The Economics of Informality in The ERF Region

FromAug 31, 2014 To Aug 31, 2014


The recent Arab Awakening is seen by many analysts to partially reflect economic exclusion. One form of exclusion is informality of both workers and firms. Workers in the informal sector tend to endure low job security, no social insurance, low income and adverse working conditions. Similarly, firms in this sector, while enjoying the ease of entry and exit and escaping costly formal regulations, are deprived from having access to formal credit, contracts and export opportunities. In short, the informal sector is characterized by low productivity-low income trap.

The above problem is exacerbated by the observation that the informal sector is relatively large. According to the World Bank, a typical MENA country produces one-third of its GDP and employs 67 percent of its labor force informally. Moreover, MENA has the highest share of firms that start informal (25 percent) and the longest operating period without formalization (4 years) among developing regions. The trend of informality has also been increasing in recent years, making this topic an important.
In an attempt to understand the trends, causes and dynamics (entry, exit) of informality in the MENA region, ERF launched a call for proposals in the context of the 14th round of the ERF-GDN Regional Research Compe­tition. ERF received 12 proposals, out of which the refereeing committee selected 8 projects for funding. The draft papers of these projects will be presented and discussed in this workshop.

Speakers, moderators and discussants included Hanan Nazier, Racha Ramadan, Reham Rizk, Hala Abou Ali, Rana Hendy (Economic Research Forum), Heba Handoussa (ENID and ERF), Kabbashi M. Suliman, Tareq Sadeq, Amirah El-Haddad (Cairo University), Alia El Mahdi (Cairo University and ERF), Fatma El Hamidi (University of Pittsburgh), Sultan Abou Ali (Zagazig University and ERF), Abeer Elshennawy, Mahmoud El Gamal, Mohamed El Komi, Mona Said, Tamer El Meehy, Layla Iskandar, and Ziad Bahaa EL-Din.