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

Igudia, Eghosa; Ackrill, Rob; Coleman, Simeon; Dobson, Carlyn

Abstract

Positing the implementation of evidenced-based policies to manage the informal economy, our paper employs, in a novel way, the multiple-indicator, multiple-cause model and primary data, to identify the determinants of the Nigerian informal economy. Building on previous literature, relevant determinants of the informal economy were constructed from participants' responses to questions designed to solicit such information. We found the factors responsible for the origin and expansion of the Nigerian informal economy to include: unemployment, a 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, followed by corruption. Our policy recommendations follow these identified factors, and recognise the positive and important role played by the informal economy. Although country-specific, our findings/recommendations may be used to inform policy in other countries with similar economic structures as Nigeria.

Citation

Igudia, E., Ackrill, R., Coleman, S., & Dobson, C. (2016). Determinants of the informal economy of an emerging economy: a multiple indicator, multiple causes approach. International Journal of Entrepreneurship and Small Business, 28(2/3), 154. https://doi.org/10.1504/ijesb.2016.076643

• Journal Article Type: Article
• Online Publication Date: May 18, 2016
• Publication Date: 2016
• Deposit Date: May 15, 2019
• Journal: International Journal of Entrepreneurship and Small Business
• Print ISSN: 1476-1297
• Publisher: Inderscience
• Peer Reviewed: Peer Reviewed
• Volume: 28
• Issue: 2/3
• Pages: 154
• DOI: https://doi.org/10.1504/ijesb.2016.076643
• Public URL: https://hull-repository.worktribe.com/output/1788093
• Publisher URL: https://www.inderscienceonline.com/doi/abs/10.1504/IJESB.2016.076643#d9439e127
• Related Public URLs: http://irep.ntu.ac.uk/id/eprint/27108/