TY  - JOUR
AU  - Porta,Rafael La
AU  - Shleifer,Andrei
TI  - The Unofficial Economy in Africa
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 16821
PY  - 2011
Y2  - February 2011
DO  - 10.3386/w16821
UR  - http://www.nber.org/papers/w16821
L1  - http://www.nber.org/papers/w16821.pdf
N1  - Author contact info:
Rafael La Porta
Dartmouth College
Tuck School
210 Tuck Hall
Hanover, NH  03755
Tel: 603/646-3739
E-Mail: rafael.laporta@dartmouth.edu

Andrei Shleifer
Department of Economics
Harvard University
Littauer Center M-9
Cambridge, MA 02138
Tel: 617/495-5046
Fax: 617/496-1708
E-Mail: ashleifer@harvard.edu
M1  - published as Rafael La Porta, Andrei Shleifer. "The Unofficial Economy in Africa," in Sebastian Edwards, Simon Johnson, and David N. Weil, editors, "African Successes: Government and Institutions" University of Chicago Press (2014)

M3  - presented at "African Development Successes Conference", July 18-20, 2010
AB  - We examine the productivity of informal firms (those that are not registered with the government) in 24 African countries using field work and World Bank firm level data.  We find that productivity jumps sharply if we compare small formal firms to informal firms, and rises rapidly with the size of formal firms. Critically, informal firms appear to be qualitatively different than formal firms: they are smaller in size, produce to order, are run by managers with low human capital, do not have access to external finance, do not advertise their products, and sell to largely informal clients for cash. Informal firms thus occupy a very different market niche than formal firms do, and rarely become formal because there is very little demand for their products from the formal sector.
ER  -