Barriers to the Formalization of Economic Activity and Marketing Solutions for Developing Economies

ABSTRACT

This research investigated barriers to the formalization of economic activity that was generally untaxed and unmeasured, referred to as informal economic activity, in an emerging economy. Nepal was selected as the country for study because it presents a case of a market undergoing economic and political liberalization. The paper presents background information on the economy of Nepal, the conduct of the fieldwork in Nepal, perspectives on informal economic activity, and the necessity of harnessing this activity. This is followed by research dealing with the informal economy and perceptions of the barriers to integration based on fieldwork in Nepal. Suggestions to harness this activity are offered. The results of this study may provide insights into the formulation of public policy and social marketing initiatives for addressing informal sector development in emerging markets.     

EU Enlargement,Institutional Governance and Innovation Environment in the Baltic Countries

Abstract

This paper presents institutional framework to implement innovative and co-operative procedures of industrial reorganization and economic growth in the Baltic countries. By using the recent features of organization mode theories and institutional economics, we apply how institutional development helps the Baltic firms to survive in the integration of EU25 markets. We present this framework as a dynamic process in three stages. The first stage identifies the main foundations from the transition period: macroeconomic stabilization, privatization, and financial governance. The second stage considers how to build up the institutional structure of the governance in production. The third stage points out those topics that enhance innovation environment and benchmarks the Baltic countries to EU innovation capacity. These progressive stages in financial, production, and innovation systems of governance can be overlapped or happen in sequential order but the final purpose of these improvements is to enhance the managerial incentives for higher innovative activity in the EU-Baltic industrial integration. It is found that the Baltic innovation input capacity is competitive compared with the EU25 average but a gap in innovation output is still essential.     

Consumer Innovativeness Among Street Vendors in Mexico City

Abstract

This study relates innovative consumer behavior to informal economic activity within the urban lower middle class of one of the world's major emerging markets, with focus on product innovations in the areas of retail and consumer goods and services. of prime interest are the innovation adoption habits of street vendors, a group hypothesized to possess greater innovative tendency than those of similar social background employed as formal sector wage earners. Results indicate that street vendors report higher income and lower levels of education than their formal sector neighbors and these two groups show distinct product acquisition/patronage patterns, as well. However, the street vendors do not always demonstrate more innovative behavior, as adoption appears product specific.     

Information Sharing and Financial Sector Development in Africa

This study investigates the effect information sharing has on financial sector development in 53 African countries for the period 2004 to 2011. Information sharing is measured with private credit bureaus and public credit registries. Hitherto unexplored dimensions of financial sector development are employed, namely: financial sector dynamics of formalization, informalization, and non-formalization. The empirical evidence is based on Ordinary Least Squares (OLS) and Generalized Method of Moments (GMM). The following findings are established. Information-sharing bureaus increase (reduce) formal (informal/non-formal) financial sector development. In order to ensure that information-sharing bureaus improve (decrease) formal (informal/non-formal) financial development, public credit registries should have between 45.45 and 50% coverage while private credit bureaus should have at least 26.25% coverage.     

Space for the informal tourism economy

ABSTRACT

In developing countries, many informal economy service providers obtain their livelihoods from tourism, and occupy and share public spaces to do so. As such, these actors must develop ‘rules in use’ that allow them to work alongside other providers, both formal and informal, in these shared spaces. These actors engage in coopetition, a mix of cooperation and competition, with each other. This paper provides a case study of informal sector service providers in Yogyakarta, Indonesia, to examine how these actors access resources and interact. Snowball sampling was adopted to identify actors and 47 in-depth interviews with pedicab drivers and street vendors were conducted and supplemented with naturalistic observation. Results indicate the public spaces occupied by the informal sector may be classified as common pool resources, collective goods, or semi-private goods. Further, the interaction among the actors in these public spaces is based on the types of, and capacity in, providing goods and services, and trust generated from the actors’ interactions. This research identified the formal and informal ‘rules in use’ that govern the behaviours of the actors related to the use of spaces. Suggestions for how informal economy actors can manage such spaces to enhance their livelihoods are provided.     

Knowledge-intensive business services in transition economies

Knowledge-intensive business services accounted for a rapid growth in transition economies after 1989. The growth in value added outpaced growth in employment, which indicated increasing labour productivity in this sector. Studies based on input–output tables found that development of business services was closely related to development of communication services in advanced EU member countries. The input–output analysis did not confirm this relation for Slovakia and the Czech Republic and found a medium to strong level of correlation for Hungary. Development of a market economy was likely to be a major factor behind development of business services. This assumption was tested on empirical data. The use of communication and business services could be a proxy for introduction of new technologies in production functions. The functions indicated that these industries made a significant contribution to economic growth both in advanced and transition economies. Output elasticity coefficients were quite similar in the Czech Republic, Hungary and Slovakia and the EU member countries.     

Telecommunications Policy Reform in Turkey

This paper, considering the economic effects of liberalisation in the telecommunications sector on the Turkish economy, makes use of the empirical studies on the linkages between regulatory regimes and telecommunications prices. Since Turkey is trying to liberalise the telecommunications sector by following the EU approach to liberalisation, the paper considers briefly the regulatory regimes in the telecommunications sectors of the EU and Turkey, determines the ad valorem equivalent of barriers to the telecommunications services sector in Turkey, and derives estimates of the welfare effects of adopting the EU rules and regulations in the Turkish telecommunications sector. It shows that there is tremendous scope for Turkey to benefit from adopting and implementing the legislative, regulatory and institutional framework of the EU telecommunications sector.     

Informal payments by patients for health services: prevalence and determinants

ABSTRACT

The aim of this paper is to explain the prevalence of informal payments in the health services sector in Southern Europe using the lens of institutional theory. To evaluate whether informal payments prevail due to formal institutional failures which lead to an asymmetry between the laws and regulations (formal institutions) and the unwritten rules (informal institutions), an analysis is undertaken of 2013 Eurobarometer survey data on the propensity to make informal payments by patients in Southern Europe. A strong association is found between the extent to which formal and informal institutions are unaligned, and the prevalence of informal payments, and such payments are found to be more likely when there is a lack of modernisation of governance coupled with a low range and reach of health services provision, lower health outcomes and systems focus on curative rather than preventative health services. The theoretical and policy implications are then explored.     

Impact of Corruption on the Development of Information and Communications Infrastructures in Bulgaria and Romania

Abstract

Bulgaria and Romania joined the European Union in January of 2007. Joining the EU is expected to promote the candidate country's economic growth, provide access to western technology, increase employment and attract foreign investments, the collective result of which is expected to be social, economic and technological advancement. In a perfect world where all factors contribute favorably those goals can be achieved. However, the detrimental impact of corruption on achieving national goals must also be addressed. This article examines linkages between information infrastructures and social development in Bulgaria and Romania as well as investment needs and financing were addressed with the objective to improve National Information Infrastructures (NII), expected payoffs from NII improvements were identified; the role of corruption in retarding information infrastructure development was also investigated. Using regression analysis the relationship between information infrastructures, social development, corruption, and economic development in Bulgaria and Romania were compared to those of the EU10 countries admitted into the EU in 2004 as well as to those in the original EU15 countries. It is concluded that given present conditions in Romania and Bulgaria development financing will have to come from internal and from World Bank sources rather than from foreign direct investment.     

Perceptions of Marketing and Approaches to Implementation

In the first macroeconomic empirical assessment of the relationship between mobile phones and finance, the author examines the correlations between mobile phone penetration and financial development using two conflicting definitions of the financial system in the financial development literature. With the traditional International Financial Statistics (IFS) (2008) definition, mobile phone penetration has a negative correlation with traditional financial intermediary dynamics of depth, activity, and size. However, when a previously missing informal-financial sector component is integrated into the definition, mobile phone penetration has a positive correlation with informal financial development. Three implications result: There is a growing role of informal finance; mobile phone penetration may not be positively assessed at a macroeconomic level by traditional financial development indicators; and it is a wake-up call for scholarly research on informal financial development indicators that will orient monetary policy.     

Analysis of the Role of Banks in the Corporate Financing Mix of Nigerian Quoted Manufacturing Enterprises

Abstract

The aim of this study is to investigate the role of Nigerian banks in funding the short-term and long-term financing requirements of Nigerian quoted manufacturing enterprises in an environment of economic reforms. It has been argued that the deregulation of the financial system induces financial fragility, credit rationing and bank disinterme-diation, thus limiting the effectiveness of the monetary transmission mechanism. We analyzed relevant data from selected authoritative official publications and found that the liberalization of the Nigerian economy in 1986 under the Structural Adjustment Program (SAP) resulted in deteriorating corporate liquidity, declining bank credit to the manufacturing sector, outrageous increases in interest rates, with the consequential decline in the contribution of the manufacturing sector to the GDP. As economic reforms commence, it is necessary for managers of banks and quoted manufacturing enterprises to maintain a well diversified portfolio of liquid assets. That way, spontaneous financial gaps can be better managed. Top management must make important borrowing decisions before relatively predictable events occur. As banks continue to emphasize high asset quality in their loan portfolio, manufacturing enterprises are expected to manage strategically the resulting credit crunch by expanding their corporate finance matrix in a way that matches their operating cycles. Monetary policy should be redirected to moderate interest rates, as well as improve credit supply in order to make the banking sector more relevant as competitive pressures intensify in the Nigerian financial services industry.     

International Marketing of Services and Developing Countries

ABSTRACT

The internationalization of services has gained great momentum in recent years. This article analyzes prospects of developing countries in the international marketing of services by examining past trends of service exports by developing countries, and relating these to demand for services in developed countries through a series of autoregression analyses. Results show that developing countries were marginalized in the international market for services over the 20-year study period. However, there are bright future prospects. The greatest prospects would be in travel services, followed by transport services. Implications of the findings for government policy in the service sector are discussed.     

The ‘ASEAN Way’ and ASEAN’s development gap with Cambodia,Laos, Myanmar and Vietnam: a critical view

ABSTRACT

The ‘ASEAN Way’, as an approach to interstate relations within ASEAN, is analysed in relation to the ‘reduction of the development gap’ (RDG) with Cambodia, Laos, Myanmar and Vietnam (CLMV). It is found that convergence of income per capita and development levels of CLMV is only to a limited extend the result of RDG and its pace is too slow. With the help of the Asian Development Bank and other regional and multilateral financial institutions, the development cooperation funds thus assembled, could leverage a multitude of loans and funds from donor organizations and countries, including the EU and its member countries.     

Informal employment in service industries: estimations from nationally representative Labour Force Survey data of Russian Federation

ABSTRACT

As the largest post-Soviet transition economy with substantial labour immigration and a considerable informal-sector Russia serves as an interesting case to study informal employment in the service and non-service economic sectors. The study fills the gap of the lack of empirical papers grounded on the reliable massive individual data. This article discusses almost twenty years’ dynamics of informal employment rates within the service and non-service industries based on the nationally representative Labour Force Survey primary data, collected quarterly for 2010–2015 with a sample size of about 200 thousand respondents per quarter. The unexpected finding is that the rate of informal employment is higher in non-service economic activities. Informal workers in the service sector in Russia are typically male, not very young, without tertiary education, living in urban areas. The paper also provides a comparative regression analysis on the probability of being informally employed in the service and non-service sectors.     

Exploring the Ethical Dimension of Hawala

The aim of this paper is to explore the ethical dimension of hawala, an ancient informal financial practice rooted in Islamic moral traditions. Widely used in countries with an Islamic background and their diasporas, hawala is considered an important vehicle for the financial and economic development of some less developed countries. Nevertheless, in Western countries, hawala is regarded with suspicion due its controversial ethical nature. Unlike other Islamic financial institutions, the controversial questions are not the legitimacy of profit sources or the interest charged, but rather the lack of transparency that surrounds hawala transactions. Yet, the literature on hawala has neglected its ethical perspective. Our study delves into this dimension with a critical approach, using the Triple Font Theory, grounded on virtue ethics. We conclude that if hawala transactions are carried out with honesty, and fairness, this practice deserves a positive ethical appraisal. However, it is necessary to implement efficient regulatory measures to guarantee that the system is not abused by money launders and criminals. In practice, it becomes imperative to bring over a change in the regulatory approach to hawala toward a more ethically, culturally, and economically sensitive strategy. Thus, future research should focus on how “hyper-norms” or fundamental principles inherent to humanity, which are common to both “formal” and “informal,” “Western” and “non-Western” financial practices, could run the new AML/CTF regulation agenda.     

Portfolio Flows to Emerging Markets: Prospects,Pitfalls and Policy Implications

ABSTRACT

This paper examines the pattern of debt and equity portfolio flows (FPI) to the developing countries in recent years and discusses some policy and operational measures to facilitate greater FPI flows. Our analysis suggests that many countries need to adopt more aggressive measures to attract foreign portfolio investment. The major areas where improvements can facilitate FPI are identified as: political and legal environment, private sector development, improvement in macro-economic management, development of capital markets, strengthening of financial institutions, enforcement of market regulations, improvements in market operations, and effective dissemination of market information.     

Measuring Consumer Sensitivity to Corporate Social Performance Across Cultures

ABSTRACT

In the context of a severe economic crisis, the objective of this research is to examine to what extent the economic crisis and austerity's measures have generated new marketing strategies in food companies. We develop a comparative analysis though multivariate analysis of variance, consisting of 10 food product categories across eight European countries, distinguishing between countries that needed financial support—the so-called rescued countries—and the countries with better economic development. Our findings show an increasingly trend toward increasing product prices and price per quantity in the rescued countries, along with an increase in the package content. Our findings suggest that food companies have been raising prices through the recession, as consumers continue to pare their spending and demand.     

International trade in financial services

International trade in financial services is a topic of some importance both to the financial services sector itself and in international trade negotiations. Unfortunately, intrinsic problems in defining and measuring trade in services, combined with a lack of data in many countries, have made empirical analysis of trade in financial services difficult. Recent improvements in data, although still providing only a limited coverage, do now provide a basis for analysis. In this paper, we use data from the OECD International Trade in Services Statistics 2001 database to conduct an analysis of trade in financial services based on standard theories and empirical techniques for international trade. Our results suggest that the key concepts of international trade are of use in understanding international trade flows in financial services. In particular, we find evidence of significant volumes of intra-industry trade in financial services, as well as significant volumes of inter-industry trade for some countries, including the UK. Using Balassa's ‘revealed comparative advantage’ index, the most highly ranked countries are Belgium-Luxembourg, Italy, Switzerland, the UK, the USA and Greece. Using the ‘net export ratio’, the countries that are ranked highest include Germany, Switzerland, the UK, the USA and Belgium-Luxembourg.     

黑龙江省金融服务业现状研究

随着黑龙江省经济市场化和金融化的进一步发展,市场需求对经济增长的约束程度越来越强,金融业在经济运行中所起的作用日益增强。因此,大力发展金融业对于促进黑龙江省经济快速增长,提高综合经济实力,建设和谐稳定、繁荣富强的社会具有十分重要的意义。为此,要促进金融服务业的均衡发展,提升金融服务业水平,构筑和谐人才发展环境,建立完善的内部监管体系,强化政府政策导向,重塑良好金融环境。     

Poland's Investment Development Path and Industry Structure of FDI Inflows and Outflows

ABSTRACT

This study explores changes in industry composition of FDI inflows to and outflows from Poland, using the conceptual framework of J. Dunning's model of the investment development path (IDP). The data time frame used (from 1996 to 2005) allows for identification of significant changes in FDI structure as Poland moves through stage 2 of her IDP. The leading position of the manufacturing sector in both FDI inflows and outflows is replaced by services (especially financial and trade). The last section presents policy implications focused on measures designed to redress the imbalance between the still much larger inflows than outflows of FDI.