Publications in refereed journals/books


This paper investigates the effect of the competition stemmed from informal firms on formal firms’ productivity in Egypt. Using the World Bank’s Enterprise Surveys, we update the two-step methodology of Guiso et al. (2004) to build a regional indicator of informal competition intensity. Our estimation reports a positive effect of this indicator on formal firms’ productivity that remains valid to the instrumental variable approach and to multiple robustness check. This result is subject to factors accounting for the characteristics of the firm and is segmented by formal firms’ size. We also identify informal firms’ cost advantage as the main channel through which this effect occurs. Our results call on the importance of tax reforms and effective regulation to be implemented in Egypt. 


The majority of micro and small enterprises (MSE) in Egypt make up part of the informal sector. Given their economic and social importance, our cross-section analysis evaluates the impact of the informality of 5000 MSEs in Egypt on their performance in 2003. A Probit model with instrumental variables produces results that show that the MSE regulations positively influence their performance. The extent of this influence is determined by the characteristics of the human and financial capital of each MSE, which testifies to the advantages of the formal sector that allows for the strengthening of these capitals. 

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