The informal economy and growth

Here's a good article on the drag the informal economy is on growth. The countries with the largest percentage are in this area of the world. I know there has been talk about enticing businesses out of the shadows and there has been some effort to streamline and lower taxes for business. And I think there has been a consensus about this across the board--at least I think there has been. But it does need to be dealt with here.

It's a wonder with all the shadow businesses around here that there are any others. But there are and they seem to compete at least on some level. The article, though, maintains that there is no incentive to invest in greater productivity on the part of these businesses. So growth is slowed or stalled. Not good for the people.

One of the problems is the perennial problem here--people with the power of government protecting these businesses because they get paid by them for that protection. This has a long tradition here extending back even to the Soviet period. (The party leaders needed stuff and protected those who could get it for them.)

It will be interesting to see what more the new government will do about this.