INFORMALITY AND ENTREPRENEURIAL ECOSYSTEM IN ALBANIA
Abstract
The informal sector constitutes a significant part of the economies in developing countries and it is very often stigmatized as unmanageable and troublesome. It has been a major issue for Albania since the early stages of its transition to a market economy. For this reason, integrating the informal economy into the formal sector has become an important policy challenge. The aim of this study is to examine the relationship between informality in Albanian enterprises and their size in terms of yearly revenues, exporting opportunities, trainings and to make a deeper analysis of the causes of informality and possible incentives to reduce it. The data, used for this study, are taken from the survey, implemented by the Albanian Investment Council (AIC) on tax audit, VAT reimbursement and informality during the period July-September 30, 2017. Study results reveal that main causes that lead businesses to informality are corruption and high taxes, and that there exists a significant negative relationship between the aforementioned variables. Research findings suggest that informality in the sector can be decreased by improving the ecosystem, in which Albanian enterprises operate through lowering taxes and reviewing taxation policy, training entrepreneurs and providing exporting opportunities to enlarge their market and increase revenues. This study provides distinct contributions that have theoretical implications to ecosystem researchers, as well as practical implications to policymakers and entrepreneurs.
Downloads
References
Baliu, Q. K.-E. (2011). A comparative overview of informal employment in Albania, Bosnia and Herzegovina, Moldova and Montenegro. Hungary: ILO.
Chen, M. A. (2012). The Informal Economy: Definitions, Theories and Policies. WIEGO working Paper. Available at: http://www.wiego.org/sites/default/files/publications/files/Chen_WIEGO_WP1.pdf
Kruja, A. D. (2013). The contribution of SMEs to the economic growth (Case of Albania). EuroEconomica, 32 (1), 55–67.
Kruja, A. D. (2020). Enterprise investments, innovation and performance: Evidence from Albania. International Journal of Innovation in the Digital Economy, 11 (1), 68–80. doi: http://doi.org/10.4018/ijide.2020010105
Loayza, N. (2007). The causes and consequences of informality in Peru. Working Paper Series, 1-22. Peru: The World Bank.
Oviedo, A. M., Thomas, M. R., Karakurum-Ozdemir, Kamer. (2009). Economic Informality: Causes, Costs, and Policies. Background Paper for Country Economic Memorandum-Informality: Causes, Consequences, Policies, 50.
Torgler, B., Schneider, F. (2009). The impact of tax morale and institutional quality on the shadow economy. Journal of Economic Psychology, 30 (2), 228–245. doi: http://doi.org/10.1016/j.joep.2008.08.004
Chong, A., Gradstein, M. (2004). Institutions and inequality. London, United Kingdom: Centre for Economic Policy Research. Forthcoming Discussion Paper, 41.
Maloney, W. F. (1999). Does Informality Imply Segmentation in Urban Labor Markets? Evidence from Sectoral Transitions in Mexico. The World Bank Economic Review, 13 (2), 275–302. doi: http://doi.org/10.1093/wber/13.2.275
Kanbur, R. (2017). Informality: Causes, consequences and policy responses. Review of Development Economics, 21 (4), 939–961. doi: http://doi.org/10.1111/rode.12321
Garcia-Bolivar, O. E. (2006). Informal economy: is it a problem, a solution or both? The perspective of the informal business. Bepress Legal Series, 28.
Kreši, A., Milatović, J., Sanfey, P. (2017). Firm performance and obstacles to doing business in the Western Balkans. Working Paper No. 200, 22. Available at: http://doi.org/10.2139/ssrn.3119154
Lin, D., Lu, J., Li, P. P., Liu, X. (2015). Balancing Formality and Informality in Business Exchanges as a Duality: A Comparative Case Study of Returnee and Local Entrepreneurs in China. Management and Organization Review, 11 (2), 315–342. doi: http://doi.org/10.1017/mor.2014.2
Amin, M., Huang, X. (2014). Does Firm-size Matter in the Informal Sector? Enterprise Note Series, 1, 5.
Walther, R. (2007). Vocational training in the informal sector. Notes and Documents AFD. Research Department Agence Française de Développement. Available at: http://www.eib.org/attachments/general/events/luxembourg_18112008_formation_professionnelle_en.pdf
Copyright (c) 2020 Dajana Hoxhaj, Alba Kruja (Demneri)
This work is licensed under a Creative Commons Attribution 4.0 International License.
Our journal abides by the Creative Commons CC BY copyright rights and permissions for open access journals.
Authors, who are published in this journal, agree to the following conditions:
1. The authors reserve the right to authorship of the work and pass the first publication right of this work to the journal under the terms of a Creative Commons CC BY, which allows others to freely distribute the published research with the obligatory reference to the authors of the original work and the first publication of the work in this journal.
2. The authors have the right to conclude separate supplement agreements that relate to non-exclusive work distribution in the form in which it has been published by the journal (for example, to upload the work to the online storage of the journal or publish it as part of a monograph), provided that the reference to the first publication of the work in this journal is included.