The role of economic prosperity on informality in Africa: Evidence of corruption thresholds from PSTR

Arbeitspapier

This paper is interested in explaining the causes of the simultaneous evolution between economic growth and informality. Using a large annual panel of African countries with a time series of 25 years, ours results show that when the corruption rate is above (below) a threshold of 1.3577, economic growth reduces (increases) informal economic sector. The corruption proxy is measured as a decreasing function of corruption such that higher levels of the corruption proxy translate lower levels of corruption. It is therefore desirable for policymakers to improve the transparency of interactions between firms, public and private agents to fight corruption, in view of decreasing the informal economic sector through economic growth.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: AGDI Working Paper ; No. WP/22/012

Classification and Topics

• Classification: Wirtschaft ; Bureaucracy; Administrative Processes in Public Organizations; Corruption ; Macroeconomic Aspects of International Trade and Finance: Forecasting and Simulation: Models and Applications ; Informal Labor Markets ; Formal and Informal Sectors; Shadow Economy; Institutional Arrangements ; Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
• Subject: Informal sector ; Growth ; Corruption ; African countries

Contributors, Location and Time

• Event: Geistige Schöpfung
• (who): Njoya, Loudi ; Ngouhouo, Ibrahim ; Asongu, Simplice ; Schneider, Friedrich
• Event: Veröffentlichung
• (who): African Governance and Development Institute (AGDI)
• (where): Yaoundé
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/262070
• Last update: 10.03.2025, 11:42 AM CET