Formal or Informal Entrepreneurs

Joel Raveloharimisy (Behavioral Science)

Becoming Formal or Informal Entrepreneurs: How Institutions Matter

The purpose of this research is to determine and explain the factors behind entrepreneurs’ decision to enter the formal or informal sector. It tests two competing hypotheses about the individual versus mixed effects of formal institutions (measured by entry regulations) and informal institutions (measured by social capital) on entrepreneurship. The research will use quantitative as well as qualitative data from Madagascar to explore the relationship between institutions and entrepreneurship. I will use the Enterprise survey questionnaires developed by the World Bank to collect a wide array of qualitative and quantitative information about the formal and informal enterprises/businesses and social capital through face-to-face interviews with entrepreneurs, key policy makers, and social activists regarding the business environment and entry regulations in Madagascar. Additional quantitative historical data regarding the growth of formal and informal sectors will be collected from the Malagasy National Statistical Office (INSTAT).

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