viewpoint of the organized sectors, but rather by the benefits that access to formality may bring in fostering the development of informal activities and the relevant parties. Yet, oversight campaigns targeting informal activities are often overrated by the need to widen the tax base, cut down on tax evasion and punish illegality. In the Turkish economy context, the low levels of tax revenues despite high tax rates suggest that Turkish economy is on the right side of the Laffer curve. Therefore policymakers should seek ways to extend the tax base.

References

  • Aguilar, E. (1995); “El Sindicato Nos Tiene con Vida Aqui: Occupational Organization, Political Behavior, and the Informal Sector in Costa Rica”, Dissertation, University of North Carolina, Chapel Hill.
  • Bromley, R. (1994); ” Informality: De Soto Style: From Concept to Policy”, in Rakowski C. (ed.): Contrapunto: The Informal Sector Debate in Latin America, Albany: State University of New York Press.
  • Chen, M. A. (2001); “Women in the Informal Sector: A Global Picture, the Global Movement”, SAIS Review, Vol: XXI No: 1 71-82.
  • De Soto, H. (1986); “El Otro Sendero. La Revolucion Informal” Lima: Instituto Libertad y Democracia.
  • (1995); “Por que Importa la Economia Informal?”, in Tokman, V. E. (ed.): El Sector Informal en America Latina, Dos Decados de Analisis, Mexico, Consejo Nacional para la Cultura y las Artes.
  • Gümüş, T. (2000); “Dışsallık ve Kayıtdışı Ekonomi Kavramına İlişkin Bir Değerlendirme”, Gazi Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, Vol: 2 No: 3 63-70.
  • Hart, K. (1973); “Informal Income Opportunities and Urban Employment in Ghana”, Journal of Modern African Studies, Vol: 11 No: 1 61-89.
  • http://www.house.gov/
  • Ilgın, Y. (2002); “Kayıtdışı Ekonomiyi Tahmin Yöntemleri ve Türkiye’de Durum”, DPT Planlama Dergisi, Special Issue 145-55.
  • ILO (1972); “Employment, Income and Equality. A Strategy for Increasing Productive Employment in Kenya”, Geneva: ILO.
  • (1991); “Dilemma of the Informal Sector”, report of the Director General presented at the 78th International Labor Conference.
  • (1997); “News Latin America and the Caribbean, 1997”, Labor Overview, No: 4, Lima, ILO Regional Office.
  • (1999); “News Latin America and the Caribbean, 1999”, Labor Overview, No: 64, Lima, ILO Regional Office.
  • ITC (2003a); “In India, Integrating the Informal Sector into the Global Economy”, ITC, Iss: 4, International Trade Centre.
  • (2003b); “In South Africa, Crafts Revival Boosts Exports”, ITC, Iss: 4, International Trade Centre.
  • (2003c); “Women’s Business Association Encourages Exporters in Cameroon”, ITC, Iss: 4, International Trade Centre.
  • (2003d); “Nepalese Businesswoman Assists New Exporters”, ITC, Iss: 4, International Trade Centre.
  • Lindbeck, A. (1983); “Budget Expansion and Cost Inflation”, American Economic Review, Vol: 73 No: 2 285-90.
  • McKean, C.S. (1994); “Training and Technical Assistance for Small and Microenterprise: A Discussion of Their Effectiveness, in Rakowski”, C. (ed.): Contrapunto: The Informal Sector Debate in Latin America. Albany: State University of New York Press.
  • Marsden, K. (1983); “Links Between Taxes and Economic Growth: Some Empirical Evidence”, World Bank Working Paper No: 605.
  • Mavral, Ü. (2001); “Karapara Kayıtdışı Ekonomi İlişkisi ve Türkiye’ye Yansımaları”, Vergi Denetmenleri Derneği, Ankara.
  • Moser, C. O.N. (1994); “The Informal Sector Debate, Part I, 1970-1983”, in Rakowski, C. (ed.): Contrapunto: The Informal Sector Debate in Latin America. Albany: State University of New York Press.
  • Mundell, R. A. (1971); “The Dollar and The Policy Mix”, Princeton Essays in International Finance, Princeton University.
  • OECD (2004); Revenue Statistics 1965-2003, Paris, OECD.
  • Otero, M. (1994); “The Role of Governments and Private Institutions in Addressing the Informal Sector in Latin America”, in Rakowski, C. (ed.): Contrapunto: The Informal Sector Debate in Latin America. Albany: State University of New York Press.
  • Öğünç, F and G. Yılmaz. (2000); “Estimating the Underground Economy in Turkey”, CBRT Research Department Discussion Paper No: 43.
  • Önder, İ. (2001); “Kayıtdışı Ekonomi ve Vergileme”, İ.Ü. Siyasal Bilgiler Fakültesi Dergisi, No: 23-24.
  • Özsoylu, A. F. (1998); ”2000’li Yıllara Doğru Türkiye’nin Önde Gelen Sorunlarına Yaklaşımlar”, Türkiye Genç İşadamları Derneği, İstanbul.
  • Sarılı, M.A. (2002); “Türkiye’de Kayıt Dışı Ekonominin Boyutları, Nedenleri, Etkileri ve Alınması Gereken Tedbirler”, Bankacılar Dergisi, No: 41 32-50.
  • Portes, A., M. Castells, L. Benton. (1989); “The Informal Economy: Studies in Advanced and Less-Developed Countries”, Baltimore and London, The Johns Hopkins University Press.
  • Portes, A. (1996); “The Informal Economy, in Pozo”, S. (ed.): Exploring the Underground Economy: Studies of Illegal and Unreported Activity, Michigan: W.E. Upjohn, Institute for Employment Research.
  • Pozo, S., (ed.) (1996); “Exploring the Underground Economy: Studies of Illegal and Unreported Activity”, Michigan: W.E. Upjohn, Institute for Employment Research.
  • Rakowski, C., (ed.) (1994) “Contrapunto: The Informal Sector Debate in Latin America” Albany: State University of New York Press.
  • Revilla, A. (1998); “La Modernizacion del Sector Informal y las Cargas Tributarias y Administrativas a las Empresas n el Peru”, ILO Working Paper No: 92.
  • Reynolds, A. (1985); “Some International Comparisons of Supply-Side Tax Policy”, Acto Journal, Vol: 5 No: 2 543-69.
  • Tokman, V.E. (1995); “Las Relaciones Entre Los Sectores Formal e Informal. Una Exploracion sobre su Naturalez”, in Tokman, V.E. (ed.): El Sector Informal en America Latina. Dos Decades de Analisis, Mexico, Consejo Nacional para la Cultura y las Artes.
  • (2001); “Integrating the Informal Sector into the Modernization Process”, SAIS Review, Vol: XX I No: 1
  • Us, V. (2004); “Kayıtdışı Ekonomi Tahmini Yöntem Önerisi: Türkiye Örneği”, Turkish Economic Association Discussion Paper No: 17.
There are 38 citations in total.

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Primary Language English
Journal Section Articles
Authors

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Publication Date June 1, 2006
Submission Date December 12, 2014
Published in Issue Year 2006 Volume: 3 Issue: 3

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APA Us, V. (2006). Integrating the Informal Sector into the Formal Economy: Some Policy Implications. Sosyoekonomi, 3(3). https://doi.org/10.17233/se.92110
AMA Us V. Integrating the Informal Sector into the Formal Economy: Some Policy Implications. Sosyoekonomi. June 2006;3(3). doi:10.17233/se.92110
Chicago Us, Vuslat. “Integrating the Informal Sector into the Formal Economy: Some Policy Implications”. Sosyoekonomi 3, no. 3 (June 2006). https://doi.org/10.17233/se.92110.
EndNote Us V (June 1, 2006) Integrating the Informal Sector into the Formal Economy: Some Policy Implications. Sosyoekonomi 3 3
IEEE V. Us, “Integrating the Informal Sector into the Formal Economy: Some Policy Implications”, Sosyoekonomi, vol. 3, no. 3, 2006, doi: 10.17233/se.92110.
ISNAD Us, Vuslat. “Integrating the Informal Sector into the Formal Economy: Some Policy Implications”. Sosyoekonomi 3/3 (June 2006). https://doi.org/10.17233/se.92110.
JAMA Us V. Integrating the Informal Sector into the Formal Economy: Some Policy Implications. Sosyoekonomi. 2006;3. doi:10.17233/se.92110.
MLA Us, Vuslat. “Integrating the Informal Sector into the Formal Economy: Some Policy Implications”. Sosyoekonomi, vol. 3, no. 3, 2006, doi:10.17233/se.92110.
Vancouver Us V. Integrating the Informal Sector into the Formal Economy: Some Policy Implications. Sosyoekonomi. 2006;3(3).