Determinants of the informal economy of an emerging economy: a multiple indicator, multiple causes (MIMIC) approach

Igudia, E., Ackrill, R., Coleman, S. and Dobson, C. (2015) Determinants of the informal economy of an emerging economy: a multiple indicator, multiple causes (MIMIC) approach. In: Williams, C. and Williams, N. (eds.) 8th International Conference for Entrepreneurship, Innovation and Regional Development. England: ICEIRD, The University of Sheffield, SEERC. pp. 384-401.

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Item Type:	Book Section
Abstract:	The debate about the best way to tackle the problems (both perceived and real) in the informal economy is on-going. In this study, we argue that, if the informal economy is to be tackled successfully, policies should focus on evidence-based factors that influence participation in the sector. We posit that although several factors have been identified in the literature as determinants, not all are relevant in every economy. This underscores the need for country-specific studies. In this study, we focus on Nigeria. To identify and/or confirm the determinants specific to the Nigerian informal economy, our paper employs, in a novel way, the multiple-cause, multiple-indicator model, and primary data. Building on previous literature[1,2], relevant determinants of the informal economy were constructed from participants’ responses to questions designed to solicit such information. While all literature-defined determinants were included in the questionnaire, not all were identified as important by participants in our survey. Particularly, we found the factors that determine the origin and expansion of the Nigerian informal economy to include: unemployment, need to be autonomous/self-employed, corruption of government officials/agencies, participants’ desire to pay less tax, and participants’ need to survive. The greatest influence, in terms of magnitude and impacts, comes from the ‘participants’ need to survive’ factor. This is followed by corruption. Our policy recommendations follow these identified factors, and recognise the positive important role played by the informal economy in emerging economies. Also, there are suggestions that, though country-specific, findings and recommendations from this study may be used to inform policy in other countries with similar economic structures as Nigeria. However, the differences in magnitudes and impacts of the reported determinants of the Nigerian informal economy strengthen our assertion that a country-specific study is necessary, if the most appropriate policies are to be implemented.
Additional Information:	Forms part of the proceedings of the 8th International Conference for Entrepreneurship, Innovation and Regional Development (ICEIRD 2015), held at the University of Sheffield, UK on 18-19 June 2015.
Uncontrolled Keywords:	Determinants of the informal economy, emerging economy's informal sector, MIMIC approach, policies for tackling the informal sector, the Nigerian informal economy
Subjects:	H Social Sciences > HC Economic History and Conditions > HC94 By region or country > HC1055 Nigeria H Social Sciences > HB Economic Theory > HB615 Entrepreneurship. Risk and uncertainty. Property
Creators:	Igudia, Eghosa, Ackrill, Robert, Coleman, Simeon and Dobson, Carlyn
Editors:	Williams, Colin and Williams, Nick
Corporate Creators:	The 8th International Conference for Entrepreneurship, Innovation and Regional Devlopment (ICEIRD), The University of Sheffield, South-East European Research Centre
Publisher:	ICEIRD, The University of Sheffield, SEERC
Faculties, Divisions and Institutes:	University Faculties, Divisions and Research Centres - OLD > Faculty of Business & Law > Economics, International Development, International Relations & Politics Faculties > Faculty of Business & Law > Economics, Intl Relations & Development
Date:	18 June 2015
Date Type:	Publication
Page Range:	pp. 384-401
Title of Book:	8th International Conference for Entrepreneurship, Innovation and Regional Development
Place of Publication:	England
Number of Pages:	821
Language:	English
ISBN:	9780993280108
Media of Output:	Conference Book
Status:	Published / Disseminated
Refereed:	Yes
Related URLs:	Conference
URI:	http://nectar.northampton.ac.uk/id/eprint/9235

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